You are cordially invited to attend the ~~2014~~2017 annual meeting of stockholders of ARMOUR Residential REIT, Inc. We will hold the meeting on ~~Thursday, May 8, 2014,~~Wednesday, June 14, 2017, at 8:00 a.m. (EDT) at the Vero Beach Hotel & Spa, 3500 Ocean Drive, Vero Beach, Florida 32963. We hope that you will be able to attend.

~~Of particular importance is Proposal No. 2, which requests stockholder approval of an amendment to our Amended~~

Your voice and Restated 2009 Stock Incentive Plan under which we grant equity to our executive officers and other key professionals. Equity is a fundamental part of our compensation philosophy and our success is dependent, in large part, on our ability to attract, retain and motivate high-performing senior executives whoyour vote are committed to our core values. We strongly believe that offering incentives in the form of equity awards is critical to our ability to do so and aligns the interests of our executive officers and other key professionals with those of our stockholders. We take a disciplined approach to the management of our compensation programs. We have proactively managed the overall affordability of our equity compensation programs to prevent dilutive effects to our stockholders and, in each year since our initial public offering, have consistently returned a significant amount of cash to our stockholders through dividends and, beginning in 2013, share repurchases. We believe that the proposed amendment to our Amended and Restated 2009 Stock Incentive plan is essential to our ability to achieve our objectives and to continue to create long-term value for our stockholders. Therefore, our Board of Directors urges you to vote “FOR” this proposal.

~~Your vote is~~ very important to us. We look forward to the opportunity to meet with stockholders in person at the annual meeting. We also recently reached out directly to our largest investors and have expanded and clarified our executive compensation disclosures in this proxy statement to reflect investor feedback we received.

Whether or not you plan to attend the annual meeting in person, your shares should be represented and voted. After reading the enclosed proxy statement, please vote your shares as soon as possible. Stockholders may vote in person at the annual meeting, or by completing and returning a proxy ~~card.~~card or by telephone or Internet, as further explained in the proxy statement. Submitting a vote before the annual meeting will not preclude you from voting in person at the annual meeting should you decide to attend. In addition, this proxy statement, the notice of annual meeting, the proxy card and our ~~2013~~2016 annual report will be mailed or made accessible via the Internet on the Company’s website at~~http://investor.armourreit.com~~www.armourreit.com on or about ~~March 19, 2014.~~

May 1, 2017.

On behalf of our Board of Directors, I extend our appreciation for your continued support.

The annual meeting of stockholders of ARMOUR Residential REIT, Inc. (“ARMOUR”) will be held on ~~Thursday May 8, 2014,~~Wednesday, June 14, 2017 at 8:00 a.m. (EDT) at the Vero Beach Hotel & Spa, 3500 Ocean Drive, Vero Beach, Florida 32963, for the purpose of considering and acting on the following proposals:

~~(1)~~

~~To elect nine (9) directors to ARMOUR’s Board of Directors until our 2015 annual meeting of stockholders and until their successors are duly elected and qualified;~~

~~(2)~~

To approve an amendment to ARMOUR’s Amended and Restated 2009 Stock Incentive Plan to increase the aggregate number of shares of common stock authorized for issuance thereunder from 2,000,000 shares to 15,000,000 shares;

~~(3)~~

~~To ratify the appointment of Deloitte & Touche LLP (“Deloitte”) as ARMOUR’s independent registered certified public accountants for fiscal year 2014; and~~

~~(4)~~

~~To transact any other business as may properly come before the annual meeting or any adjournments or postponements of the meeting.~~

Only holders of ARMOUR’s common stock of record at the close of business on ~~March 17, 2014,~~April 21, 2017, the record date and time fixed by ARMOUR’s Board of Directors, are entitled to notice of and to vote at the annual meeting. Additional information regarding the proposals to be acted on at the annual meeting can be found in the accompanying proxy statement.

~~IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS~~

~~FOR THE 2014 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 8, 2014~~

~~The accompanying proxy statement~~

Our Board of Directors unanimously recommends that you vote your shares “FOR” proposals 1, 2 and ~~the 2013 Annual Report on Form 10-K are available at:~~

~~http://investor.armourreit.com~~

3.

In accordance with the rules of the Securities and Exchange Commission, we are furnishing our proxy materials, including this proxy statement and our 2016 annual report, to our stockholders via the Internet. During the week of May 1,

2017, we will mail to certain of our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) that contains instructions on how to access our proxy materials on the Internet. The Notice of Internet Availability also contains instructions on how to vote via the Internet or by telephone. Other stockholders, in accordance with their prior requests, will receive an email with instructions on how to access our proxy materials and vote via the Internet, or will be mailed paper copies of our proxy materials and a proxy card or voting form. Stockholders may request to receive all future proxy materials in printed form by mail or electronically by email by following the instructions contained in the Notice of Internet Availability.

An admission ticket (or other proof of share ownership) and some form of government-issued photo identification (such as a valid driver’s license or passport) will be required for admission to ARMOUR’s ~~2014~~2017 annual meeting of stockholders. Only stockholders who own common stock as of the close of business on ~~March 17, 2014~~April 21, 2017 and invited guests will be entitled to attend the meeting. An admission ticket will serve as verification of your ownership.

·

If you plan to attend the annual meeting, you can obtain directions to the Vero Beach Hotel & Spa from the hotel’s website athttp://www.verobeachhotelandspa.com.

This proxy statement is furnished in connection with the solicitation of proxies by the ~~Board~~board of ~~Directors~~directors of ARMOUR Residential REIT, Inc. (“Board” or “Board of Directors”) for the 2017 annual meeting of stockholders to be held on ~~Thursday, May 8, 2014,~~Wednesday, June 14, 2017, at 8:00 a.m. (EDT) (the “annual meeting”). In this 2017 proxy statement (the “proxy statement”), except where the context suggests otherwise, references to “we,” “us,” ~~“ARMOUR,”~~“ARMOUR” or the “Company” are to ARMOUR Residential REIT, Inc.

and its subsidiaries, including JAVELIN Mortgage Investment Corp. (“JAVELIN”), which we acquired on April 6, 2016.

The Board has made these proxy materials available to you on the Internet, or has delivered printed versions of these materials to you by mail, in connection with the solicitation of proxies for use at the annual meeting. As a stockholder, you are invited to attend the annual meeting and are requested to vote on the proposals described in this proxy statement. This proxy statement includes information that we are required to provide to you under Securities and Exchange Commission (“SEC”) rules and is designed to assist you in voting your shares.

In accordance with rules adopted by the SEC, we may furnish proxy materials, including this proxy statement and our 2016 annual report to our stockholders, by providing access to such documents over the Internet instead of mailing printed copies. Most stockholders will not receive printed copies of the proxy materials. Instead, the Notice of Internet Availability, which was mailed to most of our stockholders, will instruct you as to how you may access and review all of the proxy materials on the Internet. If you would like to receive a paper copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice of Internet Availability.

Each holder of record of ARMOUR common stock as of the close of business on April 21, 2017, the record date for the annual meeting, is entitled to attend and vote at the annual meeting.

Every holder of a share of common stock on the record date will be entitled to one vote per share for each director to be elected at the annual meeting and to one vote per share on each other matter presented at the annual meeting. As of the close of business on April 21, 2017, the record date for the annual meeting, there were 36,732,333 shares of common stock outstanding and entitled to vote at the annual meeting.

ARMOUR intends to present proposals numbered 1, 2 and 3 for stockholder consideration and voting at the annual meeting. These proposals are for:

Other than the matters set forth in this proxy statement and matters incident to the conduct of the annual meeting, we do not know of any business or proposals to be considered at the annual meeting. If any other business is proposed and properly presented at the annual meeting, the proxies received from our stockholders give the proxy holders the authority to vote on such matter in their discretion.

The Board unanimously recommends that you vote your shares:

All stockholders are invited to attend the annual meeting. An admission ticket (or other proof of share ownership) and some form of government-issued photo identification (such as a valid driver’s license or passport) will be required for admission to the annual meeting. Only stockholders who own common stock as of the close of business on April 21, 2017 and invited guests will be entitled to attend the meeting. An admission ticket will serve as verification of your ownership. Registration will begin at 7:30 a.m. (EDT) and the annual meeting will begin at 8:00 a.m. (EDT).

A “proxy” allows someone else (the “proxy holder”) to vote your shares on your behalf. Our Board of Directors is asking you to allow either of the following persons to vote your shares at the annual meeting: Jeffrey J. Zimmer or Scott J. Ulm.

If your ARMOUR shares are registered in your name you may vote your shares in person at the annual meeting by completing and returning a proxy card, or by telephone or Internet as set forth in the proxy card or Notice of Internet Availability mailed to you. If you hold your common stock in an account with a bank or broker (i.e. in “street name”), you may vote by following the instructions on the voting instruction card provided to you by your bank or broker.

Yes. You may change your vote in one of several ways at any time before your proxy is exercised:

For Proposal 1: Election of Directors, the affirmative vote of the holders of common stock having a majority of the votes cast on such proposal at the annual meeting is required. See “The Board of Directors, Its Committees and Other Corporate Governance Information - Corporate Governance - Majority Voting for Directors and Director Resignation Policy.” For Proposal 2: Ratification of the Appointment of Independent Registered Certified Public Accountants, the affirmative vote of the holders of common stock having a majority of the votes cast on such proposal at the annual meeting is required. For Proposal 3: Advisory Vote Approving Executive Compensation, the affirmative vote of the holders of common stock having a majority of the votes cast on such proposal at the annual meeting is required.

A “broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner. Under the rules of the New York Stock Exchange (“NYSE”), a broker does not have the discretion to vote on Proposal 1 - Election of Directors and Proposal 3 - Advisory Vote Approving Executive Compensation. As a result, any broker will not have the discretion to vote on Proposal 1 and Proposal 3, but will have the discretion to vote on Proposal 2.

Accordingly, for Proposals 1 and 3 above, shares of common stock that are represented by broker non-votes are not included in the determination of the common stock voting on such matter and will not have an effect on the votes, but are counted for quorum purposes. For Proposal 2 above, shares of common stock which are represented by broker non-votes are included in the determination of the common stock voting on such matter and are counted for quorum purposes. For all three Proposals above, shares which abstain from voting on any matter are counted for quorum purposes.

The cost of soliciting proxies will be borne by the Company. In addition to solicitation by mail, solicitations may also be made by telephone, telegram, facsimile, email or in person by directors, officers or other personnel of the Company, who will receive no additional compensation for such services. We have also engaged Alliance Advisors LLC, a proxy solicitor, to assist us in the solicitation of proxies for the annual meeting for a fee of $20,000, plus reimbursement for out-of-pocket expenses.

ARMOUR’s Board of Directors is currently comprised of nine (9) members. The nine (9) nominees are listed below. All nine nominees are presently directors of ARMOUR. ~~Eight of the nine nominees have served since November 2009. Ms. Downey has been a member of our Board since September 2013.~~

If instructed, the persons named on the accompanying proxy card will vote for the election of the nominees named below to serve for the ensuing year and until their successors are elected and qualified. If any nominee for director shall become unavailable (which management has no reason to believe will be the case), it is intended that the shares represented by the enclosed proxy card will be voted for any such replacement or substitute nominee as may be nominated by our Board.

The following is a brief biographical statement for each director nominee:

Scott J. Ulm has been the Co-Chief Executive Officer, Co-Vice Chairman, Chief Investment Officer and Head of Risk Management of ARMOUR since November 2009. Mr. Ulm ~~has been~~was a Co-Managing Member of ARMOUR Residential Management, LLC, our external manager (“ARRM”), ~~since~~from March ~~2008.~~2008 until December 2014. Since December 2014, Mr. Ulm has been the managing member of the entity that acts as one of the general partners of ARMOUR Capital Management LP, the successor to ARRM as our external manager (“ACM”). Mr. Ulm has also ~~been~~served as the Co-Chief Executive Officer, Co-Vice Chairman, Chief Investment Officer and Head of Risk Management of JAVELIN, ~~Mortgage Investment Corp.,~~formerly a publicly-traded ~~REIT~~real estate investment trust (“REIT”) (NYSE: JMI) ~~which~~that invests in and manages a leveraged portfolio of agency ~~mortgage backed~~mortgage-backed securities, non-agency ~~mortgage backed~~mortgage-backed securities and other mortgage-related investments, ~~(“JAVELIN”),~~ since June 2012. In April 2016, JAVELIN was acquired by ARMOUR pursuant to a tender offer and subsequent second-step merger (the “Merger”). Pursuant to the Merger, JAVELIN became a wholly-owned, qualified REIT subsidiary of ARMOUR and delisted its common stock from the NYSE. Mr. Ulm has also been a director of JAVELIN, since the Merger. JAVELIN is also externally-managed by ~~ARRM.~~ACM. Mr. Ulm has 26also served as the Co-Chief Executive Officer of Staton Bell Blank Check LLC, the sub-manager to ACM (“SBBC”), since January 2015. Mr. Ulm is also a Trustee and Vice Chairman of the Cary Institute of Ecosystems Studies, where he is chairman of the Trusteeship Committee and a member of its Investment Committee. Mr. Ulm is also the 1st Vice President of the Nantucket Community Sailing and a member of its investment committee. Mr. Ulm has nearly 30 years of structured finance and debt capital markets experience, including mortgage-backed securities. Mr. Ulm has advised numerous U.S., European, and Asian financial institutions and corporations on balance sheet and capital raising matters. From 2005 to 2009, Mr. Ulm was Chief Executive Officer of Litchfield Capital Holdings. From 1986 to 2005, he held a variety of senior positions at Credit Suisse both in New York and London, including Global Head of Asset-Backed Securities, Head of United States and European Debt Capital Markets and the Global Co-Head of Collateralized Debt Obligations, both cash and synthetic. While at Credit Suisse, Mr. Ulm was responsible for the underwriting and execution of more than $100

As a result of Mr. Ulm’s 26nearly 30 years years of experience in structured finance and debt capital markets, including mortgage-backed securities, he is able to provide valuable business, leadership, and management advice to our ~~board~~Board of ~~directors~~Directors in many critical areas.

Jeffrey J. Zimmer has been the Co-Chief Executive Officer, Co-Vice Chairman and President of ARMOUR since November 2009. Mr. Zimmer also served as Chief Financial Officer of ARMOUR from November 2009 to September 2012 and the Secretary of ARMOUR from November 2009 to March 2014. Mr. Zimmer ~~has been~~was a Co-Managing Member of ARRM ~~since~~from March ~~2008.~~2008 until December 2014. Since December 2014, Mr. Zimmer has been the managing member of the entity that acts as one of the general partners of ACM.Mr. Zimmer has also been the Co-Chief Executive Officer, Co-Vice Chairman and President of JAVELIN, since June 2012, and ~~Secretary~~a director of JAVELIN, ~~from June 2012 to March 2014.~~since the Merger. Mr. Zimmer has also served as the Co-Chief Executive Officer of SBBC since January 2015. Mr. Zimmer has significant experience in the mortgage-backed securities market over a 2930 plus year period. From September 2003 through March 2008, he was the co-founder and Chief Executive Officer of Bimini Capital Management, Inc., a ~~publicly traded~~publicly-traded REIT. From 1990 to 2003, he was a managing Director at RBS/Greenwich Capital in the Mortgage-Backed and Asset-Backed Department where he held various positions that included working closely with some of the nation’s largest mortgage banks, hedge funds and investment management firms on various mortgage-backed securities investments. Mr. Zimmer was employed at Drexel Burnham Lambert in the institutional mortgage-backed sales area from 1984 until 1990. From 2009-2016, Mr. Zimmer, the sole owner and manager of Zimmer Advisors LLC, advised one client, with total capital of under $20 million, on investing and financing mortgage bonds. He received his M.B.A. degree in finance from Babson College and a B.A. degree in economics and speech communication from Denison University.

As a result of Mr. Zimmer’s 2930 plus years of experience in the mortgage-backed securities market, including serving as president and chief executive officer of other publicly-traded mortgage REITs, he is able to provide valuable business, leadership, and management advice to our Board of Directors in many critical areas.

Daniel C. Staton has been the Non-Executive Chairman of ARMOUR since November 2009 and was the President, Chief Executive Officer and Director of Enterprise Acquisition Corp. ~~("Enterprise"~~, a blank check company formed for the purpose of acquiring an operating business (“Enterprise”), from its inception in 2007 until its merger with ARMOUR in November 2009. Mr. Staton ~~has~~was also ~~been~~ the Non-Executive Chairman of JAVELIN ~~since~~from June ~~2012.~~2012 until the Merger in April 2016. Since January 2015, Mr. Staton has indirectly owned a minority limited partnership interest in ACM. Mr. Staton has more than 1215 years of experience sourcing private equity and venture capital investments. Mr. Staton also served as Chairman of the Board of Storage Realty Trust from 1997 to 1999, when he led its merger with Public Storage (NYSE: PSA), where he has continued to serve as a Director since the merger. Mr. Staton has served as a director of Terran Orbital, an aerospace company that designs and manufactures nanosatellites for the U.S. government and military (“Terran Orbital”), since July 2014 and Here Today, a chain of discount retail stores in the Midwest (“Here Today”), since July 2012. Since February 2003, he has been Managing Director of the private equity firm, Staton Capital LLC, and also served as the Chairman of the Board of FriendFinder Networks Inc. ~~("FriendFinder"~~(“FriendFinder”), ~~a leading internet-based~~an Internet-based social networking and multimedia entertainment company, from October 2004 until June 2012. Mr. Staton was a Co-Chairman of the Board of FriendFinder, which went public in May 2011, from July 2012 to December 2013, and a consultant to FriendFinder from October 2012 until December 2013. Under Mr. Staton's leadership as Co-Chairman of the Board, FriendFinder was strategically restructured ~~in 2013~~ pursuant to a consensual prepackaged plan of reorganization ~~under Chapter 11 of the United States Bankruptcy Code. The restructuring resulted~~ in ~~all general unsecured creditors being paid~~federal bankruptcy court effective in ~~full.~~2013. Between 1997 and 2007, Mr. Staton was President of The Walnut Group, a private investment firm, where he served as initial investor and Director of Build-A-Bear Workshop, the initial investor in Deal$: Nothing Over a Dollar (until its sale to Supervalu Inc.), and Director of Skylight Financial. Prior to The Walnut Group, Mr. Staton was General Manager and Partner of Duke Associates from 1981 until its ~~IPO~~initial public offering in 1993, and then served as Chief Operating Officer and Director of Duke Realty Investments, Inc. (NYSE: DRE) until 1997. ~~Mr. Staton also served as Chairman of the Board of Storage Realty Trust from 1997 to 1999, when he led its merger with Public Storage (NYSE: PSA), where he continues to serve as a Director.~~ Mr. Staton supplements his professional network by co-producing and investing in numerous Broadway musicals as well as with relationships with not-for-profit organizations. Mr. Staton majored in Finance at the University of Missouri

Mr. Staton has extensive experience serving on the boards of directors of private and public companies and sourcing private equity and venture capital investments and brings significant corporate governance expertise to our Board of Directors.

Marc H. Bell has been a director of ARMOUR since November 2009 and was the Chairman of the Board of Directors and Treasurer of Enterprise from its inception in 2007 until its merger with ARMOUR in November 2009. Mr. Bell ~~has~~was also ~~been~~ a director of JAVELIN from June 2012 until the Merger in April 2016. Since January 2015, Mr. Bell has indirectly owned a minority limited partnership interest in ACM. He is a co-founder and has been the Chairman of Terran Orbital since ~~June 2012.~~its inception in July 2014. Mr. Bell has served as ~~Managing Director~~director of Here Today since September 2015. Mr. Bell founded Marc Bell Capital, ~~Partners~~ LLC, an investment firm which invests in diverse industries, including media, ~~and~~ entertainment, ~~ventures,~~ real estate, technology, Internet and ~~distressed assets, since~~consumer brands, in July 2003. Mr. Bell previously served as the Chief Executive Officer of FriendFinder, ~~which went public in May 2011,~~ from October 2004 to June 2012, the President from October 2004 until March 2012, the Co-Chairman of the Board of FriendFinder from July 2012 to December 2013, ~~and~~ a consultant to FriendFinder from October 2012 to December 2013, and its Chief Strategy Officer during 2012. Under Mr. Bell's leadership as Co-Chairman of the Board, FriendFinder was strategically restructured ~~in 2013~~ pursuant to a consensual prepackaged plan of reorganization ~~under Chapter 11 of the United States Bankruptcy Code. The restructuring resulted~~ in ~~all general unsecured creditors being paid~~federal bankruptcy court effective in ~~full.~~2013. Previously, Mr. Bell was the founder and President of Globix Corporation, a full-service commercial Internet Service ~~Provider with data centers and a private network with over 20,000 miles of fiber spanning the globe.~~Provider. Mr. Bell served as Chairman of the Board of Globix Corporation from 1998 to 2003 and Chief Executive Officer from 1998 to 2001. Mr. Bell was also a member of the Board of Directors of EDGAR Online, Inc. (NASDAQ: EDGR), an Internet-based provider of filings made by public companies with the SEC, from 1998 to 2000. Mr. Bell has also been a co-producer of Broadway musicals, and serves as a member of the Board of Trustees of New York University and Board of Overseers of New York University ~~School~~Langone Medical Center. Mr. Bell is also a member of ~~Medicine.~~the Board of Directors of the SOS Children’s Villages, the Boca Raton Police Foundation and the Boca Raton Museum of Arts. Mr. Bell holds a B.S. degree in Accounting from Babson College and an M.S. degree in Real Estate Development from New York University.

Mr. Bell’s ~~past~~ experience as managing director of an investment firm, as well as serving on the boards of directors of several public companies, allows him to provide valuable business, leadership, and management advice to our Board of Directors in many critical areas.

Carolyn Downey has been a director of ARMOUR since September 2013. Ms. Downey has ~~over 26~~nearly 30 years of institutional capital markets experience working with leading institutions in global finance. From 1989 ~~until~~through 2007, Ms. Downey held various executive positions at, including as a Managing Director of, RBS Greenwich Capital, a fixed-income sales, trading and finance firm serving institutional clients, and a U.S. Government securities primary dealer. At RBS Greenwich Capital, Ms. Downey was responsible for relationships with real-estate investment trusts, financial institutions, hedge funds, investment managers and proprietary trading desks, participated in structuring and distribution of net interest margin securities, commercial mortgage securities and collateralized mortgage obligations, and advised on hedging strategies using derivative products and synthetic swaps. Prior to her time at RBS Greenwich Capital, Ms. Downey was a Vice President of Fixed Income Sales at Salomon, Inc. from 1981 ~~until~~through 1989, where she was for some time responsible for residual product placement and other equity tranches of structured debt and sourcing residuals from mortgage originators and security issuers. Ms. Downey also previously served as a mortgage product specialist in London and a thrift specialist in New York. She holds a B.A. degree from St. ~~Mary's~~Mary’s College in Sociology, a B.S. degree in Accounting from Boston University and an M.B.A. degree from the Stanford University Graduate School of Business. Ms. Downey serves on the Advisory Board of St. Ann School, Manhattan, a partnership of patrons, the Archdiocese and school leaders, and previously served as a member of the Board of Directors of the Student Sponsor Partners.

As a result of Ms. ~~Downey's 26 plus~~Downey’s nearly 30 years of experience in structured finance, investment banking and capital markets, she provides significant financial, leadership and management advice to our Board of Directors in many critical areas.

Thomas K. Guba has been a director of ARMOUR since November 2009 and the lead independent director of ARMOUR since March 2014. Mr. Guba ~~has~~was also ~~been~~ a director of JAVELIN ~~since~~from June 2012 until the Merger in April 2016 and the lead independent director ~~since~~of JAVELIN from March ~~2014.~~2014 until April 2016. Mr. Guba has been the senior executive or head trader of various Wall Street mortgage and government departments in his 36over 40 years in the securities business. Since 2009, Mr. Guba has been employed by Auriga ~~Securities, USA, performing broker-dealer transactions in mortgage-backed securities.~~Capital Management, LLC, an asset management firm registered with the SEC. From 2001 through 2008, Mr. Guba was President and Principal of the Winter Group, a fully integrated mortgage platform and money management firm. He was Managing Director of Structured Product Sales at Credit Suisse First Boston from 2000 to 2002, Managing Director and Department Manager of Mortgages and U.S. Treasuries at Donaldson Lufkin Jenrette, which was subsequently purchased by Credit Suisse First Boston, from 1994 to 2000, Executive Vice President and Head of Global Fixed Income at Smith Barney from 1993 to 1994, Managing Director of the Mortgage and U.S. Treasuries Department at Mabon Securities from 1990 to 1993, Senior Vice President and Mortgage Department Manager at Drexel Burnham Lambert from 1984 to 1990, Senior Vice President and Head Mortgage Trader at Paine Webber from 1977 to 1984, and a trader of mortgaged backed securities at Bache & Co. from 1975 to 1977. Mr. Guba was also a Second Lieutenant, Military Police Corps, in the United States Army from 1972 to 1974. Mr. Guba holds a B.A. degree in political science from Cornell University and a M.B.A. degree in finance from New York University and serves on the Board of the SIFMA ~~Foundation as a Treasurer.~~

Foundation.

Mr. Guba’s ~~past~~ experience on Wall Street allows him to provide valuable insights and advice to our Board of Directors, particularly as it pertains to the capital markets.

Robert C. Hain has been a director of ARMOUR since November 2009. Mr. Hain ~~has~~was also ~~been~~ a director of JAVELIN ~~since~~from June ~~2012. Mr. Hain has been a non-executive director of Bank Leumi (UK) Plc, a majority-owned subsidiary of Bank Leumi Le Israel BM, one of Israel’s largest financial institutions, since 2012.~~2012 until the Merger in April 2016. Mr. Hain has been Chairman of City Financial Investment Company Limited ("(“City ~~Financial"~~Financial”) since 2006, a partner at Shadbolt Partners LLP since 2005, and a director of Wittering Limited since 2005 and Kingsway Consultancy Limited since 2007, each of which is engaged in asset management in the United Kingdom and Europe. Mr. Hain is also a director of ~~City Financial Investment Company (Hong Kong) Limited~~HomeChoice International Plc (Malta), a retailer of home furnishings to South Africans listed on the Johannesburg Stock Exchange. He is a director of Sound Diplomacy Holdings Ltd. and ~~CFIC Cayman Limited,~~a partner at Laurier Partners LLP, both ~~wholly-owned subsidiaries~~ of City Financial. City Financial and its affiliates acquire, rejuvenate and grow mutual fund and similar investment management businesses, and provide strategic advice to a select group of owners of investment managementwhich are London-based specialist consulting firms. Previously, Mr. Hain was a director of Majorpoint Limited (London) from 2006 to 2014, the Non-Executive Chairman of Dundee Wealth SA (Luxembourg) from 2007 to 2009, a director of Tailwind Financial Inc. (Canada) from 2006 to 2009 and the Vice Chairman of CSS Stellar Holdings Inc. from 2005 to 2006. Mr. Hain was also the Chief Executive Officer of Invesco UK, a prominent British asset manager, from 2002 to 2004, and Chief Executive Officer of AIM Trimark, a Canadian mutual fund company, from 1998 to 2002. Mr. Hain was a member of the Executive Management Committee of Amvescap Plc (now Invesco ~~Ltd)~~Ltd.), from 1998 to 2005. Mr. Hain’s career in financial services includes senior executive positions in marketing, private banking and retail financial services in North America and Europe, and has comprised major acquisitions, integrations, and product and service delivery innovations. In addition, Mr. Hain has served on the boards and committees of financial services, business, arts, health and social services organizations at the national and local levels in Toronto, Zurich, Winnipeg, Halifax and London. He holds degrees from the University of Toronto (Innis College) and the University of Oxford (Merton College).

Mr. Hain’s extensive experience managing investments allows him to provide our Board of Directors with valuable knowledge regarding financial markets and investment opportunities.

John “Jack” P. Hollihan, III III has been a director of ARMOUR since November 2009. Mr. Hollihan ~~has~~was also ~~been~~ a director of JAVELIN ~~since~~from June ~~2012.~~2012 until the Merger in April 2016. Mr. Hollihan has over 2830 years of investment banking and investment experience. Mr. Hollihan has served as the lead independent director of City Financial Investment Company Limited (London) and Executive Chairman of Litchfield Capital Holdings ~~(Connecticut)~~(Florida) since 2005. Mr. Hollihan ~~has~~was also ~~been~~ a ~~director~~trustee of American Financial Realty Trust (NYSE: AFR) from 2005 until its sale in 2008 and of Recombine ~~LLC.~~LLC from its inception in 2012 until 2014. From 2000 to 2002, Mr. Hollihan was the Head of European Industry Investment Banking for Banc of America Securities (“BAS”), where he was a member of the BAS European Capital Committee and Board, and where he had responsibility for a loan book of approximately $8 billion. Prior to that, from 1986 to 2000, Mr. Hollihan was Head of Global Project and Asset Based Finance and Leasing at Morgan Stanley and was a member of the Morgan Stanley International Investment

Stewart J. Paperin has been a director of ARMOUR since November 2009. ~~Mr. Paperin has also been a director of JAVELIN since June 2012.~~ Mr. Paperin served as a member of Enterprise’s Board of Directors from its inception in July 2007 to its ~~business combination~~merger with ARMOUR in November 2009. Mr. Paperin was also a director of JAVELIN from June 2012 until the Merger in April 2016. Mr. Paperin currently serves as the managing member of Leopard Rock Property Group, a real property development and investment firm located in Los Angeles and San Diego, California. Mr. Paperin served as Executive Vice President of the Soros Foundation, a worldwide private philanthropic foundation, from 1996 to 2013, where he oversaw financial, administrative and economic development activities. From 1996 to July 2005, Mr. Paperin served as a Senior Advisor and portfolio manager for Soros Fund Management LLC, a financial services company, and ~~since~~from July 2005 ~~has~~to June 2014, he served as a consultant to Soros Fund Management LLC. From 1996 to 2007, Mr. Paperin served as a Director of Penn Octane Corporation (NASDAQ: POCC), a company engaged in the

7

purchase, transportation and sale of liquefied petroleum gas. Prior to joining the Soros organizations, Mr. Paperin served as President of Brooke Group International, an investment firm concentrated on the former Soviet Union, from 1990 to 1993, and as Senior Vice President and Chief Financial Officer of Western Union Corporation, a provider of money transfer and message services, which was controlled by Brooke Group, from 1988 to 1990. Prior to Western Union Corporation, Mr. Paperin served as Chief Financial Officer of Timeplex Corporation, a telecommunications equipment provider, from 1986 to 1988 and of Datapoint Corporation, a computer equipment manufacturer, from 1985 to 1986. Prior to Datapoint Corporation, Mr. Paperin served as a financial officer of Pepsico Corporation (NYSE: PEP) from 1980 to 1985 and as a management consultant at Cresap McCormick & Paget from 1975 to 1980. Mr. Paperin also served as a member of the Board of Directors of Community Bankers Acquisition Corp., a blank check company formed to acquire an operating business in the banking industry (NYSE MKT LLC: BTC). Mr. Paperin holds a B.A. degree and an M.S. degree from the State University of New York at Binghamton. He is a member of the Council on Foreign Relations and was awarded an honorary Doctor of Humane Letters by the State University of New York.

Mr. Paperin’s pertinent experience, qualifications, attributes and skills include financial literacy and expertise, and allows him to provide significant expertise in accounting and financial matters and in analyzing and evaluating financial statements.

ARMOUR’s Board of Directors unanimously recommends a vote“FOR” each of the nine nominees for director.

Our Board and management refer to the FTSE NAREIT Mortgage REIT index of 34 companies to identify overall performance and other trends in the mortgage REIT industry. Our Board and management have also identified a focused peer group of six publicly-traded mortgage REITs that we believe are most directly comparable to ARMOUR. The peer group companies are: American Capital Agency Corp., Annaly Capital Management Inc., Anworth Mortgage Asset Corporation, Capstead Mortgage Corporation, CYS Investments Inc. and Ellington Residential Mortgage REIT. In addition to reviewing general industry trends and market and regulatory factors applicable to our company, our management carefully reviews these specific companies periodically as part of the process of developing appropriate operating, corporate governance and compensation practices and policies for our company.

We are committed to sound and effective corporate governance practices. We have adopted various policies, guidelines and prohibitions designed to align the interests of the Board and management with those of our stockholders:

We regularly seek to engage with our stockholders on corporate governance matters. In an effort to generate a higher level of consensus on our executive compensation among our stockholders, our non-executive Chairman, Dan Staton, our Compensation Committee Chairman, Jack Hollihan and our Co-CEOs, Scott Ulm and Jeff Zimmer, conducted an investor outreach program designed to:

We contacted all stockholders who reportedly held 0.7% or more of our common shares outstanding.These ten stockholders are all institutional investors and collectively hold approximately 25% of our common shares outstanding. According to Bloomberg, as of April 28, 2017, institutional investors held approximately 48% of our shares of common stock outstanding, while the other approximately 52% were represented largely by individual retail investors, including our directors and officers who collectively own approximately 1.5% of our common shares outstanding. Historically, this mix of institutional and retail stockholders has not significantly changed. While we value the views of all of our stockholders, we believed that outreach efforts focused on our largest stockholders would provide us timely and representative insights more efficiently.

Of the stockholders contacted, four investors holding a total of approximately 18% of our common shares outstanding agreed to participate in telephone conference calls with us. We made several attempts to engage with the other investors identified, which proved unsuccessful. We also engaged with certain individual and other investors. Our meetings and communications with these significant stockholders were positive and useful, and we believe this proxy statement reflects the investor feedback we received through the more detailed and clarifying executive

Our Amended and Restated Bylaws (the “Bylaws”) provide that a director nominee will be elected by receiving the affirmative vote of the majority of votes cast on the election of such nominee on a per nominee basis in an uncontested election (which occurs when the number of director nominees is the same as the number of directors elected). The Bylaws further provide that any director nominee who is an incumbent director but who is not elected by the vote required in the Bylaws, and with respect to whom no successor has been elected, shall promptly tender his or her offer to resign to our Board for its consideration following certification of the stockholder vote. Within 90 days following certification of the stockholder vote, our Nominating and Corporate Governance Committee shall consider the tendered resignation offer and make a recommendation to our Board whether or not to accept such offer, and our Board shall act on the Nominating and Corporate Governance Committee’s recommendation. In determining whether to accept the resignation, our Nominating and Corporate Governance Committee and Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation, including, among other things, whether accepting the resignation of such director would cause the Company to fail to meet any applicable stock exchange or SEC rules or requirements. Thereafter, our Board shall promptly and publicly disclose its decision-making process regarding whether to accept the director’s resignation offer or the reasons for rejecting the resignation offer, if applicable, on a Form 8-K. A director who tenders his or her resignation shall not participate in the Nominating and Corporate Governance Committee’s recommendation or our Board’s action regarding whether to accept such resignation offer. If our Board does not accept the director’s resignation, the director will continue to serve until the next annual meeting of stockholders and until the director’s successor is duly elected and qualified or until the director’s earlier resignation as provided for in the Bylaws or removal as provided for by the Maryland General Corporate Law.

In a contested election, the director nominees who receive a plurality of votes cast will be elected as directors. Under the plurality standard, the number of persons equal to the number of vacancies to be filled who receive more votes than the other nominees are elected to our Board, regardless of whether or not they receive a majority of the votes cast.

Director and Senior Executive Officer Minimum Stock Ownership and Retention Guidelines

On April 7, 2015, we also adopted a policy prohibiting the hedging and pledging of our securities, which applies to all officers and directors of the Company and provides that such individuals are prohibited from (i) engaging in any hedging transactions (including short-selling, options, puts, and calls, as well as derivatives such as swaps, forwards, and futures transactions) with respect to securities of the Company, and (ii) making or maintaining any pledges of securities of the Company or otherwise holding securities of the Company in a margin account, except with respect to any securities that were already pledged as of the date of adoption of the policy. As of the date of this proxy statement, all of our directors and executive officers are in compliance with this policy. In addition, no securities beneficially owned by our officers and directors are pledged.

We adhere to the rules of the ~~New York Stock Exchange ("NYSE")~~NYSE in determining whether a director is independent. The NYSE requires that a majority of our Board of Directors must be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which, in the opinion of our Board of Directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Consistent with these considerations, our Board of Directors has affirmatively determined that Ms. Downey and Messrs. Guba, Hain, Hollihan and Paperin are independent directors.

Our Board of Directors plays an active role in overseeing management and representing the interests of stockholders. Management, which is responsible for day-to-day risk management, conducts a risk assessment of our business annually. The risk assessment process is global in nature and has been developed to identify and assess our risks, including the nature of the risk, as well as to identify steps to mitigate and manage each risk. Oversight responsibility for each risk is allocated among the full Board of Directors and its committees, and specific Board of Director and committee agendas are developed accordingly.

Our Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee and adopted charters for each of these committees. Each of these committees has three directors and is composed exclusively of independent directors, as defined by the listing standards of the NYSE. Moreover, the Compensation Committee is composed exclusively of individuals intended to be, to the extent required by Rule 16b-3 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), non-employee directors and will, at such times as we are subject to Section 162(m) of the Internal Revenue Code (“Code”), qualify as outside directors for purposes of Section 162(m) of the Code.

During the year ended December 31, ~~2013,~~2016, our Board of Directors held ~~three meetings.~~nine meetings and acted by written consent in lieu of a meeting on six occasions. Our ~~audit committee~~Audit Committee held five meetings, our Compensation Committee held three meetings and our ~~compensation committee~~Nominating and ~~nominating and corporate governance committee each~~Corporate Governance Committee held ~~one meeting.~~two meetings. Each of our directors attended at least 75% of the meetings of the Board of Directors and of the Board’s committees on which they served during ~~2013.~~

~~Effective March 5, 2014, our Board of Directors created the position of lead~~2016.

Our independent ~~director and our independent~~ directors have designated Thomas K. Guba as our lead independent director. The lead independent director coordinates the activities of our other independent directors. In addition to the duties of all members of the Board of Directors, the ~~lead independent director~~Lead Independent Director has the following additional responsibilities and authority:

Our Board of Directors has adopted a lead independent director charter. A copy of the lead independent director charter is available on ARMOUR’s website at~~http://investor.armourreit.com~~www.armourreit.com under ~~“Corporate Governance.~~“Governance Documents.”

The members of our ~~audit committee~~Audit Committee are ~~Mr.~~Messrs. Paperin, ~~Mr.~~ Hain and ~~Mr.~~ Hollihan, with Mr. Paperin serving as chairman. The Audit Committee is responsible for, among other things:

·

A copy of the Audit Committee charter is available on ARMOUR’s website at~~http://investor.armourreit.com~~www.armourreit.com under ~~“Corporate Governance.~~“Governance Documents.”

The Audit Committee will at all times be composed exclusively of “independent directors” who are “financially literate” as defined by the NYSE listing ~~standards.~~standards and Rule 10A-3(b)(1) of the Exchange Act. The definition of “financially literate” generally means being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.

Our Board has determined that each member of our Audit Committee is financially literate under the NYSE listing standards and Rule 10A-3(b)(1) of the Exchange Act.

In addition, a listed company must certify to the NYSE that the ~~committee~~Audit Committee will have at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial

Also, our Board of Directors has affirmatively determined that each member of our Compensation Committee is independent for Compensation Committee purposes based on the more stringent independence standards imposed by applicable NYSE and SEC rules.

The Compensation Committee consists of ~~Mr.~~Messrs. Hollihan, ~~Mr.~~ Guba and ~~Mr.~~ Paperin. Mr. Hollihan chairs our ~~compensation committee.~~Compensation Committee. The Compensation Committee is responsible for, among other things:

·

A copy of the Compensation Committee charter is available on ARMOUR’s website at~~http://investor.armourreit.com~~www.armourreit.com under ~~“Corporate Governance.~~“Governance Documents.”

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During the fiscal year ended December 31, 2016, Messrs. Hollihan, Guba and Paperin served as the members of the Compensation Committee. Each of the members of the Compensation Committee is an independent director as required under NYSE listing standards. No member of the Compensation Committee is a current or former officer or employee of ours or any of our ~~subsidiaries or had~~subsidiaries. There were no transactions during the 2016 fiscal year between us and any ~~relationship requiring~~of the directors who served as members of the Compensation Committee for any part of the 2016 fiscal year that would require disclosure by us under ~~Item 404~~the SEC rules requiring disclosure of Regulation S-K. None of our executive officers serve as a member of the board of directors or compensation committee of any company that has one or more of its executive officers serving as a member of our board of directors or compensation committee.

certain relationships and related-party transactions.

The Nominating and Corporate Governance Committee consists of Mr. Hain, Ms. Downey and Mr. Guba. Mr. Hain chairs our ~~nominating~~Nominating and ~~corporate governance committee.~~Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for, among other things:

·

A copy of the Nominating and Corporate Governance Committee charter is available on ARMOUR’s website at~~http://investor.armourreit.com~~www.armourreit.com under ~~“Corporate Governance.~~“Governance Documents.”

During 2016, we paid our ~~independent~~non-executive directors ~~each~~ an annual fee of ~~$50,000, with $25,000 additional being paid to our audit committee chairman. In 2012, we increased annual independent director’s fees to $110,000; 60%~~$132,000; 50%, or $66,000 of this fee, was payable in cash and 40%, or $44,000 was payable in stock or cash at the option of the director. We also began paying an annual fee of $25,000 to the chairman of our audit committee, payable in cash. Beginning in 2013, we increased annual independent director’s fees to $132,000; 50%, or $66,000 of this fee, iswas payable in common stock, cash, ~~and 50%, or $66,000 of this fee is payable in stock,~~ or a combination of stock and cash (e.g. to cover estimated income taxes) at the option of the ~~director, and began paying director compensation of $132,000 to each of Messrs. Staton and Bell, as non-employee directors, payable in the same manner as to~~director. In 2016, we paid our independent directors. In addition, in 2013 we began paying an annual fee of $25,000 to Mr. Staton, in his role as our non-executive Chairman, payable in cash. Beginning in 2014, we began paying our new lead independent director, Mr. Guba, an annual fee of $35,000 in cash for the additional ~~board~~Board responsibilities associated with ~~the~~that role and ~~began paying an~~paid annual ~~fee~~fees of $35,000 in cash to Mr. Staton as our non-executive chairman as well as $25,000 in cash each to Mr. Hollihan as our ~~compensation committee~~Compensation Committee chairman and Mr. Hain as our ~~nominating~~Nominating and ~~corporation governance committee~~Corporate Governance Committee chairman for the additional Board responsibilities associated with ~~the~~those roles. Also, ~~beginning~~ in ~~2014,~~2016, we ~~increased the annual fee~~ paid to ~~Mr. Staton as our non-executive Chairman and~~ Mr. Paperin as our ~~audit committee~~Audit Committee chairman $70,000 in cash and began paying our other Audit Committee members an annual fee of $35,000 each in cash for the additional responsibilities associated with the acquisition of JAVELIN pursuant to ~~$35,000 each.~~

~~No equity-based~~the Merger and the general expansion of ARMOUR's business.

The Compensation Committee is committed to the ongoing review and evaluation of our non-executive director compensation levels and program. On April 7, 2015, we adopted a policy designed to ensure that non-executive directors attain and maintain meaningful levels of stock ownership over time to better align their interests with the interests of ARMOUR’s stockholders. We have established stock ownership targets for non-executive directors to beneficially own ARMOUR common shares with a basis equal to a minimum of three times their annual base cash retainer (currently $66,000), or $198,000. Target ownership levels are to be achieved within five years or less from the date the policy was ~~paid~~adopted and all ARMOUR shares received as compensation (on an after tax basis) are to be retained until the individual’s share ownership targets are met. As of the date of this proxy statement, six of our seven non-executive directors have achieved their stock ownership targets.

We also adopted a policy prohibiting the hedging and future pledging of our securities by our directors, which provides that such individuals are prohibited from (i) engaging in ~~2010. In 2011, our compensation committee approved grants totaling an aggregate~~any hedging transactions (including short-selling, options, puts, and calls, as well as derivatives such as swaps, forwards, and futures transactions) with respect to securities of ~~3,750 shares~~the Company, and (ii) making or maintaining any pledges of ~~stock~~securities of the Company or otherwise holding securities of the Company in a margin account, except with respect to ~~each~~any securities that were already pledged as of the date of adoption of the policy. As of the date of this proxy statement, all of our ~~non-employee directors. For each non-employee director, 188 shares vest on~~directors and senior executive officers are in compliance with this policy. In addition, no securities beneficially owned by our directors and executive officers are pledged.

We do not have, and we do not currently intend to adopt, any plans or programs for our directors that provide for pension benefits or the ~~last day~~deferral of each fiscal quarter commencing on March 31, 2011 and ending on September 30, 2015. On December 31, 2015, 178 shares will vest at which time all 3,750 shares of stock will have vested. In 2012, our compensation committee determined that certain performance criteria had been met and therefore approved grants totaling an aggregate of 1,250 additional shares of stock to eachcompensation.

Any member of our ~~non-employee directors, subject to the same vesting schedule as the 2011 grants. For each non-employee director, 315~~Board of ~~the director’s 1,250 shares vested on the last day~~Directors who is also an officer or employee of the first fiscal quarter of 2012 and 63 shares vest on the last day of each fiscal quarter commencing on June 30, 2012 and ending on September 30, 2015. On December 31, 2015, 53 shares will vest, at which time all of the remaining 935 shares of stock will have vested. No additional equity-basedARMOUR or its affiliates does not receive any compensation ~~was paid to our directors in 2013. See the section titled, “Executive Officer Compensation – ARMOUR Amended and Restated 2009 Stock Incentive Plan”~~from us for ~~more information~~serving on our ~~directors’ equity compensation.~~

Board of Directors.

All members of our Board are reimbursed for their costs and expenses of serving on the Board, including costs and expenses of attending all meetings of our Board and our committees.

~~Any member of our Board of Directors who is also an officer, employee or a member of ARMOUR or its affiliates does not receive any compensation from us for serving on our Board of Directors.~~

We have adopted a code of business conduct and ethics that applies to all our directors and officers. We do not have any employees. ~~We anticipate that any waivers of our code of business conduct and ethics will be posted on our website.~~ The code of business conduct and ethics is available at our website at~~http://investor.armourreit.com~~www.armourreit.com under ~~“Corporate Governance.~~“Governance Documents.”

ARRM has also adopted policies applying to its employees, which prohibit insider trading, tipping and certain transactions in ARMOUR stock including margining, short selling and transactions in options on ARMOUR stock.

Our Board of Directors has adopted a set of corporate governance guidelines, which provide a framework within which the Board and its committees direct the affairs of ARMOUR. The corporate governance guidelines address the roles of the Board and management, functions of the Board, qualifications for directors, director independence, ethics and conflicts of interest among other matters. The corporate governance guidelines are available at our website at~~http://investor.armourreit.com~~www.armourreit.com under ~~“Corporate Governance.~~“Governance Documents.”

Our code of business conduct and ethics, corporate governance guidelines and lead independent director and committee charters are available at our website at~~http://investor.armourreit.com~~www.armourreit.com. Copies of these documents are also available in print to any stockholder who requests them. Requests should be sent to: ARMOUR Residential REIT, Inc., 3001 Ocean Drive, Suite 201, Vero Beach, Florida 32963, Attention: James R. Mountain.

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Our Board of Directors may be contacted by any party via mail at the address listed ~~below.~~

below:

Chairman

Board of Directors

ARMOUR Residential REIT, Inc.

3001 Ocean Drive, Suite 201

Vero Beach, Florida 32963

We believe that providing a method for interested parties to communicate directly with our lead independent director, ~~or independent directors,~~ rather than the full Board, would provide a more confidential, candid and efficient method of relaying any interested party’s concerns or comments. The lead independent director and the independent directors can be contacted by any party via mail at the address listed ~~below.~~

below:

Vero Beach, Florida 32963

The Audit Committee has adopted a process for anyone to send communications to the Audit Committee with concerns or complaints concerning our Company’s regulatory compliance, accounting, audit or internal controls issues. The Audit Committee can be contacted by any party via mail at the address listed below:

Vero Beach, Florida 32963

Relevant communications are distributed to the Board, or to any individual director or directors, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, our Board of Directors has requested that certain items that are unrelated to the duties and responsibilities of the Board should be excluded or redirected, as appropriate, such as: business solicitations or advertisements; junk mail and mass mailings; resumes and other forms of job inquiries; spam; and surveys. In addition, material that is unduly hostile, threatening, potentially illegal or similarly unsuitable will be excluded; however, any communication that is excluded will be made available to any outside director upon request.

The following is a list of individuals serving as named executive officers of ARMOUR (collectively, the “named executive officers” and individually, each a “named executive officer”) during 2016 and as of the date of this ~~Proxy Statement.~~proxy statement. All named executive officers serve at the discretion of our Board of Directors.

Please refer to the biographical information for Mr. Ulm and Mr. Zimmer listed above in the section titled “Director Nominees.” The biographical information for ~~Mr.~~Messrs. Mountain, Gruber and ~~Mr. Gruber is~~Harper are provided below.

James R. Mountain has been the Chief Financial Officer and Treasurer of ARMOUR since September 1, 2012 and the Secretary of ARMOUR since March 5, 2014. Mr. Mountain has also ~~became~~been the Chief Financial Officer of ~~ARRM and~~ACM (and its predecessor, ARRM), since September 2012. Mr. Mountain has been the Chief Financial Officer and Treasurer of JAVELIN onsince September ~~1, 2012. Mr. Mountain~~2012 and has been the Secretary of JAVELIN since March 5, 2014. Mr. Mountain has also served as a manager of LANCE Indemnity Company LLC, a wholly-owned insurance subsidiary of JAVELIN ("LANCE"), and SABRE Business Insurance LLC, a wholly-owned insurance subsidiary of ARMOUR ("SABRE"), since their inceptions in May 2014. LANCE and SABRE provide D & O insurance coverage to the directors of JAVELIN and ARMOUR, respectively. Mr. Mountain has also served as the Chief Financial Officer and Secretary of SBBC since January 2015. Mr. Mountain joined ARMOUR after having spent over 30 years at Deloitte. Mr. Mountain has significant experience in securitization transactions, having been involved in that market since its inception in the ~~mid-1980’s,~~mid-1980s, and helped to build Deloitte’s securitization practice. With significant experience in all facets of complex and structured financial transactions, he was also involved in the early development of Deloitte’s global capital markets practice. In these roles, he advised his partners and clients on both the buy-side and sell-side of the capital markets, as well as their regulators, regarding the financial reporting, control, valuation, risk management, and strategic aspects of cutting-edge financial transactions. Mr. Mountain also previously served as a partner in Deloitte’s national office, where he supervised the review and consultation process relating to securities offerings by banks, thrifts, securities ~~deals,~~dealers, insurance companies, and investment companies. Mr. Mountain is the Chair of the Financial Management Committee of the Mortgage Bankers Association and an ex officio member of the Association’s Residential Board of Governors. Mr. Mountain earned his Bachelor of Arts degrees in accounting and in economics from the University of Montana, as well as ~~a Master of Business Administration~~his M.B.A. degree from the University of California, Berkeley. He is a Certified Public Accountant and a member of the American Accounting Association and the American Institute of Certified Public Accountants. Mr. Mountain ~~also chairs the investment committee~~is a Trustee of the University of Montana Foundation and previously chaired the Foundation’s investment committee and its audit and finance committee.

Mark Gruber has been the Chief Operating Officer of ARMOUR since September 3, 2013 and the Head of Portfolio Management since June 2010. Mr. Gruber has also been the Head of Portfolio Management of ~~ARRM~~ACM (and its predecessor, ARRM) since June 2010 and its Chief Operating Officer since September 3, 2013. Mr. Gruber has served as the Chief Operating Officer of JAVELIN since September 2013 and its Head of Portfolio Management since October 2012. Mr. Gruber has also served as a manager of LANCE and SABRE, since their inceptions in May 2014. Mr. Gruber has also served as the Chief Operating Officer ~~of JAVELIN since September 3, 2013~~ and ~~its~~ Head of Portfolio Management of SBBC since ~~October 3, 2012.~~January 2015. From April 2008 until joining ~~ARRM~~ACM in June 2010, Mr. Gruber managed aan approximately $1.1 billion mortgage portfolio for Penn Mutual Life Insurance. From June 2005 to March 2008, Mr. Gruber was Vice-President of Research and Trading at Bimini Capital Management, Inc., a publicly traded REIT that managed approximately $4 billion in agency mortgage assets. Mr. Gruber previously worked for Lockheed Martin at the Knolls Atomic Power Laboratory where he was an engineer for the Naval Nuclear Propulsion Program. Mr. Gruber holds an

This compensation discussion and analysis describes our compensation objectives and policies in relation to compensation received ~~by our named executive officers~~ for the year ended December 31, ~~2013,~~2016 by our named executive officers , which consist of Scott J. Ulm, our Co-Chief Executive Officer, Co-Vice Chairman, Chief Investment Officer and Head of Risk Management, Jeffrey J. Zimmer, our Co-Chief Executive Officer, Co-Vice Chairman and President, James R. Mountain, our Chief Financial Officer, Treasurer and Secretary, ~~and~~ Mark Gruber, our Chief Operating Officer and Head of Portfolio ~~Management.~~

Management and Gordon Harper, our Vice-President of Finance and Controller. Messrs. Ulm, Zimmer, Mountain and Gruber also serve as executive officers of JAVELIN. See the section in this proxy statement below titled, “Certain Relationships and Related Party Transactions - Acquisition of JAVELIN Mortgage Investment Corp.” for more information about JAVELIN.

At our ~~2012~~2016 annual meeting of stockholders, we provided our stockholders ~~approved,~~with a proposal to approve, on an advisory basis, the compensation of our ~~then~~ named executive officers. A majority of our stockholders (51%) that voted at the annual meeting of stockholders with respect to this advisory, non-binding vote, approved the compensation of our named executive officers as described in our proxy statement for our 2016 annual meeting of stockholders. In reviewing our proxy statement for the 2016 annual meeting, although Institutional Shareholder Services (“ISS”) did not object to any of our pay practices, ISS did not support our say-on-pay proposal on the basis that “the company does not provide sufficient disclosure on compensation paid to its executives by the external manager to enable stockholders to evaluate these pay practices. Without this information, stockholders are not able to make a fully informed say-on-pay vote.”

In an effort to generate a higher level of consensus on our executive compensation among our stockholders, our non-executive, Chairman Dan Staton, our Compensation Committee Chairman, Jack Hollihan and our Co-CEOs, Scott Ulm and Jeff Zimmer, conducted an investor outreach program designed to:

We contacted all stockholders who reportedly held 0.7% or more of our common shares outstanding. These ten stockholders are all institutional investors and collectively hold approximately 25% of our common shares outstanding. According to Bloomberg, as of April 28, 2017, institutional investors held approximately 48% of our shares of common stock outstanding, while the other approximately 52% were represented largely by individual retail investors, including our Directors and Officers who collectively own approximately 1.5% of our common shares outstanding. Historically, this mix of institutional and retail stockholders has not significantly changed. While we value the views of all of our stockholders, we believed that outreach efforts focused on our largest stockholders would provide us timely and representative insights more efficiently.

Of the stockholders contacted, four investors holding a total of approximately 18% of our common shares outstanding agreed to participate in telephone conference calls with us. We made several attempts to engage with the other investors identified, which proved unsuccessful. We also engaged with certain individual and other investors. Our meetings and communications with these significant stockholders were positive and useful, and we believe this proxy statement reflects the investor feedback we received through the more detailed and clarifying executive compensation disclosure herein. We look forward to continuing engagement with our stockholders on this important topic.

Based upon the results of the advisory vote, our investor outreach and a review of our ~~2013~~2016 compensation policies, we believe that our ~~2013~~2016 compensation policies and decisions are consistent with the compensation philosophy and objectives discussed below and effectively align the interests of our named executive officers and other key professionals with the ~~long term~~long-term goals of the Company.

We are managed by ~~ARRM~~ACM pursuant to a management ~~agreement.~~agreements between ACM and ARMOUR and ACM and JAVELIN (collectively, the “Management Agreements”). We do not have any employees whom we compensate directly with salaries, bonuses or other compensation. Our named executive officers, ~~and other key professionals~~who are employees of ~~ARRM and~~ACM, do not receive cash compensation directly from us for serving as executive officers, but are primarily compensated by ~~ARRM~~ACM for ~~their~~ services they perform for ACM and for us as our named executive officers. Pursuant to ~~us. Certain~~the terms of the Management Agreements, ACM provides us with executive personnel, including the individuals who act as our executive officers. We compensate ACM for these services and all other services performed by ACM pursuant to the Management Agreements through payments of management fees and reimbursements and awards under our 2009 Stock Incentive Plan (as amended from time to time, the “Plan”) described below. We have limited our role in compensating our named executive officers ~~also hold an ownership interest in ARRM.~~to granting equity compensation. See the section in this proxy statement below titled, “Certain Relationships and Related Party Transactions” ~~below~~ for a further description of the ~~management agreement~~ARMOUR Management Agreement (as defined therein) and the ~~relationship~~JAVELIN Management Agreement (as defined therein), the relationships between ~~ARRM~~ACM and ~~ARMOUR.~~ARMOUR and between ACM and JAVELIN, the management fees that we pay to ACM, and how ACM compensates our named executive officers.

Mr. Ulm and Mr. Zimmer do not receive any cash compensation from us for their services as our executive officers, and we do not specifically reimburse ACM for cash compensation paid to Mr. Ulm and Mr. Zimmer. Mr. Ulm and Mr. Zimmer are, however, substantial equity holders of ACM and, accordingly, have an interest in the profits and losses of ACM from its past, present and future investments and businesses. Equity returns to the equity holders of ACM are not directly related to services rendered by Mr. Ulm and Mr. Zimmer to ACM or us and would be distributed to such equity holders even if they did not personally perform any services for ACM or us. The payments made to Mr. Ulm and Mr. Zimmer are paid by ACM to them as partnership distributions. Such partnership distributions fluctuate each year based on the net operating cash flow of ACM and ACM’s overall investment and financing decisions.

Mr. Mountain, Mr. Gruber and Mr. Harper also do not receive cash compensation directly from us, and we also do not reimburse ACM for cash compensation paid to them. Mr. Mountain, Mr. Gruber and Mr. Harper do, however, receive compensation directly from ACM in the form of salaries and bonuses. Such compensation amounts are determined by ACM and not by us, our Board or the Compensation Committee. In ~~order~~determining such salaries and bonuses, ACM considers the general compensation practices in our industry, including anticipated compensation requirements of other candidates who could potentially fill the positions, as well as the relative and absolute financial performance of ARMOUR and each person's role in the achievement of that performance, and the nature and results of their contribution to ACM business activities unrelated to ARMOUR.

During 2016, our five named executive officers as a group received aggregate salaries of $1,550,000 and aggregate cash bonuses of $1,425,000 from ACM. These salaries and bonuses were paid to Messrs. Mountain, Gruber and Harper. Messrs. Zimmer and Ulm did not receive salaries and bonuses from ACM in 2016. Our five named executive officers also received aggregate realized incentive compensation consisting of the value of vested shares and dividend equivalent payments on unvested shares of $1,162,376 during 2016. For context, ARMOUR paid aggregate management fees to ACM of $26.1 million during 2016.

Notwithstanding the fact that we do not pay cash compensation to our named executive officers, our Compensation Committee may award equity compensation directly to our executive officers, ACM employees or to ACM for awards to ACM employees serving us, in addition to the management fees we pay ACM. In making the determination of whether or not to award equity compensation, our Compensation Committee takes into account, among other things, the management fees we pay to ACM and individual and company performance, both on an absolute basis and relative to our peers.

The Plan is used to align ~~their~~the interests ~~with~~of our ~~long term goals, we also compensate our~~named executive officers and other key professionals ~~through~~with our ~~equity~~long-term goals. Our named executive officers’ compensation ~~program,~~is derived from the stock awards previously granted to them in 2013, 2012 and 2011 by our Board of Directors, upon the recommendation of the Compensation Committee, pursuant to our Plan, which isvested or vest on a ~~fundamental part of our compensation philosophy.~~quarterly basis over five-year periods. We believe that the ~~combination of the management agreement and our~~ equity compensation program provides the appropriate balance to encourage long-term performance without excessive risk-taking.

Incentive equity awards under the Plan vest over time and require continued service to ARMOUR. We have not awarded stock-based incentive compensation to our named executive officers since 2013.

Our success is dependent, in large part, on our ability through our ~~management agreement~~Management Agreements with ~~ARRM~~ACM and our equity incentive program to attract, motivate and retain high-performing senior executives who are committed to our core values of stockholder value, prudent risk-taking and integrity. The REIT and mortgage investment industry is highly competitive and attracting and retaining experienced professionals represents a comparative advantage. We compete with a large number of REIT companies, funds, financial institutions and specialty finance companies for executive talent which has significant career mobility. Many of those companies are privately owned and/or have significantly larger market capitalization than we do. Accordingly, they may have significantly more flexibility and resources as it relates to compensating their key professionals. We are a specialized company in a highly competitive industry and our ability to attract, retain and reward our executive officers and other key professionals is essential to maintaining our competitive position. We strongly believe that offering incentives in the form of equity awards is critical to our ability to do so and aligns the interests of our named executive officers and other key professionals with those of our stockholders. ~~Since we began awarding equity compensation in 2011, the number of our executive officers has doubled from two to four and the number of our equity award recipients has tripled from two to six.~~

We have historically limited equity compensation to our named executive officers and other key professionals because, among other reasons, we have determined that: (i) these program participants have the greatest impact on our long-term performance; (ii) we have a limited ability to offer equity compensation without undue dilution of existing stockholders, and (iii) equity compensation grants that are subject to the restrictive requirements of our equity compensation program are of limited value in compensating ~~ARRM’s~~ACM’s administrative and clerical employees.

The Compensation Committee’s objectives in developing and administering our equity compensation program are to:

·

The ~~Compensation Committee determined the equity compensation awarded in 2013 was commensurate with our 2012 performance and was comparable~~ability to other agency mortgage REITs. These and previous equity grants were deemed necessary to attract, retain and motivate our senior management team and have provided increased goal alignment between the participants and the Company. For example, the 2013 equity awards have decreased substantially in value compared to their grant-date value as disclosed in this proxy statement, which parallels the performance of our common stock during that time period.

~~The~~appropriately use of our stock as part of our compensation program is also important to our continued success because it fosters a pay-for-performance culture, which is an important element of our overall compensation program. We believe that equity compensation motivates our named executive officers and other key professionals to create stockholder value because the value they realize from equity compensation is based on our common stock performance.

The Compensation Committee makes all equity compensation decisions related to the named executive officers. When making equity compensation decisions for our named executive officers, the Compensation Committee seeks input from members of the Board of Directors and, with respect to our non-CEO executive officers, Scott J. Ulm and Jeffrey J. Zimmer, our Co-Chief Executive Officers. The Compensation Committee engages in discussions and makes final determinations related to equity compensation paid to the named executive officers. ~~All decisions regarding our executive officers’ compensation are made by our compensation committee.~~

In ~~connection with the business combination with Enterprise,~~2009, we adopted the ~~2009 Stock Incentive~~ Plan ~~(the “Plan”)~~ to attract, retain and reward directors, officers and other employees, and other persons who provide services to us (“Eligible Individuals”). ~~In 2009, the~~The Board initially allocated up to ~~250,000~~31,250 shares to be available under the Plan. On July 18, 2011, our stockholders approved an amendment to the Plan to increase the number of shares issuable thereunder from ~~250,000~~31,250 shares to ~~2,000,000~~250,000 shares and the Plan was amended ~~accordingly (the “Amended Plan”).~~accordingly. The ~~Amended~~Plan was further amended on May 8, 2014, when our stockholders approved an increase in the number of shares issuable thereunder from 250,000 shares to 1,875,000 shares. The Plan allows us to grant a variety of stock-based and cash-based awards to Eligible Individuals.

The ~~Amended~~ Plan is administered by the Compensation Committee. The Compensation Committee has the full authority to administer and interpret the ~~Amended~~ Plan, to authorize the granting of awards, to determine the eligibility to receive an award, to determine the number of shares of common stock to be covered by each award (subject to the limitations provided in the ~~Amended~~ Plan), to determine the terms, provisions and conditions of each award (which may not be inconsistent with the terms of the ~~Amended~~ Plan), to prescribe the form of instruments evidencing awards and to take any other actions and make all other determinations that it deems necessary or appropriate in connection with the ~~Amended~~ Plan or the administration or interpretation thereof. In connection with this authority, the Compensation Committee may, among other things, establish required periods of employment and/or performance goals that must be met in order for awards to be granted or to vest, or for the restrictions on any such awards to lapse. The Compensation Committee administering the Plan is composed exclusively of individuals intended to be, to the extent required by Rule 16b-3 of the Exchange Act, non-employee directors and will, at such times as we are subject to Section 162(m) of the Code, qualify as an outside director for purposes of Section 162(m) of the Code.

The ~~Amended~~ Plan provides for grants of common stock, restricted shares of common stock, stock options, performance shares, performance units, restricted stock units (“RSUs”), stock appreciation rights and other equity-based and cash-based awards. The total number of shares of common stock that may be issued under the ~~Amended~~ Plan is 2,000,000 shares. As discussed in Proposal 2 below, we have no shares currently available to grant under the Amended Plan and therefore we are asking stockholders to approve an amendment (as such, the “Second Amended Plan”) to the Amended Plan to increase the1,875,000 shares, of ~~common stock~~which 1,609,223 remain available ~~under the Amended Plan from 2,000,000 shares to 15,000,000 shares.~~

We have determined that the Second Amended Plan is necessary because our success is dependent, in large part, on our ability through our management agreement with ARRM and our equity incentive program to attract, motivate and retain high-performing senior executives who are committed to our core values of stockholder value, prudent risk-taking and integrity. The REIT and mortgage investment industry is highly competitive and attracting and retaining experienced professionals represents a comparative advantage. We compete with a large number of REIT companies, funds, financial institutions and specialty finance companies for executive talent which has significant career mobility. Many of those companies are privately owned and/or have significantly larger market capitalization than we do. Accordingly, they may have significantly more flexibility and resources as it relates to compensating their key professionals. We are a specialized company in a highly competitive industry and our ability to attract, retain and reward our executive officers and other key professionals is essential to maintaining our competitive position. We strongly believe that offering incentives in the form of equity awards is critical to our ability to do so and aligns the interests of our executive officers and other key professionals with those of our stockholders.

Since we began awarding equity compensation in 2011, the number of our executive officers has doubled from two to four and the number of our equity award recipients has tripled from two to six. We believe that if approved, the Second Amended Plan would be a significant factor in our continued ability to motivate and retain our existing executive officers and other key professionals and to attract the additional personnel necessary for our future growth. We do not believe that having an “evergreen plan” (which sets the aggregate number of authorized plan shares equal to a fixed percentage of shares issued and outstanding from time to time) is necessary to achieve these goals. Accordingly, we are not requesting, and do not intend to request, that our stockholders approve an amendment to make our Amended Plan an “evergreen plan.” Based on our prior experience and current expectations, we believe that the 13,000,000 additional shares will provide us with an opportunity to grant equity awards for three to seven years, depending on the performance and growth of ARMOUR.

issuance.

The ~~Amended~~ Plan allows for the Compensation Committee or the Board to expand the types of awards available under the ~~Amended~~ Plan. The maximum number of shares that may underlie awards in any one year to any eligible person will be determined by the Compensation Committee or the Board. If an award granted under the Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards.

The Compensation Committee’s objectives in developing and administering our equity compensation program are to:

·

The following table provides information as of December 31, ~~2013~~2016 with respect to shares of common stock that have been issued under our equity compensation plans:

The following table ~~sets forth~~provides information regarding compensation earned by each of the ~~information required by Item 402~~Company’s named executive officers for the calendar year ended December 31, 2016, as well as for the calendar years ended December 31, 2015 and 2014. As described in the compensation discussion and analysis section included in this proxy statement, none of ~~Regulation S-K promulgated by~~ the ~~SEC. The amounts shown represent~~named executive officers of the ~~equity~~Company are employees of the Company and the Company did not directly pay any cash compensation ~~paid~~ to the named executive officers for ~~the year shown as consideration for services rendered to our Company. With respect to equity incentive awards, the dollar amounts indicated~~or in ~~the table under “Stock Awards” are the aggregate fair value of awards computed in accordance with FASB ASC Topic 718.~~

such calendar years.

The following table sets forth information on the holdings of equity awards by our named executive officers as of December 31, ~~2013:~~

2016:

The following table sets forth information on the shares of stock held by our named executive officers that vested during the year ended December 31, ~~2013.~~2016. The shares of stock described below were approved by our ~~compensation committee~~Compensation Committee to be granted to our named executive officers pursuant to our ~~Amended~~ Plan.

Upon a ~~change~~Change in ~~control,~~Control, as defined in ~~our Amended~~the Plan, the Compensation Committee may make certain adjustments which it, in its discretion, determines are necessary or appropriate in light of the ~~change~~Change in ~~control.~~Control. These include, accelerating the vesting of some or all of the awards under the ~~Amended~~ Plan, terminating all awards under the ~~Amended~~ Plan (allowing for either the exercise of vested awards or a cash payment in lieu of vested awards), converting the awards to the right to receive proceeds in the event of liquidation, or a combination of any of the foregoing. In the event that the Compensation Committee does not terminate or convert an award upon a ~~change~~Change in ~~control,~~Control, then the award shall be assumed, or substantially equivalent awards shall be substituted, by the acquiring, or succeeding corporation (or an affiliate thereof).

Our Board may amend, alter or discontinue the ~~Amended~~ Plan but cannot take any action that would impair the rights of a participant without such participant’s consent. To the extent necessary and desirable, the Board must obtain approval of our stockholders for any amendment that would:

·

The Compensation Committee may amend the terms of any award granted under the ~~Amended~~ Plan, prospectively or retroactively, but generally may not impair the rights of any participant without his or her ~~consent.~~

consent.

Under ~~our Amended~~the Plan, upon a ~~change~~Change in ~~control~~Control (as defined in ~~our Amended~~the Plan) or a termination of the management agreement by us without ~~cause~~Cause (as defined in the management agreement and determined in accordance with ~~our management agreement)~~it), all outstanding stock awards immediately vest. The following table sets forth estimates of the potential benefits to our named executive officers in connection with a ~~change~~Change in ~~control~~Control or termination of the management agreement without ~~cause,~~Cause, assuming such event ~~occured~~occurred on December 31, ~~2013.~~2016. The actual payments due on terminations occurring on different dates could materially differ from the estimates in the table.

In accordance with the powers and duties of the Compensation Committee as set forth in its charter, the ~~committee~~Compensation Committee hereby reports the following:

1.

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K set forth elsewhere in this Proxy Statement; and

2.

Based on the review and discussion referred to in the preceding paragraph, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

In 2009, ~~in connection with the consummation of our business combination with Enterprise Acquisition Corp.,~~ we entered into a management agreement with ARRM (as amended from time to time, the “ARMOUR Management Agreement”), which requires ACM, the successor to ARRM, to manage our business affairs in conformity with certain restrictions contained in the ~~management agreement,~~ARMOUR Management Agreement, including any material operating policies adopted by us.

Pursuant to the terms of the ~~management agreement, ARRM~~ARMOUR Management Agreement, ACM, in which we have no ownership interest, is responsible for (i) advising us with respect to, arranging for, and managing the acquisition, financing, management and disposition of, our investments, (ii) evaluating the duration risk and prepayment risk of our investments and arranging borrowing and hedging strategies, and (iii) coordinating our capital raising activities. In conducting these activities, ~~ARRM~~ACM advises us on the formulation of, and implementation of, our operating strategies and policies, arranges our acquisition of assets, monitors the performance of our assets, arranges for various types of financing and hedging strategies, and provides administrative and managerial services in connection with our day-to-day operations, as may be required from time to time for management of our assets. In addition, ~~ARRM~~ACM provides us with executive personnel along with administrative personnel, office space, and other appropriate services required in rendering ~~ARRM’s~~ACM’s management services to us.

On November 6, 2009, we entered into a first amended and restated management agreement with ARRM for the sole purpose of reducing the monthly management fee to 1/12th of 1% of ~~gross equity raised~~ARMOUR Gross Equity Raised (as defined below), including initial gross merger equity as well as any future ~~gross equity raised,~~ARMOUR Gross Equity Raised, until gross equity raised was $50 million, inclusive of gross merger equity. We reached this threshold on December 22, 2010. Thereafter, the monthly management fee ~~would be~~became 1/12th of (a) 1.5% of ~~gross equity raised~~ARMOUR Gross Equity Raised up to $1 billion, and (b) 0.75% of ~~gross equity raised~~ARMOUR Gross Equity Raised in excess of $1 ~~billion, with~~billion. The term “ARMOUR Gross Equity Raised” means (i) ARMOUR’s initial equity capital following the consummation of ARMOUR’s merger in 2009, plus (ii) equity capital raised in public or private issuances of ARMOUR’s equity securities (calculated before underwriting fees and distribution expenses, if any), less capital returned to ARMOUR’s stockholders (which includes (i) the purchase price of equity securities ARMOUR repurchases, and (ii) dividends ARMOUR pays to the extent that such dividends are deemed a ~~monthly minimum based on 1/12th~~return of ~~$900,000 (inclusive~~capital for tax purposes), as adjusted to exclude one-time charges pursuant to changes in generally accepted accounting principles (“GAAP”) and certain non-cash charges after discussion between ACM and the Board and approved by a majority of the ~~original gross merger equity).~~Board. We are also obligated to reimburse certain expenses incurred by ~~ARRM~~ACM and its affiliates. ~~ARRM~~ACM is further entitled to receive a termination fee from us under certain circumstances.

On June 18, 2012, we further amended and restated the first amended and restated management agreement, dated November 6, 2009, with ARRM by entering into a second amended and restated management agreement. Pursuant to the second amended and restated management agreement, the initial term of the first amended and restated management agreement (the “Initial Term”) was extended for ten (10) years (the “New Initial Term”) commencing June 18, 2012, unless earlier terminated by either ARMOUR or ~~ARRM,~~ACM, pursuant to the terms of the second amended and restated management agreement. In addition, the second amended and restated management agreement provides that following the New Initial Term, the second amended and restated management agreement will automatically renew for successive ~~5-year~~five-year renewal terms (each, a “Renewal Term”), unless either ARMOUR or ~~ARRM~~ACM gives advance notice to the other of its intent not to renew the second amended and restated management ~~Agreement~~agreement prior to the expiration of the New Initial Term or any Renewal Term, as applicable, subject to the terms and conditions for, and the restrictions on, the giving of such notice contained in the second amended and restated management agreement.

On December 19, 2014, ARRM was converted into a Delaware limited partnership and changed its name to “ARMOUR Capital Management LP” (“ACM”) under Delaware law, which resulted in ACM becoming the successor to ARRM as our manager in connection with the conversion and name change. Effective January 1, 2015, entities owned by Messrs. Staton and Bell became owners, collectively, of 25% of the limited partnership interests in ACM and SBBC became 99% owned by ACM, pursuant to a contribution agreement dated October 31, 2014. Our rights and obligations under the ARMOUR Management Agreement and the ARMOUR Sub-Management Agreement (as defined below) were not ~~terminate~~adversely affected by the ~~third~~conversion and name change or the transactions effected pursuant to the contribution agreement.

On February 23, 2015, we entered into a fourth amended and restated management agreement ~~during~~with ACM. The purpose of the ~~New Initial Term, except for cause, or in connection with a Corporate Event, as defined in the third~~fourth amended and restated management ~~agreement. Also, in~~agreement was to reflect ACM’s succession under Delaware law to ARRM as our manager.

We may not terminate the fifth amended and restated management agreement during the New Initial Term, except for Cause, or in connection with a Corporate Event, as such terms are defined in the fourth amended and restated management agreement. Also, in the event of a termination without Cause, ACM is obligated to pay a termination fee ~~rate, calculated~~to SBBC under the ARMOUR Sub-Management Agreement (as defined below) (see discussion of SBBC and ~~payable monthly in arrears.~~

~~The monthly management fee shall never be less than 1/12th of $900,000, unless ARRM determines it will accept less than that amount. Payment~~the ARMOUR Sub-Management Agreement below).

See the subsection below titled, “Management Fees” for a description of the management ~~fee will not be affected by impairment~~fees that we pay to ~~assets acquired. We do not pay ARRM any incentive fees.~~

~~ARRM uses~~ACM pursuant to the ~~proceeds from its management fee in part~~Management Agreements and how ACM compensates our named executive officers.

SBBC provides certain services to ~~pay compensation~~ACM to ~~its officers and personnel who, notwithstanding that certain~~support ACM’s performance of ~~them also are our officers, receive no cash compensation directly from us.~~

~~ARRM was paid an aggregate of approximately $28.1 million, $19.5 million and $6.9 million in management fees for~~ services ~~provided~~ to us, ~~during 2013, 2012~~in each case upon reasonable request by ACM, pursuant to sub-management agreements between ACM, SBBC and ~~2011 respectively.~~

us (collectively, the “Sub-Management Agreements”). See the subsections below titled, “ARMOUR Sub-Management Agreement” and “JAVELIN Sub-Management Agreement” for descriptions of the sub-management agreements.

On November 6, 2009, We and ARRM entered into a sub-management agreement with ~~SBBC.~~SBBC (as amended from time to time, the “ARMOUR Sub-Management Agreement”). Pursuant to the ~~sub-management agreement,~~ARMOUR Sub-Management Agreement, SBBC ~~has~~ agreed to provide certain services to ~~ARRM.~~ACM, the successor to ARRM, to support ACM’s

On February 23, 2015, we entered into a first amended and restated sub-management agreement with SBBC for the purpose of reflecting ACM’s succession under Delaware law to ARRM as our manager and to revise certain terms and conditions in the ARMOUR Sub-Management Agreement that became inapplicable as a result of SBBC becoming 99% owned by ACM.

See the subsection below titled, “Sub-Management Fees” for the sub-management ~~agreement~~fees that ACM has paid to SBBC pursuant to the Sub-Management Agreements.

JAVELIN has a management agreement with ACM and a sub-management agreement with SBBC that are substantially similar to the ARMOUR Management Agreement and the ARMOUR Sub-Management Agreement, respectively. All fees associated with these JAVELIN agreements through October 5, 2017, their original expiration dates, were accrued by ARMOUR as costs of the acquisition of JAVELIN. Effective October 5, 2017, the JAVELIN management agreement will renew annually at a fee of one dollar per year, payable in advance. The JAVELIN sub-management agreement will expire by its terms on ~~substantially~~October 5, 2017.

We do not directly compensate our named executive officers with salaries or other cash compensation. No portions of the ~~same terms~~management fees are designated for the payment by ACM of compensation to its employees who are our executive officers, and we are not required to, and do not separately reimburse, ACM for compensation paid by ACM to those persons. The purpose of the management fees are not to provide compensation to our named executive officers, but rather to compensate ACM for the services it provides for the day-to-day management of ARMOUR. The Management Agreements make ACM solely responsible for determining and paying all employee expenses, including salaries, bonuses, wages, payroll taxes and benefits for the executive officers and other ACM employees that provide services to us. We are not entitled under the Management Agreements or otherwise to review or approve compensation decisions made by ACM or how ACM compensates our named executive officers. ACM does not consult with us to determine such compensation. Rather, ACM independently makes all compensation determinations for its employees without any direction by, or involvement of, our Board of Directors and without reference to any specific policies or programs under the oversight of our Board of Directors. This is due to, among other things, our lack of ownership in ACM and the fact that ACM conducts, and our named executive officers may participate in, business unrelated to us.

The services provided by employees of ACM include not only services in respect of other separate business ventures that directly or indirectly benefit ARMOUR, including BUCKLER Securities LLC (as described below), but also include services in respect of other separate business ventures conducted and/or pursued by ACM that are unrelated to ARMOUR, as well as services for the independent operation of ACM as a stand-alone business entity, such as the ~~sub-management agreement~~hiring, evaluation and compensation of contractors and vendors of ACM, as well as employees of ACM, including those who are not executive officers of ARMOUR. The services performed by ACM’s employees who are ARMOUR’s executive officers are not performed exclusively for ARMOUR, and not all of the value derived by those persons from ACM is specifically compensatory in nature or ~~an alternative arrangement reasonably acceptable~~related to ~~ARRM~~actual services performed.

We have negotiated a strategic joint venture with ACM for the purpose of facilitating ARMOUR’s access to more stable, reliable and ~~2011, respectively. No sub-management fees were paid~~potentially lower priced repurchase agreement financing than what is generally available in the market for comparable securities transactions. The parties formed a Delaware limited liability company, BUCKLER Securities, LLC (”BUCKLER”), and our independent directors negotiated a series of transactions with ACM and various affiliates of ARMOUR and ACM, as described more below (the “BUCKLER Transactions”), with the intended purpose of utilizing a regulated broker-dealer platform to ~~SBBC~~facilitate access to repurchase financing for

In connection with the BUCKLER Transactions, ARMOUR TRS Inc., our wholly-owned subsidiary formed for the purpose of facilitating the capitalization of BUCKLER (“ATRS”), ACM, Messrs. Mountain and Gruber, and an unaffiliated executive officer of BUCKLER, entered in to an operating agreement of BUCKLER (the “BUCKLER Operating Agreement”). Pursuant to the BUCKLER Operating Agreement, ACM, ATRS, Messrs. Mountain and Gruber, and the executive officer of BUCKLER, each contributed $2,467,150, $352,450, $304,750, $148,400 and $251,750, respectively, to BUCKLER in exchange for equity interests in BUCKLER of 70%, 10%, 8.65%, 4.21% and 7.14%, respectively. The operating agreement contains certain provisions to benefit and protect ARMOUR, including (1) sharing in any (a) defined profits realized by BUCKLER from the anticipated financing spreads resulting from repurchase financing facilitated by BUCKLER, and (b) distributions from BUCKLER to its members of net cash receipts, and (2) the realization of anticipated savings from reduced clearing, brokerage, trading and administrative fees. In addition, the independent directors orof ARMOUR, through ATRS, must approve in their sole discretion any third party business engaged by BUCKLER and may cause BUCKLER to wind up and dissolve and promptly return certain subordinated loans we provide to BUCKLER as regulatory capital (as described more below) if the ~~members of our board of~~independent directors who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We do not enter into any such transaction unless our audit committee or disinterested directorsreasonably determine that ~~the terms of such transaction are no less favorable~~BUCKLER’s ability to ~~us than those that would be available to us with respect to such a transaction from unaffiliated third parties.~~

~~Independence of Directors~~

~~Please refer to “Independence of Directors” under the previous section titled, “The~~provide attractive securities transactions for ARMOUR is materially adversely affected. The initial Board of ~~Directors, Its Committees~~managers of BUCKLER will consist of Messrs. Ulm and ~~Other Corporate Governance Information.”~~

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PROPOSAL 2 - APPROVAL OF AN AMENDMENT TO ARMOUR’S AMENDED AND RESTATED 2009 STOCK INCENTIVE PLAN TO INCREASE THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE THEREUNDER FROM 2,000,000 SHARES OF COMMON STOCK TO 15,000,000 SHARES

~~At the annual meeting, we are asking our stockholders to approve~~Mountain and an ~~amendment to the ARMOUR Amended and Restated 2009 Stock Incentive Plan (the “Amended Plan”), which would have the effect~~unaffiliated executive officer of increasing the aggregate number of shares of common stock authorized for issuance pursuant to the Amended Plan from 2,000,00 shares of common stock to 15,000,000 shares. Our Board has approved the amendment to the Amended Plan. The proposed Second Amended and Restated 2009 Stock Incentive Plan the (the “Second Amended Plan”) is attached to this proxy statement as~~Appendix A~~.

The Amended Plan is intended to attract, retain and reward directors, officers and other employees, and other persons who provide services to us (“Eligible Individuals”). The Amended Plan allows us to grant a variety of stock-based and cash-based awards to Eligible Individuals.

The Amended Plan is administered by our compensation committee, which consists solely of independent directors. The Compensation Committee, appointed by the Board, has the full authority to administer and interpret the Amended Plan, to authorize the granting of awards, to determine the eligibility to receive an award, to determine the number of shares of common stock to be covered by each award (subject to the limitations provided in the Amended Plan), to determine the terms, provisions and conditions of each award (which may not be inconsistent with the terms of the Amended Plan), to prescribe the form of instruments evidencing awards and to take any other actions and make all other determinations that it deems necessary or appropriateBUCKLER.

Also in connection with the ~~Amended Plan or the administration or interpretation thereof. In connection~~BUCKLER Transactions, ARMOUR and ATRS entered into certain subordinated loan agreements with ~~this authority, the Compensation Committee may, among other things, establish required periods of employment and/or performance goals that must be met~~BUCKLER, in order for ~~awards~~BUCKLER to meet FINRA-required regulatory capital requirements of BUCKLER as a broker-dealer, in the principal amounts of $65 million and $40 million, respectively, plus interest payable to us in an amount equal to the amount of interest earned by BUCKLER on the investment of the loan proceeds generally in government securities. As of the date of this proxy statement, ATRS has funded $25 million of its subordinated loan to BUCKLER. The remaining amounts under the subordinated loan commitment will need to be ~~granted or to vest, or~~funded by ARMOUR and ATRS before BUCKLER can become fully operational. These subordinated loans will serve as regulatory capital for ~~the restrictions on any such awards to lapse. The Compensation Committee administering the Amended Plan consists of independent directors as defined by the listing standards of the NYSE~~BUCKLER and will ~~at such times as we are subject to Section 162(m)~~represent a redeployment of ~~the Code, qualify as an outside director for purposes of Section 162(m) of the Code.~~

~~Why our Board of Directors Believes our Stockholders Should Approve the Second Amended Plan~~.

We have determined that the Second Amended Plan is necessary because our success is dependent, in large part, on our ability through our management agreement with ARRM and our equity incentive program to attract, motivate and retain high-performing senior executives who are committed to our core values of stockholder value, prudent risk-taking and integrity. The REIT and mortgage investment industry is highly competitive and attracting and retaining experienced professionals represents a comparative advantage. We compete with a large number of REIT companies, funds, financial institutions and specialty finance companies for executive talent which has significant career mobility. Many of those companies are privately owned and/or have significantly larger market capitalization than we do. Accordingly, they may have significantly more flexibility and resources as it relates to compensating their key professionals. We are a specialized company in a highly competitive industry and our ability to attract, retain and reward our executive officers and other key professionals is essential to maintaining our competitive position. We strongly believe that offering incentives in the form of equity awards is critical to our ability to do so and aligns the interests of our executive officers and other key professionals with those of our stockholders.

Since we began awarding equity compensation in 2011, the number of our executive officers has doubled from two to four and the number of our equity award recipients has tripled from two to six. We believe that if approved, Second Amended Plan would be a significant factor in our continuing ability to motivate and retain our existing executive officers and other key professionals and to attract the additional personnel necessary for our future growth. We do not believe that having an “evergreen plan” (which sets the aggregate number of authorized plan shares equal to a fixed percentage of shares issued and outstanding from time to time) is necessary to achieve these goals. Accordingly, we are not requesting, and do not intend to request, that our stockholders approve an amendment to make our Amended Plan an “evergreen plan.” Based on our prior experience and current expectations, we believe that the 13,000,000 additional shares will provide us an opportunity to grant equity awards for three to seven years, depending on the performance and growth of ARMOUR.

~~The Compensation Committee’s objectives in developing and administering our equity compensation program are to:~~

·

~~focus decision-making and behavior on goals that are consistent with our overall business strategy without threatening the long-term viability of our company;~~

·

~~attract, retain and motivate highly-skilled executive officers that will contribute to our successful performance;~~

·

~~align the interests of our executive officers with the interests of our stockholders by motivating executives to increase long-term stockholder value;~~

·

~~provide compensation opportunities that are competitive within industry standards thereby reflecting the value of the position in the marketplace;~~

·

~~support a culture committed to paying for performance where compensation is commensurate with the level of performance achieved; and~~

·

maintain flexibility and discretion to allow us to recognize the unique characteristics of our operations and strategy, and our prevailing business environment, as well as changing labor market dynamics.

26

Because we have exhausted the 2,000,000 shares available for equity grants under the Amended Plan, approval of the Second Amended Plan is critical to achieving these objectives and our continued success. We believe that equity compensation is an essential part of our compensation program to help us attract and retain talent in order to create stockholder value and the combination of our management agreement and our equity compensation provides the appropriate balance to encourage long-term performance without excessive risk taking. Failure to approve the Second Amended Plan would be disruptive because it would force our compensation committee to rely exclusively on cash to compensate and incentivize our executive officers and other key professionals, which would increase cash compensation expense and reduce cash flow available for distribution to our stockholders. Alternatively, if the Second Amended Plan is not approved, we may need to implement cash-based incentive plans in order to attempt to achieve these objectives. We believe that equity awards under the Second Amended Plan represent the superior alternative, in terms of both efficiency and effectiveness. Not only would continuing the current approach avoid potential disruptions in our relationship with our executive officers and other key professionals, but it would reduce the likelihood that we would need to rely on cash incentive awards in the future and reduce cash flow available for distribution to our stockholders.

The use of our stock as part of our compensation program is also important to our continued success because it fosters a pay-for-performance culture, which is an important element of our overall compensation program. We believe that equity compensation motivates our named executive officers and other key professionals to create stockholder value because the value they realize from equity compensation is based on our common stock performance.

~~Finally, we believe~~capital that we have ~~demonstrated~~historically been required to commit to haircuts in connection with our ~~commitment~~repurchase transactions. The subordinated loan agreements are based substantially on standard, FINRA-prescribed terms and conditions, including those governing prepayment rights, events of acceleration and default, and provisions allowing for the return to sound equity compensation practices. We recognize that equity compensation awards dilute stockholder equity and, therefore, we have carefully managed our equity incentive compensation. Our equity compensation practices are targeted to be consistent with market norms and we believe our historical share usage has been responsible and mindful of stockholder interests, as described further below.

~~Available Shares~~

The Amended Plan provides for grants of common stock, restricted shares of common stock, stock options, performance shares, performance units, stock appreciation rights and other equity-based and cash-based awards. The Board initially allocated up to 250,000 shares to be available under the ARMOUR 2009 Stock Incentive Plan (the “Plan”). In the first three months of 2011, we granted a total of 192,500 shares of stock, which vests over quarterly periods commencing on March 31, 2011 and ending on December 31, 2015. On July 18, 2011, the Plan was amended and restated to allocate up to 2,000,000 shares to be available under the Amended Plan. In the first three months of 2012, we granted a total of 655,524 shares of stock, 598,024 of which vest equally over quarterly periods commencing on March 31, 2012 and ending on December 31, 2016. In the first three months of 2013, we granted a total of 1,278,195 shares of stock, which vests equally over quarterly periods commencing on March 31, 2013 and ending on December 31, 2017. The 2011, 2012 and 2013 grants described above, together with separate equity grants in the aggregate amount of 23,989 shares which formed a portionus of the ~~directors’ fees of our independent directors, collectively exceeds the 2,000,000 shares available under the Amended Plan by 150,208 shares. Therefore, of the 1,278,195 share awards granted~~loan proceeds, in ~~2013, 150,208 of the share awards were granted subject to stockholders approval of the Second Amended Plan, as follows:~~

~~NEW PLAN BENEFITS~~

ARMOUR Second Amended and Restated 2009 Stock Incentive Plan

Name and Position

Dollar Value (1)

Number of Shares (2)
Scott J. Ulm, Co-Chief Executive Officer
$
301,667

75,104

Jeffrey J. Zimmer, Co-Chief Executive Officer
$
301,667

75,104

Total
$
602,334

150,208
(3)

~~(1)~~

~~Based on a share price of $4.01 per share, the closing price of our common stock on the NYSE on December 31, 2013.~~

~~(2)~~

~~Represents share awards to grantee that are subject to stockholder approval of the Second Amended Plan.~~

~~(3)~~

While other individuals have received a substantial portion of the 1,278,195 share grants in 2013, Messrs. Ulm and Zimmer have agreed to cover the entire 150,208 share excess in the event our stockholders do not approve the Second Amended Plan.

We are now seeking stockholder approval of the Second Amended Plan to increase the aggregate number of shares of common stock authorized for issuance under the Amended Plan from 2,000,000 shares of common stock to 15,000,000 shares. The Second Amended Plan will remain identical to the Amended Plan in all other respects. The Board believes that 13,000,000 additional shares represents a reasonable amount of potential equity dilution and provides a powerful incentive for our executive officers and key professionals to increase the value of the Company for all stockholders. In order to determine the number of shares to be authorized under the Second Amended Plan, the Compensation Committee and the Board considered the need for the shares and the potential dilution that awarding the requested shares may have on current stockholders.

27

The Amended Plan allows for the Board to expand the types of awards available under the Amended Plan. The maximum number of shares that may underlie awards in any one year to any eligible person will be determined by the Compensation Committee or the Board. If an award granted under the Amended Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards.

Our compensation committee has not awarded, and does not intend to award, any equity compensation to our executive officers based on 2013 performance. The compensation committee has not granted, and does not intend to grant, awards to continuing officers and other key professionals with respect to years where either total stockholder return or total economic return are negative. The Amended and Restated 2009 Stock Incentive Plan also prohibits the repricing of previous awards. We will continue to monitor our use of equity compensation in the future to ensure that our overhang and burn rate are maintained at or below comparative market values.

In the first quarter of 2013, our compensation committee awarded the equity compensation disclosed in this proxy statement based on company and individual performance in 2012. The Compensation Committee determined the equity compensation awarded in 2013 was commensurate with our 2012 performance and was comparable to other agency mortgage REITs. These and previous equity grants were deemed necessary to attract, retain and motivate our senior management team and have provided increased goal alignment between the participants and the company. For example, the 2013 equity awards have decreased substantially in value compared to their grant-date value as disclosed in this proxy statement, which parallels the performance of our common stock during that time period.

~~Overhang, Burn Rate and Dilution~~

We take a disciplined approach to the expense management of our compensation programs. The compensation committee has historically limited, and intends to continue to limit, the total equity awards granted in any given year to no more 1.25% of the weighted-average shares of common stock outstanding for the year. For fiscal years 2011, 2012 and 2013, our burn rate (which is total equity awards granted in a fiscal year divided by total weighted-average shares of common stock outstanding for the year) was 0.31%, 0.29% and 0.35%, respectively. Some analysts weight full value awards, such as those granted by ARMOUR, more heavily than equity option awards. For example, weighting our awards by a factor of 2.5 results in an adjusted burn rate of 0.78%, 0.73% and 0.88%, respectively. The substantial majority of our awards to date vest ratably over a period of 20 quarters. These vesting schedules are designed to both further the retention, incentive and goal alignment objectives of the awards as well as to appropriately apportion the expense of the awards. The resulting realized dilution rate (which is the total shares issued upon vesting, net of withholdings divided by total weighted-average shares of common stock outstanding for the year) was 0.03%, 0.05% and 0.08%, respectively. The expense recognized by ARMOUR is based on the closing market price of the common stock on the days that shares vest.

We have proactively managed the overall affordability of our equity compensation programs to prevent dilutive effects to our stockholders and, in each year since our initial public offering, have consistently returned a significant amount of cash to our stockholders through dividends and, beginning in 2013, share repurchases. Since July of 2011, when our Amended Plan was last amended to increase the number of shares authorized to 2,000,000, we have accretively grown ARMOUR’s common share base by 378% from 74,781,000 common shares to 357,613,485 common shares outstanding at December 31, 2013, thereby significantly reducing the relative overhang of our equity awards on stockholders. Dividends paid on our common stock totaled more than $650 million for 2011, 2012, and 2013. Additionally, during 2013 we repurchased 16,771,000 common shares, capturing an estimated $14 million in value for continuing stockholders, as compared to the total dilutive charges to equity of approximately $2.5 million for our Amended Plan from its inception through December 31, 2013.

The overhang and burn rate of grants to date under the Amended Plan we believe to be exceptionally low and well below the median for S&P 500 companies and companies within the mortgage REIT industry. As of December 31, 2013, 357,613,485 shares of our common stock were outstanding and 1,479,318 shares were subject to outstanding unvested equity awards under the Amended Plan, 150,208 shares of which are subject to stockholder approval of the Second Amended Plan. Thus, our year-end overhang (which are shares granted but not yet vested under equity compensation awards outstanding divided by shares outstanding) for each of the last three years has been less than 0.5%.

~~Awards Under the Amended Plan~~

~~Restricted Shares of Common Stock.~~ A restricted share award is an award of shares of common stock that is subject to restrictions on transferability and such other restrictions, if any, the Compensation Committee may impose at the date of grant. Grants of restricted shares of common stock will be subject to vesting schedules as determined by the Compensation Committee. The restrictions may lapse separately or in combination at such times, under such circumstances, including, without limitation, a specified period of employment or the satisfaction of pre-established criteria, in such installments or otherwise, as the Compensation Committee may determine. Except to the extent restricted under the award agreement relating to the restricted shares of common stock, a participant granted restricted shares of common stock has all of the rights of a stockholder, including, without limitation, the right to vote and the right to receive dividends or distributions on the restricted shares of common stock. Such dividends and distributions, however, may be held in escrow until all restrictions on the underlying shares have lapsed. Although dividends may be paid on restricted shares of common stock, whether or not vested, at the same rate and on the same date as on shares of our common stock, holders of restricted shares of common stock are generally prohibited from selling such shares until they vest.

28

~~Stock Options and Stock Appreciation Rights.~~ ~~A stock option is a right to purchase a specified number of shares of our common stock at an exercise price established at the date of grant. Stock options granted may be either non~~ − ~~qualified stock options or incentive stock options (which are intended to qualify as~~ “~~incentive stock options~~” ~~within Section 422 of the Code). A stock appreciation right (~~“~~SAR~~”) entitles the recipient to receive, upon surrender of the SAR, an amount of cash or number of shares of our common stock having a fair market value equal to the positive difference, if any, between the fair market value of one share of common stock on the date of exercise and the exercise price of the SAR. The Compensation Committee will specify at the time an option or SAR is granted when and in what proportions an option or SAR becomes vested and exercisable in accordanceconjunction with the ~~Plan.~~

~~Performance-Based Awards.~~ The Compensation Committee may grant performance awards, which may be cash or equity based, including performance units and performance shares. Generally, performance awards require satisfaction of pre-established performance goals, consisting of one or more business criteria and a targeted performance level with respect to such criteria as a condition of awards being granted, becoming exercisable or settleable, or as a condition to accelerating the timing of such events. The Compensation Committee will set the performance goals used to determine the amount payable pursuant to a performance award.

~~Other Awards.~~ The Compensation Committee may also award to certain eligible persons shares of our common stock, or RSUs or other awards whose value is based, in whole or in part, on our common stock. Such awards may be in addition to any other awards made under the Amended Plan,BUCKLER Operating Agreement and subject to ~~such other terms~~FINRA’s rules and ~~restrictions~~regulations.

Our Audit Committee has reviewed, approved and authorized the BUCKLER Agreements and the BUCKLER Transactions as ~~determined~~related party transactions under Item 404 of Regulation S-K, which approval was subject to approval by ~~the Compensation Committee in its discretion.~~

~~Change in Control~~

Upon a change in control, as defined in the Amended Plan, the Compensation Committee may make certain adjustments which it, in its discretion, determines are necessary or appropriate in light of the change in control. These include, accelerating the vesting of some or all of the awards under the Amended Plan, terminating all awards under the Amended Plan (allowing for either the exercise of vested awards or a cash payment in lieu of vested awards), converting the awards to the right to receive proceeds in the event of liquidation, or a combination of any of the foregoing. In the event that the Compensation Committee does not terminate or convert an award upon a change in control, then the award shall be assumed, or substantially equivalent awards shall be substituted, by the acquiring, or succeeding corporation (or an affiliate thereof).

our independent directors. Our ~~Board may amend, alter or discontinue the Amended Plan but cannot take any action that would impair the rights of a participant without such participant’s consent. To the extent necessary~~independent directors have separately and ~~desirable, the Board must obtain approval of our stockholders for any amendment that would:~~

·

~~other than through adjustment as provided in the Amended Plan, increase the total number of shares of common stock reserved for issuance under the Amended Plan;~~

·

~~change the class of persons eligible to participate in the Amended Plan;~~

·

~~reprice any stock option awards under the Amended Plan; or~~

·

~~otherwise require such approval.~~

The Compensation Committee may amend the terms of any award granted under the Amended Plan, prospectively or retroactively, but generally may not impair the rights of any participant without his or her consent.

~~Recommendation of the Board of Directors~~

~~ARMOUR’s Board of Directors unanimously recommends a vote~~~~“FOR”~~ ~~approval of an amendment to our Amended Plan to increase the aggregate number of shares of common stock~~simultaneously authorized ~~for issuance thereunder from 2,000,000 shares to 15,000,000 shares. Our Board has~~and approved ~~the amendment to the Amended Plan.~~

these agreements and transactions.

The Audit Committee of our Board of Directors appointed Deloitte as our independent registered certified public accountants for fiscal years ~~2012~~2015 and ~~2013~~2016 and has appointed Deloitte as our independent registered certified public ~~accountant~~accountants for fiscal year ~~2014.~~2017. The Audit Committee is responsible for the appointment, oversight and termination of our independent registered certified public accountants. We are seeking the ratification of our stockholders of this appointment, although our ~~audit committee~~Audit Committee is not bound by any stockholder action on this matter.

If the appointment of Deloitte as our independent registered certified public accountants is not ratified by our stockholders, the Audit Committee will reconsider its appointment, but may nevertheless retain Deloitte. Also, even if the appointment of Deloitte as our independent registered certified public accountants is ratified by our stockholders, the Audit Committee may direct the appointment of a different independent auditor at any time during the year if the Audit Committee determines, in its discretion, that such a change would be in our best interests. Deloitte has advised us that no partner or employee of Deloitte has any direct financial interest or any material indirect interest in ARMOUR other than receiving payment for its services as our independent certified public accountants. Representatives of Deloitte are expected to attend the annual meeting in person or telephonically, will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions.

Deloitte served as our independent registered public accountants in fiscal years ~~2012~~2016 and ~~2013.~~2015. The following tables set forth the aggregate fees billed to ARMOUR by Deloitte in fiscal years ~~2012~~2016 and ~~2013,~~2015, respectively:

Audit ~~Fees.~~~~��“Audit~~Fees. “Audit Fees” consist of fees and related expenses billed for professional services rendered for the audit of the financial statements and services that are normally provided by our independent auditors in connection with statutory and regulatory filings or engagements. For example, audit fees included fees for professional services rendered in connection with quarterly and annual reports, and the issuance of consents by our independent auditors to be named in our registration statements and to the use of their audit report in the registration statements.

Audit-Related ~~Fees.~~Fees. “Audit-Related Fees” and “All Other Fees” consist of fees and related expenses for products and services other than services described under “Audit Fees” and “Tax Fees.”

Tax ~~Fees.~~Fees. “Tax Fees” consist of fees and related expenses billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance and tax planning and structuring. Deloitte provided federal and state tax return preparation services during ~~2013~~2016 and ~~did not provide such services during 2012.~~

2015

In connection with ~~Deloitte's~~Deloitte’s audit of our financial statements for fiscal years ~~2012~~2016 and ~~2013,~~2015, we had no disagreement with Deloitte on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

The Audit Committee periodically approved the provision of various audit, audit-related, tax and other permissible non-audit services by Deloitte. The Audit Committee plans to continue to review and pre-approve such services as appropriate. All of the services provided by Deloitte in ~~2012~~2016 and ~~2013~~2015 were approved by our ~~audit committee~~Audit Committee pursuant to these procedures. Our ~~audit committee~~Audit Committee will continue to review and pre-approve such services as appropriate.

ARMOUR’s Board of Directors recommends a vote“FOR” the ratification of Deloitte as our independent registered certified public accountants for the ~~2014~~2017 fiscal year.

Our ~~audit committee~~Audit Committee oversees our financial reporting process on behalf of the Board, in accordance with the Audit Committee charter. Management is responsible for our financial statements and the financial reporting process, including the system of internal controls. Our independent registered public accounting firm, Deloitte, is responsible for expressing an opinion on the conformity of our audited financial statements with ~~GAAP~~generally accepted accounting principles (“GAAP”) for the yearly periods ended December 31, ~~2011,~~2016, December 31, ~~2012~~2015 and December 31, ~~2013,~~2014, respectively.

In fulfilling its oversight responsibilities, our ~~audit committee~~Audit Committee reviewed and discussed with management and Deloitte the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2013,~~2016, and discussed with management the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. Our ~~audit committee~~Audit Committee also reviewed and discussed with management and Deloitte the disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Controls and Procedures” included in the Annual Report on Form 10-K for the year ended December 31, ~~2013.~~

2016.

Our ~~audit committee~~Audit Committee has received the written disclosures and the letter from Deloitte required by applicable requirements of the Public Company Accounting Oversight Board ~~("PCAOB"~~(“PCAOB”) regarding the independent registered public accounting firm’s communications with our ~~audit committee~~Audit Committee concerning independence, and our ~~audit committee~~Audit Committee discussed with the independent registered public accounting firm their independence from us. Our ~~audit committee~~Audit Committee has discussed with Deloitte the matters required to be discussed by Auditing Standard No. ~~61,~~16, as amended, as adopted by the PCAOB. When considering Deloitte’s independence, our ~~audit committee~~Audit Committee considered whether their provision of services to us beyond those rendered in connection with their integrated audit and quarterly review work was compatible with maintaining their independence. Our ~~audit committee~~Audit Committee also reviewed, among other things, the nature of audit-related services provided and the amount of fees paid to Deloitte for their audit and audit-related services, both separately and in the aggregate.

In reliance on the reviews and discussions referred to above, prior to the filing of our Annual Report on Form 10-K for the year ended December 31, ~~2013~~2016 with the SEC, the Audit Committee recommended to the Board (and the Board approved) that the audited financial statements be included in such Annual Report on Form 10-K for filing with the SEC.

The members of our ~~audit committee~~Audit Committee are not professionally engaged in the practice of auditing or accounting. Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and discussions with the independent registered public accountant. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB, that the financial statements are presented in accordance with GAAP, or that Deloitte is in fact “independent.”

As described in more detail under the heading, “Executive Officer Compensation” and “Certain Relationships and Related Party Transactions,” we have been managed by ACM, in which we have no ownership interest, since our inception in 2009. We do not have any employees whom we compensate directly in cash. The fifth amended and restated management agreement between ACM and us limits our role in compensating our named executive officers to granting equity compensation. The management agreement makes ACM solely responsible for determining and paying all employee expenses, including salaries, bonuses, wages, payroll taxes and benefits for our named executive officers and other ACM employees that provide services to us. We are not entitled under the management agreement or otherwise to review or approve compensation decisions made by ACM or how ACM compensates our named executive officers. ACM does not consult with us regarding the compensation of our named executive officers, including how much such officers are paid. This is due to, among other things, our lack of ownership of ACM and the fact that ACM conducts, and our named executive officers participate in, business separate from us.

Notwithstanding the fact that we do not pay cash compensation to our named executive officers, our Compensation Committee may award equity compensation consisting of shares of our common stock to ACM personnel, in addition to the management fees we pay ACM. These compensation-related provisions date to the original management agreement from our inception in 2009. In making the determination of whether or not to award equity compensation, our Compensation Committee takes into account, among other things, the management fees we pay to ACM and individual and company performance, both on an absolute basis and relative to our peers.

Our named executive officers’ compensation was derived from the management fees we paid to ACM, pursuant to the terms of the management agreement, and vested stock awards previously granted to our named executive officers in 2013, 2012 and 2011 by the Board of Directors upon the recommendation of the Compensation Committee pursuant to the Plan.

We did not award any equity compensation to our named executive officers in 2016 based on 2015 performance, in 2015 based on 2014 performance, or in 2014 based on 2013 performance. As discussed earlier in this proxy statement, we also recently reached out directly to our largest investors and have expanded and clarified our executive compensation disclosures in this proxy statement to reflect investor feedback we received.

The SEC requires public companies to provide stockholders with periodic advisory (non-binding votes) on executive compensation, also referred to as “say-on-pay” proposals. While the vote is advisory and not binding on us, it will provide information to us and our Compensation Committee regarding stockholder sentiment about our executive compensation philosophy, policies and practices described above. Our Compensation Committee will be able to consider the results of this vote when determining equity compensation for our named executive officers for the remainder of 2017 and beyond.

We are presenting the following proposal, which gives you as a stockholder the opportunity to endorse or not endorse our compensation program for the named executive officers listed under “ARMOUR's Executive Officers” in this proxy statement by voting for or against the following resolution.

ARMOUR’s Board of Directors recommends a vote “FOR” the approval of ARMOUR’s 2016 compensation of our named executive officers as disclosed in this proxy statement.

Section 16(a) of the Exchange Act requires that our directors, executive officers and persons who beneficially own 10% or more of our common stock file with the SEC initial reports of ownership and reports of changes in ownership of our stock and our other equity securities. To our knowledge, based solely on a review of the copies of such reports furnished to us, during the year ended December 31, ~~2013,~~2016, all such filing requirements applicable to our directors, executive officers and greater than 10% beneficial owners were complied ~~with, with the exception of one Form 4 filed by each of Messrs. Ulm, Zimmer and Mountain on March 21, 2013.~~

with.

Stockholders interested in submitting a proposal for inclusion in our proxy materials for the ~~2015~~2018 annual meeting of stockholders may do so by following the procedures set forth in Rule 14a-8 under the ~~Securities~~ Exchange ~~Act of 1934, as amended.~~Act. Stockholder proposals intended to be presented at the ~~2015~~2018 annual meeting of stockholders must be received by ARMOUR for inclusion in ARMOUR’s proxy statement and form of proxy relating to that meeting by ~~November 20, 2014.~~

January 1, 2018.

The Board of Directors knows of no other matters to come before the ~~stockholders’~~annual meeting. However, if any other matters properly come before the meeting or any of its adjournments, the person or persons voting the proxies will vote them in accordance with their best judgment on such matters.


~~Payment of Filing Fee (Check the appropriate box):~~

þ (3)	~~No fee required.~~
o	~~Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.~~

	~~(1) Title of each class of securities to which transaction applies:~~

	~~(2) Aggregate number of securities to which transaction applies:~~

	~~(3)~~ 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):


	~~(1) Amount Previously Paid:~~
	~~(2) Form, Schedule or Registration Statement No.:~~
	~~(3) Filing Party:~~
	~~(4) Date Filed:~~



NOTICE OF ANNUAL MEETING OF STOCKHOLDERS ON ~~MAY 8, 2014~~ JUNE 14, 2017	1
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS	2
ADMISSION TO THE ~~2014~~2017 ANNUAL MEETING	2 3
PROXY STATEMENT	4
~~PROXY STATEMENT~~	2

PROPOSAL 1 - ELECTION OF DIRECTORS	5 7

THE BOARD OF DIRECTORS, ITS COMMITTEES AND OTHER CORPORATE GOVERNANCE INFORMATION	9 12

ARMOUR’S EXECUTIVE OFFICERS	14 20

EXECUTIVE OFFICER COMPENSATION	15 22

COMPENSATION COMMITTEE REPORT	22 32

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	23 33

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	24 35

PROPOSAL 2 - APPROVAL OF AN AMENDMENT TO ARMOUR’S AMENDED AND RESTATED 2009 STOCK INCENTIVE PLAN TO INCREASE THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE THEREUNDER FROM 2,000,000 SHARES OF COMMON STOCK TO 15,000,000 SHARES	26

~~PROPOSAL 3 -~~2- RATIFICATION OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTANTS	30 40

AUDIT COMMITTEE REPORT	31 42
PROPOSAL 3 - ADVISORY (NON-BINDING) VOTE APPROVING ARMOUR'S 2016 EXECUTIVE COMPENSATION	43
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE	32 44
STOCKHOLDER PROPOSAL DEADLINE	44
~~STOCKHOLDER PROPOSAL DEADLINE~~	32

OTHER MATTERS	32 44


*~~Why did I receive this Proxy~~* *~~Statement?~~* (1)	You have received these proxy materials because our Board of Directors is soliciting your proxy to vote your shares at the annual meeting on May 8, 2014. This proxy statement includes information that is designed to assist you in voting your shares and information that we are required to provide to you under the rules of the Securities and Exchange Commission (“SEC”).

*~~Who is entitled to vote?~~*	~~Each holder of record of ARMOUR common stock on March 17, 2014, the record date for the annual meeting, is entitled to attend and vote at the annual meeting.~~

*~~How many votes do I have?~~*	Every holder of a share of common stock on the record date will be entitled to one vote per share for each director to be elected at the annual meeting and to one vote per share on each other matter presented at the annual meeting. On March 17, 2014, the record date for the annual meeting, there were 357,426,413 shares of common stock outstanding and entitled to vote at the annual meeting.

*~~What proposals are being~~* *~~presented at the annual meeting?~~*	~~ARMOUR intends to present proposals numbered one, two and three for stockholder consideration and voting at the annual meeting. These proposals are for:~~

	1. Election of nine (9) members of ARMOUR’s Board of Directors; 2. Approval of an amendment to ARMOUR’s Amended and Restated 2009 Stock Incentive Plan to increase the aggregate number of shares of common stock authorized for issuance thereunder from 2,000,000 shares to 15,000,000 shares; and 3.


*~~How do I attend the annual Meeting?~~* (3)	~~All stockholders are invited to attend the annual meeting. An admission ticket (or other proof~~Approval, by a non-binding advisory vote, of share ownership) and some form of government-issued photo identification (such as a valid driver’s license or passport) will be required for admission to the annual meeting. Only stockholders who own common stock as of the close of business on March 17, 2014 and invited guests will be entitled to attend the meeting. An admission ticket will serve as verification of your ownership. Registration will begin at 7:30 a.m. (EDT) and the annual meeting will begin at 8:00 a.m. (EDT). · If you received your proxy materials by mail and voted by completing your proxy card and checked the box indicating that you plan to attend the meeting, an admission ticket will be held for you at the check-in area at the annual meeting. · ~~If you received your proxy materials by mail and did not vote because you did not complete the proxy card, an admission ticket will be held for you at the check-in area at the annual meeting.~~ · If your ARMOUR shares are held in a bank or brokerage account, contact your bank or broker to obtain a written legal proxy in order to vote your shares at the meeting. If you do not obtain a legal proxy from your bank or broker, you will not be entitled to vote your shares, but you can still attend the annual meeting if you bring a recent bank or brokerage statement showing that you owned our common stock on March 17, 2014. You should report to the check-in area for admission to the annual meeting.

*~~What is a proxy?~~*	A “proxy” allows someone else (the “proxy holder”) to vote your shares on your behalf. Our Board of Directors is asking you to allow either of the following persons to vote your shares at the annual meeting: Jeffrey J. Zimmer and Scott J. Ulm.

*~~How do I vote?~~*	If your ARMOUR shares are registered in your name, you may vote your shares in person at the annual meeting or by proxy. If you have received your proxy materials by mail, you may vote by marking, dating and signing your proxy card and returning it by mail in the enclosed postage-paid envelope. If you hold your common stock in an account with a bank or broker (i.e. in “street name”), you may vote by following the instructions on the voting instruction card provided to you by your bank or broker. Even if you plan to be present at the annual meeting, we encourage you to vote your common stock by proxy. Stockholders of record who attend the meeting may vote their common stock in person, even though they have sent in proxies.

*~~May I change or revoke my vote?~~*	~~Yes. You may change your vote in one of several ways at any time before your proxy is exercised:~~ · ~~Submit another proxy card (or voting instruction card) with a date later than your previously delivered proxy card (or voting instruction card);~~ · Notify Jeffrey J. Zimmer or Scott J. Ulm in writing before the annual meeting that you are revoking your proxy or, if you hold your shares in “street name,” follow the instructions on the voting instruction card; or · ~~If you are a holder of record, or a beneficial owner with a proxy from the holder of record, vote in person at the annual meeting.~~

*~~What is a quorum?~~*	A quorum is necessary to hold a valid meeting. The presence, in person or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum for the conduct of business. ARMOUR’s 2016 executive compensation.


¨
o	~~Fee paid previously with preliminary materials.~~

o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.


(1)	To elect nine (9) directors to ARMOUR’s Board of Directors until our 2018 annual meeting of stockholders and until their successors are duly elected and qualified;


(2)	To ratify the appointment of Deloitte & Touche LLP (“Deloitte”) as ARMOUR’s independent registered certified public accountants for fiscal year 2017;


(3)	To approve, by a non-binding advisory vote, ARMOUR’s 2016 executive compensation; and


(4)	To transact any other business as may properly come before the annual meeting or any adjournments or postponements of the meeting.


(2)	Ratification of the appointment of Deloitte & Touche LLP (“Deloitte”) as ARMOUR’s independent registered certified public ~~accounting firm;~~

	~~Other than the matters set forth in this proxy statement~~accountants for fiscal year 2017; and matters incident to the conduct of the annual meeting, we do not know of any business or proposals to be considered at the annual meeting. If any other business is proposed and properly presented at the annual meeting, the proxies received from our stockholders give the proxy holders the authority to vote on such matter in their discretion.

	~~For Proposal 1: Election~~
(2)	“FOR” the ratification of ~~Directors,~~ the ~~affirmative~~appointment of Deloitte as ARMOUR’s independent registered certified public accountants for fiscal year 2017; and


(3)	“FOR” the approval, by a non-binding advisory vote, of the holders of common stock having a plurality of the votes cast by stockholders present in person or represented by proxy at the annual meeting is required. For Proposal 2: Approval of an Amendment to the Amended and Restated 2009 Stock Incentive Plan, and Proposal 3: Ratification of the Appointment of Independent Registered Certified Public Accountants, the affirmative vote of the holders of common stock having a majority of the votes cast on such proposal at the annual meeting is required. Pursuant to Maryland law (i) shares of common stock which are represented by “broker non-votes” (i.e., common stock held by brokers which are represented at the annual meeting but with respect to which the broker is not empowered to vote on a particular proposal) and (ii) shares which abstain from voting on any matter, are not included in the determination of the common stock voting on such matter, but are counted for quorum purposes.

*~~Who will bear the cost of soliciting proxies?~~*	The cost of soliciting proxies will be borne by the Company. In addition to solicitation by mail, solicitations may also be made by telephone, telegram, facsimile, email or in person by directors, officers or other personnel of the Company, who will receive no additional compensation for such services. We have also engaged Morrow & Co., LLC, a proxy solicitor, to assist us in the solicitation of proxies for the annual meeting for a fee of $6,500, plus reimbursement for out-of-pocket expenses. ARMOUR’s 2016 executive compensation.


Director Nominees	Age	Director Since	Current Positions

Scott J. Ulm	55	2009	Co-Chief Executive Officer, Co-Vice Chairman, Chief Investment Officer and Head of Risk Management
Jeffrey J. Zimmer	56	2009	Co-Chief Executive Officer, Co-Vice Chairman and President
Daniel C. Staton	61	2009	Non-Executive Chairman
Marc H. Bell	46	2009	Director
Carolyn Downey	64	2013	Independent Director
Thomas K. Guba	63	2009	Lead Independent Director
Robert C. Hain	60	2009	Independent Director
John P. Hollihan, III	64	2009	Independent Director
Stewart J. Paperin	66	2009	Independent Director



Name		Fees Earned or Paid in Cash		Stock Awards(1)		Total
Daniel C. Staton(1)	$	91,000	$	74,325	$	165,325
Marc H. Bell(1)	$	66,000	$	74,325	$	140,325
Carolyn Downey(1) (2)	$	22,000	$	22,000	$	44,000
Thomas K. Guba(1)	$	66,000	$	74,325	$	140,325
Robert C. Hain(1)	$	66,000	$	74,325	$	140,325
John P. Hollihan, III(1)	$	66,000	$	74,325	$	140,325
Stewart J. Paperin(1)	$	91,000	$	74,325	$	165,325
Jordan Zimmerman(1) (3)	$	38,918	$	42,761	$	81,679


(5)
	~~(5)~~ Total fee paid:



	Stock Awards
Name	Number of Shares or Units of Stock that Have Not Vested ⁽¹⁾	Market Value of Shares or Units of Stock That Have Not Vested ⁽²⁾
Scott J. Ulm	13,250	$287,393
Jeffrey J. Zimmer	13,250	$287,393
James R. Mountain	2,065	$44,790
Mark R. Gruber	1,690	$36,656
Gordon M. Harper	1,314	$28,501



	Stock Awards
Name	Number of Shares Acquired on Vesting	Value Realized on Vesting ⁽¹⁾
Scott J. Ulm	19,977	$428,307
Jeffrey J. Zimmer	19,977	$428,307
James R. Mountain	2,064	$44,252
Mark R. Gruber	2,440	$52,314
Gordon M. Harper	1,312	$28,129



Name	Fees Earned or Paid in Cash		Fees Earned or Paid in Stock ⁽¹⁾		Total
Daniel C. Staton	$	101,000	$	66,000	$	167,000
Marc H. Bell	$	99,000	$	33,000	$	132,000
Carolyn Downey	$	66,000	$	66,000	$	132,000
Thomas K. Guba	$	101,000	$	66,000	$	167,000
Robert C. Hain	$	165,600	$	26,400	$	192,000
John P. Hollihan, III	$	152,400	$	39,600	$	192,000
Stewart J. Paperin	$	136,000	$	66,000	$	202,000



Name	Age	Position

Scott J. Ulm	55 58	Co-Chief Executive Officer, Co-Vice Chairman, Chief Investment Officer and Head of Risk Management

Jeffrey J. Zimmer	56 59	Co-Chief Executive Officer, Co-Vice Chairman and President

James R. Mountain	54 57	Chief Financial Officer, Treasurer and Secretary
Mark R. Gruber	41
~~Mark Gruber~~	38	Chief Operating Officer and Head of Portfolio Management
Gordon R. Harper	50	Vice President of Finance and Controller


Plan Category	Number of Securities to be Issued upon the Vesting of Stock Awards		Weighted-Average Price of Restricted Stock	Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans
Equity Compensation Plans Approved by Stockholders(1)	2,000,000	$	7.01	0
Equity Compensation Plans Not Approved by Stockholders	–		–	–
Total	2,000,000	$	7.01	0


Name and Principal Position	Year		Stock Awards (1)		All Other Compensation (2)		Total
Scott J. Ulm Co-Chief Executive Officer, Chief Investment	2013	$	871,904	$	602,654	$	1,474,558
Officer, Head of Risk Management and	2012		545,803		421,055		966,858
Co-Vice Chairman	2011		105,211		92,611		197,822

Jeffrey J. Zimmer	2013	$	871,904	$	602,654	$	1,474,558
Co-Chief Executive Officer,	2012		545,803		421,055		966,858
Co-Vice Chairman and President	2011		105,211		92,611		197,822

James R. Mountain	2013	$	80,425	$	62,526	$	142,951
Chief Financial Officer, Treasurer and Secretary	2012(3)		–
	2011(3)		–		–		–

Mark Gruber (4)	2013	$	104,699	$	73,298	$	177,997
Chief Operating Officer and	2012		55,980		42,180		98,160
Head of Portfolio Management	2011		14,385		13,065		27,450



Name and Principal Positions	Year	All Other Compensation ⁽¹⁾	Total
Scott J. Ulm Co-Chief Executive Officer, Chief Investment Officer, Head of Risk Management and Co-Vice Chairman	2016	$80,320	$80,320
	2015	$183,448	$183,448
	2014	$334,340	$334,340
Jeffrey J. Zimmer Co-Chief Executive Officer, Co-Vice Chairman and President	2016	$80,320	$80,320
	2015	$183,448	$183,448
	2014	$334,340	$334,340
James R. Mountain Chief Financial Officer, Treasurer and Secretary	2016	$10,400	$10,400
	2015	$21,073	$21,073
	2014	$35,978	$35,978
Mark Gruber Chief Operating Officer and Head of Portfolio Management	2016	$10,027	$10,027
	2015	$22,580	$22,580
	2014	$40,837	$40,837
Gordon Harper ⁽²⁾ Vice President of Finance and Controller	2016	$—	$—
	2015	$—	$—
	2014	$—	$—


Name	Date of Grant	Stock Awards: Number of Shares (1)		Weighted Average Grant Date Fair Value of Stock Awards (2)
Scott J. Ulm	March 18, 2013	530,076(3)	$	3,593,915
Jeffrey J. Zimmer	March 18, 2013	530,076(3)	$	3,593,915
James R. Mountain	March 18, 2013	82,706	$	560,746
Mark Gruber (4)	March 18, 2013	67,669	$	458,795



Name	Date of Grant	Stock Awards: Number of Shares	Weighted Average Grant Date Fair Value of Stock Awards
Scott J. Ulm	—	0	$	0
Jeffrey J. Zimmer	—	0	$	0
James R. Mountain	—	0	$	0
Mark Gruber	—	0	$	0
Gordon Harper	—	0	$	0


	Stock Awards
Name	Number of Shares Acquired on Vesting		Value Realized on Vesting (1)
Scott J. Ulm	179,312	$	871,904
Jeffrey J. Zimmer	179,312	$	871,904
James R. Mountain	16,540	$	80,425
Mark Gruber	21,532	$	104,699


Name		Value of Vesting Stock Awards (1)
Scott J. Ulm	$	2,504,148
Jeffrey J. Zimmer	$	2,504,148
James R. Mountain	$	265,325
Mark Gruber	$	305,309



Name	Value of Vesting Stock Awards ⁽¹⁾
Scott J. Ulm	$	287,393
Jeffrey J. Zimmer	$	287,393
James R. Mountain	$	44,790
Mark R. Gruber	$	36,656
Gordon M. Harper	$	28,501


Name and Address of Beneficial Owner (1)	Amount and Nature of Beneficial Ownership (2)	Approximate Percentage of Outstanding Common Stock

Officers and Directors

Scott J. Ulm	208,896	*
Jeffrey J. Zimmer	80,151	*
James R. Mountain	26,540	*
Mark Gruber	23,116	*
Daniel C. Staton	2,058,951(3)	*
Marc H. Bell	1,886,914(4)	*
Carolyn Downey	3,253	*
Thomas K. Guba	198,396	*
Robert C. Hain	11,164(5)	*
John P. Hollihan, III	49,796	*
Stewart J. Paperin	23,396	*
All directors and executive officers as a group (11 individuals)	4,570,573	1.28%

5% Holders

BlackRock, Inc.	30,377,102(6)	8.49%
The Vanguard Group Inc.	20,165,015(7)	5.64%



Name and Address of Beneficial Owner ⁽¹⁾	Amount and Nature of Beneficial Ownership ⁽²⁾		Approximate Percentage of Outstanding Common Stock
Officers and Directors
Scott J. Ulm	88,080		*
Jeffrey J. Zimmer	93,279		*
James R. Mountain	14,030		*
Mark R. Gruber	11,277		*
Gordon M. Harper	2,268		*
Daniel C. Staton	263,328	⁽³⁾	*
Marc H. Bell	17,800		*
Carolyn Downey	10,549		*
Thomas K. Guba	36,393		*
Robert C. Hain	5,615	⁽⁴⁾	*
John P. Hollihan, III	11,778		*
Stewart J. Paperin	12,019	⁽⁵⁾	*
All directors and executive officers as a group (12 individuals)	566,416		1.5%

5% Holders
BlackRock, Inc.	3,332,269	⁽⁶⁾	9.1%
The Vanguard Group Inc.	2,875,979	⁽⁷⁾	7.8%


ARMOUR Second Amended and Restated 2009 Stock Incentive Plan

Name and Position		Dollar Value (1)	Number of Shares (2)
Scott J. Ulm, Co-Chief Executive Officer	$	301,667	75,104
Jeffrey J. Zimmer, Co-Chief Executive Officer	$	301,667	75,104
Total	$	602,334	150,208	(3)


		Year Ended December 31, 2013		Year Ended December 31, 2012
Audit Fees	$	675,000	$	659,698
Audit-Related Fees		150,000		450,000
Tax Fees		23,400		20,000
All Other Fees		—		—

Total	$	848,400	$	1,129,398



	Year Ended December 31, 2016		Year Ended December 31, 2015
Audit Fees	$	844,000	$	730,000
Audit-Related Fees	—		35,000
Tax Fees	158,000		24,440
All Other Fees	—		—
Total	$	1,002,000	$	789,440



ARMOUR RESIDENTIAL REIT, INC.			Your phone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. Votes submitted electronically over the Internet or by telephone must be received by 7:00 p.m., Eastern Time, on June 13, 2017.

			:INTERNET/MOBILE -
			www.cstproxyvote.com
			Use the Internet to vote your proxy. Have your proxy card available when you access the above website. Follow the prompts to vote your shares.

			(PHONE - 1-(866) 894-0537
			Use a touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares.

PLEASE DO NOT RETURN THE PROXY CARD IF YOU ARE VOTING ELECTRONICALLY OR BY PHONE.			*MAIL - Mark, sign and date your proxy card and return it in the postage-paid envelope provided.


~~Proposa1 1~~— ~~To elect nine (9) directors to ARMOUR's Board of Directors as listed below to serve until ARMOUR's 2015 annual meeting of stockholders and until his or her successor is duly elected and qualified.~~			~~FOR All Nominees~~ □	~~WITHHELD~~ ~~As to All Nominees~~ □	~~Proposal 2~~— To approve an amendment to ARMOUR's Amended and Restated 2009 Stock Incentive Plan to increase the aggregate number of shares of common stock authorized for issuance thereunder from 2,000,000 shares to 15,000,000 shares. □~~FOR~~ □~~AGAINST~~ □~~ABSTAIN~~

~~NOMINEES:~~	~~01 Scott J. Ulm~~ ~~02 Jeffrey J. Zimmer~~ ~~03 Daniel C. Staton~~	~~04 Marc H. Bell~~ ~~05 Carolyn Downey~~ ~~06 Thomas K. Guba~~	~~07 Robert C. Hain~~ ~~08 John P. Hollihan, III~~ ~~09 Stewart J. Paperin~~		~~Proposal 3 — To ratify the appointment of Deloitte & Touche LLP as ARMOUR's independent registered certified public accountants for fiscal year 2014.~~
					□~~FOR~~ □~~AGAINST~~ □~~ABSTAIN~~

~~To withhold your vote for any individual nominee, draw a line through that nominee’s name above.~~
					IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED AND EMPOWERED TO VOTE UPON OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF STOCKHOLDERS AND ALL CONTINUATIONS, ADJOURNMENTS OR POSTPONEMENTS THEREOF.


					~~COMPANY ID:~~

					~~PROXY NUMBER:~~

					~~ACCOUNT NUMBER:~~

Signature, if held jointly

Note: Please sign exactly as name appears hereon. When shares are held by joint owners, both should sign. When signing as attorney, executor, administrator, trustee, guardian, or corporate officer, please give title as such.