☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) ☒ Definitive Proxy Statement ☐ Definitive Additional Materials ☐ Soliciting Material under §240.14a-12 |
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Dear Fellow Stockholders,
At this pivotal moment, I am keenly aware that none of our achievements would have been possible without the tireless efforts of our Directors, executives and employees. They have supported every step of the Company’s strategic evolution, and also championed our commitment to corporate citizenship. Since the onset of the pandemic,responsibility, we recently published our political engagement and contributions policy, which guides our engagement on public policy. While Annaly has successfully navigated unprecedented marketlong prohibited the use of corporate funds for any political contributions or expenditures, we codified our existing practices to ensure that our political engagement and economic turbulence while also continuing to upholdrelated activities comply with all applicable laws, are consistent with our responsibility as a prudent steward ofcore values and protect and enhance stockholder value.
As a further testament to our alignmentlimited Total Stockholder Return governor with stockholders, the Company made a recent enhancement to our stockholder rights framework. Following sustained dialogue with our top stockholders over the course of several years, in February 2022, the Board determined to proactively lower the threshold formore expansive Absolute Tangible Economic Return modifier.
Asevery decision we make and, as always, we are committed to year-round engagement with both retailgrateful for your feedback, for your investment and institutional investors to ensure we have a full understanding of your priorities and perspectives, including any concerns that may arise between annual meetings. To that end, we have held over 125 in-person, virtual or telephonic meetings with stockholders across the U.S., Canada and Europe since the beginning of 2022. One of the main themes that emerged from these conversations is your continued focus on our environmental, social and governance (“ESG”) initiatives. In June 2022, we were pleased to publish our third corporate responsibility report, which included enhanced climate-related disclosures that considered the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”).
Like much of what makes Annaly who we are today, our focus on corporate responsibility and ESG began with Wellington Denahan, whose personal commitment to sustainability and philanthropy informed the founding of the Corporate Responsibility Committee of the Board in 2017. Wellington’s contributions to Annaly, including her years serving as our Chief Operating Officer, Chief Investment Officer, Chief Executive Officer and Executive Chairman, cannot be overstated. Her foresight, entrepreneurial spirit and wisdom blazed the trail, and I know I speak on behalf of the entire Annaly team in thanking Wellington for her exceptional dedication to the Company, our Board and our stockholders.
In closing, I would also like to thank each of you – for the faith you’ve placed in us these past 25 years, as well as for your continued trust and investment assupport. With that in mind, we move into the next phase of Annaly’s journey. We hope that you will join us for this year’s Annual Meeting of Stockholders, which will be conducted via interactive online format on May 17th.
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ANNALY CAPITAL MANAGEMENT ç152023 PROXY STATEMENTth.
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| | | Date and Time | | | |
| May 15, 2024 9:00 a.m. (Eastern Time) | | | |||
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| | | Virtual Meeting | | | |
| www.virtualshareholdermeeting.com/ NLY2024 | | | |||
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| | | Who May Vote | | | |
| Only common stockholders of record at the close of business on March 18, 2024, the record date for the Annual Meeting (the “Record Date”), may vote at the Annual Meeting and any postponements or adjournments thereof. | | |
ITEMS OF BUSINESS | | | | | |||||||||
Proposal | | | Board Vote Recommendation | | | Page Reference | | ||||||
1 | | | Election of twelve Directors for a term ending at the | | | | | FOR each Director nominee | | | |
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| Approval, on an advisory basis, of the Company’s executive compensation | | | | | FOR | | | |
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| Ratification of |
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The Company will also transact any other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. Only common stockholders of record at the close of business on March 20, 2023, the record date for the Annual Meeting, may vote at the Annual Meeting and any postponements or adjournments thereof.
Your vote is very important. Please exercise your right to vote.
4, 2024.
By Order of the Board of Directors,
Anthony C. Green
Chief Corporate Officer, Chief Legal Officer & Secretary
April [ ], 2023
| | | By Order of the Board of Directors, Anthony C. Green Chief Corporate Officer, Chief Legal Officer & Secretary April 4, 2024 | |
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| IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON MAY 15, 2024 | | | The Company’s Proxy Statement and | | |
| | | | | | Your vote is very important. Please exercise your right to vote. | | | ||||||||||||
| | Vote Before the Meeting | | | | Vote During the Meeting | | | ||||||||||||
| | Internet | | | Mobile Device | | | | | Phone | | | | | | Attend the Meeting | | | ||
| | Online at www.proxyvote.com | | | Scan the QR code to visit www.proxyvote.com | | | Call toll-free 24/7 1-800-690-6903 | | | Complete & return your proxy card | | | | Online at www.virtualshareholder meeting.com/NLY2024 | | |
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENTVoluntary Electronic Receipt of Future Proxy Materials
| | | We promote sustainable and environmentally friendly practices in order to reduce energy use, decrease waste, increase recycling and lower water consumption in our daily operations. We are committed to continuing to look for ways to minimize the environmental footprint of our operations. | | ||||||||
| We encourage our stockholders to enroll in e-delivery to help us conserve our natural resources and save on annual meeting costs | | ||||||||||
| Online at www.proxyvote.com | | | | Scan the QR code to visit www.proxyvote.com | | | |
| Combined with your adoption of electronic delivery of proxy materials, and the elimination of approximately 408,600 sets of proxy materials, we can ideally reduce the impact on the environment by: | | ||||||||||
| | | using approximately 1,070 fewer tons of wood, or 6,420 fewer trees (100 acres of forest) | | | | saving approximately 5.74 million gallons of water, or the equivalent of filling approximately 261 swimming pools | | | | ||
| | | using approximately 6.84 billion fewer BTUs, or the equivalent of the amount of energy used by 8,140 residential refrigerators for one full year | | | | eliminating approximately 316,000 pounds of solid waste | | | | ||
| | | using approximately 4.82 million fewer pounds of greenhouse gases, including CO2, or the equivalent of 438 automobiles running for one year | | | | reducing hazardous air pollutants by approximately 428 pounds | | | |
| Environmental impact estimates were calculated using the Environmental Paper Network Paper Calculator. For more information visit www.papercalculator.org. | |
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Wednesday, May | | ||||||||||||||||||||||||||||
| | Virtual Meeting | | | www.virtualshareholdermeeting.com/ | | |||||||||||||||||||||||
| | Record | | | Close of business on March | |
Proposal | | | Board Vote Recommendation | | | Page Reference | | ||||||
1 | | | Election of Directors | | | | | FOR each Director nominee | | | | ||
2 | | | Approval, on an advisory basis, of the Company’s executive compensation | | | | | FOR | | | | ||
3 | | | Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2024 | | | | | FOR | | | |
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How to Vote:
Stockholders may vote:
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| | | | Vote During the Meeting | | | |||||||||||||
| | Internet | | | Mobile Device | | | | | Phone | | | | | | Attend the Meeting | | | ||
| | Online at www.proxyvote.com | |
| Scan the QR code to visit www.proxyvote.com | | |
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENTPARTICIPATE IN THE ANNUAL MEETING
Participate In the Annual Meeting
You are entitled to participate, vote and ask questions at the Annual Meeting by visiting www.virtualshareholdermeeting.com/NLY2023.
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| NLY | | | | 1997 | | | | $11bn | | | | $74bn | |
| New York Stock Exchange (“NYSE”) Traded | |
| | Initial Public Offering | |
| | Permanent Capital(1) as of December 31, 2023 | |
| | Total Assets(2) as of December 31, 2023 | |
| | Following the dispositions of our Commercial Real Estate and Middle Market Lending businesses in 2021 and 2022, respectively, Annaly has successfully refocused on our core housing finance strategy, which has been our mission since our founding. Since the beginning of 2023, we have continued to enhance our positioning as the leading residential housing focused mortgage REIT through the expansion of our Residential Credit and Mortgage Servicing Rights (“MSR”) businesses. We believe the combination of these strategies on balance sheet provides our stockholders with superior risk-adjusted returns, a strong earnings profile and stability across different interest rate and macro environments. Simultaneously, we have also continued to enhance our best-in-class corporate governance and responsibility practices. | |
Since has economic exposure. Assets reflect TBA purchase contracts (market value) of ($0.6)bn, exclude assets transferred or pledged to securitization vehicles of $13.3bn and include unsettled MSR commitments of $0.5bn and $1.4bn of retained securities that are eliminated in consolidation and are shown net of participations issued totaling $1.1bn. MSR commitments represent the beginningmarket value of deals where Annaly has executed a letter of intent.
2022 marked
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We strive to efficiently diversify
| | We continued to allocate capital across the residential mortgage loan in 2023, with the objective to evaluate the loan and invest across the most attractively priced portion of the mortgage. With Agency MBS as the anchor, we have been able to strategically grow our Residential Credit and MSR businesses into fully scaled platforms while maintaining an intentional focus on credit and risk management given broader market volatility and disruptions to the mortgage finance sector. We believe that we have achieved greater balance in the overall portfolio, which should benefit our leverage and liquidity profiles and support better risk-adjusted returns. | |
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| 6.0% | | | | 25+ | | | | 748% | |
| economic return for the full year 2023 | | | | years of delivering yield to stockholders | | | | total stockholder return since Annaly’s IPO(1) | |
| | | How We Engaged | | | We are committed to ongoing engagement with both retail and institutional stockholders through a wide range of mediums, including: ▪ in-person and virtual meetings, ▪ conferences, ▪ phone calls, ▪ electronic communication, and ▪ social media. | |
| | | Topics We Discussed | | | Following the results of our 2023 advisory resolution on executive compensation (commonly known as a “Say-on-Pay” vote), which received support from over 88% of votes cast, we have continued our multi-pronged stockholder outreach campaign to solicit feedback on a number of issues, including: ▪ our executive compensation practices and disclosures, ▪ our human capital management, including diversity, equity and inclusion (“DE&I”) efforts, ▪ our corporate governance framework and policies, and ▪ our corporate responsibility and environmental, social and governance (“ESG”) initiatives. | |
| 100% | | | | ~90% | | | | >200 | |
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Stockholder Outreach and Results Of 2022 Say-On-Pay Vote
of top 100 institutional investors | |
| | met with investors representing ~90% of included outreach efforts | |
| | meetings with stockholders across the U.S., Canada and Europe during | |
Annaly’s stockholder engagement efforts generated significant feedback for both the Board and management and have resulted in a number of enhancements to our corporate governance, corporate responsibility and executive compensation practices and disclosures over the last few years. Our stockholders have been instrumental to, and supportive of, these governance and disclosure enhancements and we look forward to continuing to find innovative ways to engage over the course of 2023 and beyond.
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6 | ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT
2022–2023 Stockholder Engagement Efforts
| | Annaly’s stockholder engagement efforts generated significant feedback for both the Board and management and have resulted in a number of enhancements to our corporate governance, corporate responsibility and executive compensation practices and disclosures over the last few years. | |
What the | | | What the Company Did | |
| | | Increased the weighting of the Relative Tangible Economic Return metric such that it now accounts for more than 60% of the total corporate scorecard value linked to – Both such metrics had been equally-weighted in 2022 ▪ Replaced the TSR governor, which had previously only capped the portion of the annual incentive award tied to
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Maintain Focus on Board Composition and Succession Planning | | | ▪ Added three highly qualified Independent Directors to our Board ▪ Conducted Board self-evaluation by way of individual Director interviews facilitated by a third-party governance expert ▪ Launched Board Chair succession planning process | |
Advance Human Capital and | | | Published a statement on human rights expressing our commitment to ▪ Published Political Engagement and Contributions Policy that codifies our longstanding practice prohibiting the use of
Supported seven employee-led networks, which collectively led over ▪
Conducted 25 training and
▪
Coordinated over 25 volunteer activities with
▪ Hosted interns in partnership with Project Destined,
▪ | |
| 2023, which: environment; and | |
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| | Additional Actions We Took | | | Our stockholder outreach is complemented by related initiatives, including: ▪
Analysis of market governance, compensation and ESG practices at peer companies ▪
Advice from external advisors – governance, compensation and ESG consultants, – board search firms, – proxy solicitors, and –
discussions with proxy advisory services and corporate governance research firms | |
ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT| 7
| Skill/Experience | | | BOVICH | | | FINKELSTEIN | | | HAMILTON | | | HANNAN | | | HAYLON | | | LAGUERRE | | | LAROCHE | | | REEVES | | | SCHAEFER | | | VOTEK | | | WEDE | | | WILLIAMS | | | TOTAL | | |||
| | | Complex and regulated industries | | | | | | | | | | | | | | | | | | | | | | | | | | | 12/12 | | |||||||||||||
| | | Compliance | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/12 | | |||||
| | | Corporate governance | | | | | | | | | | | | | | | | | | | | | | | | | | | 12/12 | | |||||||||||||
| | | Ethics and ESG | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7/12 | | ||||||||
| | | Finance and accounting | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/12 | | ||||||||||||
| | | Financial services | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10/12 | | |||||||||||
| | | Government, public policy and regulatory affairs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/12 | | ||||
| | | Industry knowledge | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9/12 | | ||||||||||
| | | Information technology/cybersecurity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3/12 | | ||||
| | | Legal expertise | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1/12 | | ||
| | | Mergers & acquisitions | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/12 | | ||||||||||||
| | | Operations/human capital management | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/12 | | ||||||||||||
| | | Other public company board experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/12 | | |||||
| | | Private company board experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8/12 | | |||||||||
| | | Public company CEO | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/12 | | |||
| | | Risk management | | | | | | | | | | | | | | | | | | | | | | | | | | | 12/12 | | |||||||||||||
| | | Strategy development and implementation | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/12 | | ||||||||||||
| | | Gender diversity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/12 | | |||||
| | | Racial/ethnic diversity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5/12 | | ||||||
| | | Audit Committee financial expert(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4/12 | | |||||
| TOTAL | | | 11 | | | 12 | | | 11 | | | 16 | | | 11 | | | 13 | | | 11 | | | 11 | | | 11 | | | 16 | | | 10 | | | 11 | | | | |
| | As evidenced by the composition of our Board, we are committed to seeking out highly qualified candidates of diverse gender and race/ethnicity, as well as taking into account other factors that promote principles of diversity. | ||||||||||||||
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Skill / Experience | Bovich | Finkelstein | Hamilton | Hannan | Haylon | Laguerre | Reeves | Schaefer | Votek | Williams | Total | |||||||||||
Complex and regulated industries | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 10 | |||||||||||
Compliance | ✓ | ✓ | ✓ | ✓ | 4 | |||||||||||||||||
Corporate governance | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 10 | |||||||||||
Ethics and ESG | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 7 | ||||||||||||||
Finance and accounting | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 9 | ||||||||||||
Financial services | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 8 | |||||||||||||
Government, public policy and regulatory affairs | ✓ | ✓ | 2 | |||||||||||||||||||
Industry knowledge | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 7 | ||||||||||||||
Information technology/cybersecurity | ✓ | ✓ | ✓ | 3 | ||||||||||||||||||
Legal expertise | ✓ | 1 | ||||||||||||||||||||
Mergers & acquisitions | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 9 | ||||||||||||
Operations/human capital management | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 9 | ||||||||||||
Other public company board experience | ✓ | ✓ | ✓ | ✓ | 4 | |||||||||||||||||
Private company board experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 7 | ||||||||||||||
Public company CEO | ✓ | ✓ | 2 | |||||||||||||||||||
Risk management | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 10 | |||||||||||
Strategy development and implementation | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | 9 | ||||||||||||
Gender diversity | ✓ | ✓ | ✓ | 3 | ||||||||||||||||||
Racial/ethnic diversity | ✓ | ✓ | ✓ | ✓ | 4 | |||||||||||||||||
Audit Committee financial expert | ✓ | ✓ | ✓ | ✓ | 4 | |||||||||||||||||
Total | 11 | 12 | 10 | 16 | 12 | 13 | 11 | 11 | 15 | 11 |
As evidenced by the composition of our Board, we are committed to seeking out highly qualified candidates of diverse gender and race/ethnicity, as well as taking into account other factors that promote principles of diversity. The Board’sOur Corporate Governance Guidelines formalize the Board’s commitment to seeking out highly qualified candidates of diverse gender and race/ethnicity and include a directorDirector refreshment policy requiring thatprohibiting Independent Directors may not standfrom standing for re-election following after the earlier of their 15th anniversary of service on the Board or their 73rd birthday. In extraordinary circumstances, the Board may determine that an Independent Director may stand for re-election after having reached such age or term limit for up to three additional one-year terms.
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
Continuing Director Diversity(1)
Environmental, Social and Governance (“ESG”)
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENTInitiative (GRI).
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
Table of Contents
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ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT
CORPORATE GOVERNANCE AT ANNALY
| Best Practices | | |||
| Director Independence | | | Separate CEO and Independent Chair of the Board ▪
92% of ▪
Regular executive sessions of Independent Directors ▪
Key Board Committees (Audit, Management Development and Compensation and Nominating/Corporate Governance) are comprised entirely of Independent Directors ▪
Board oversees a succession plan for the CEO and other senior executives | |
| Board Refreshment | | | ▪
Board is committed to seeking out highly qualified candidates of diverse gender and race/ethnicity, as well as taking into account other factors that promote principles of diversity – 33% of – 42% of – 80% of Committee leadership positions are held by women or racially/ethnically diverse Directors | |
| Director | | | Annual Board, Committee and individual Director self-evaluations, with periodic use of an external facilitator ▪
Comprehensive Board succession planning process ▪
Robust over-boarding policy which limits the number of outside public company boards, other than Annaly, on which Directors can serve to three ▪
Multiple Audit Committee financial experts | |
| Stockholder Rights | | | All Directors are elected annually ▪
Majority vote standard for uncontested elections ▪
Annual stockholder advisory vote on executive compensation ▪
Majority voting to approve amendments to the Company’s charter and bylaws ▪
Stockholders representing at least 25% of votes entitled to be cast on a matter may request a special meeting of the Company ▪
Virtual meeting format enables participation from global stockholder base ▪
Stockholders can submit questions for the Annual Meeting through an interactive pre-meeting forum and during the Annual Meeting | |
| Corporate Responsibility
| | | Board created Corporate Responsibility ▪
Publish annual ESG Reports, which include ▪
Corporate Governance Guidelines and Board Committee charters reflect integrated ESG oversight across the Board and its Committees ▪
Sponsor seven employee-led networks
Disclose workforce diversity statistics, including EEO-1 Reports ▪ ▪ Political Engagement and Contributions Policy codifying our longstanding practice prohibiting the use of corporate funds for any political contributions or expenditures ▪
Included in the | |
ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT| 11
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| | | ELECTION OF DIRECTORS | |
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| The Board has nominated and unanimously recommends a vote FOR each | | |||||||||
| ▪ Francine J. Bovich ▪ David L. Finkelstein ▪ Thomas Hamilton ▪ Kathy Hopinkah Hannan | | | ▪ Michael Haylon ▪ Martin Laguerre ▪ Manon Laroche ▪ Eric A. Reeves | | | ▪ John H. Schaefer ▪ Glenn A. Votek ▪ Scott Wede ▪ Vicki Williams | | |||
| | | | as Directors, with each to hold office until the | |
Name and Principal Occupation | | | Age | | | Director since | | | Independent | | | Annaly Committee Membership | | | Other Current Public Company Boards | | |||||||||||||||||||
| Audit |
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Responsibility | |
| Management Development and Compensation | | | Corporate Governance | | | Risk | | |||||||||||||||||||||
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| Morgan Stanley Investment Management | |
| 72 |
| | 2014 | | | | | | | | | | | | | | | | | | 0 | | ||||||||
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| Annaly Capital Management, Inc. | |
| | | 2020 | | | | | | | | | | | | | | | | | | | | | 0 | | ||||||
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| Barclays Capital | |
| 56 |
| | 2019 | | | | | | | | | | | | | | | | | 1 | | |||||||||
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| KPMG LLP | |
| 62 | | | 2019 | | | | |
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| Haylon Conning, Inc. | |
| 66 | | | 2008 | | |
| | | | | | | | | | | | | | | | 0 | | |||||||
| | Martin Laguerre Senior Advisor, Warburg Pincus | | | 50 | | | 2023 | | | | | | | | | | | | | | | | | | 0 | | ||||||||
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| 54 |
| | 2023 | | | | | | | | | | | | | | | | | | 0 | | ||||||||
| | Eric A. Reeves Founder and Chief Executive Officer Prospect Park LLC | | | 51 | | | 2021 | | | | | | | | | | | | | | | | | 0 | | |||||||||
| | John H. Schaefer |
| Morgan Stanley Global Wealth Management | |
| 72 |
| | 2013 | | | | | | | | | | | | | | | | | | 0 | | ||||||
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Glenn A. Votek |
| Annaly Capital Management, Inc. | |
| 65 |
| | 2019 | | | | | | | | | | | | | | | | | | 0 | | ||||||||
| | Scott Wede Former Global Head of Securitized Products and Municipal Finance, Barclays Capital | | | 51 | | | 2023 | | | | | | | | | | | | | | | | | | 0 | | ||||||||
| | Vicki Williams |
| NBCUniversal | |
| 51 |
| | 2018 | | | | | | | | | | | | | | | | | | 0 | | ||||||
Number of 2023 Meetings | | | | | | Board – 12 | | | 6 | | | 4 | | | 8 | | | 5 | | | 5 | | | | |
“CR” refers to
| | | Independent Chair of the Board | | | | | Committee Chair | | | | | Committee Member | | | | | Audit Committee Financial Expert | |
* Independent ChairGuidelines. However, we recognize that certain institutions would not yet view Mr. Votek as independent for purposes of servicing on any of our three key Committees (Audit, MDC and NCG), and therefore the Board.
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| FRANCINE J. BOVICH | | | Independent Director since 2014 | | |||
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COMMITTEES ▪ Management Development and Compensation ▪ Nominating/ Corporate Governance (Chair) |
| | CAREER HIGHLIGHTS The Bradley ▪ Trustee (2011 to present) The BNY Mellon Family of Funds ▪ Board member, including Morgan Stanley Investment Management ▪ Managing Director (1993 to 2010) United Nations Investment Committee ▪ U.S. Representative, advising on a global portfolio of approximately $30 | | | OTHER AFFILIATIONS ▪ Member of the Economic Club of New York ▪ Emeritus Trustee of Connecticut College EDUCATION ▪ B.A. in Economics, ▪ M.B.A. in Finance, | | |
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| DAVID L. | | | Director since 2020 | | ||||
| | | CAREER HIGHLIGHTS Annaly Capital Management, Inc. ▪ Chief Executive Officer (2020 to present) ▪ Chief Investment Officer ▪ Chief Investment Officer, Agency and RMBS ▪ Head of Agency Trading Federal Reserve Bank of New York ▪ Officer in the Markets Group, where he was the primary strategist and policy advisor for the MBS purchase Salomon Smith Barney, Citigroup Inc. and Barclays ▪ Held Agency MBS trading positions | | | OTHER AFFILIATIONS ▪ Vice Chair of the Treasury Markets Practice Group sponsored by the Federal Reserve Bank of New York ▪ Member of the Financial Sector Advisory Council of the Federal Reserve Bank of EDUCATION ▪ B.A. in Business Administration, ▪ M.B.A. ▪ Holds the Chartered Financial Analyst® | | ||
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14 | ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT
| THOMAS HAMILTON | | | Independent Director since 2019 | | |||
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COMMITTEES ▪ Management Development and Compensation ▪ Nominating/ Corporate Governance ▪ Risk (Chair) | | | CAREER HIGHLIGHTS ▪ Owner and Director (2013 to present) ▪ President and Chief Executive Barclays Capital (2004 to 2012) ▪ Strategic Advisor to the Global Head of Fixed Income, Currencies and Commodities ▪ Global Head of Securitized Product Trading and Banking ▪ Head of Municipal Trading and Investment | | | OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS ▪ Larimar Therapeutics, Inc. (NASDAQ: LRMR) OTHER AFFILIATIONS ▪ Co-Founder of the ▪ Director of the ▪ Chairman of the Board of Chondrial Therapeutics, Inc. EDUCATION B.S. in Finance, | | |
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| KATHY HOPINKAH HANNAN, PhD, CPA | | | Independent Director since 2019 | | |||
COMMITTEES ▪ Audit (Chair) ▪ Management Development and Compensation ▪ Nominating/ Corporate Governance | | | CAREER HIGHLIGHTS ▪ Global Lead Partner, ▪ National Managing Partner of Diversity and Corporate ▪ Midwest Area Managing Partner, ▪ Founder, the KPMG Women’s Advisory OTHER AFFILIATIONS Trustee of the Committee for Economic Development in Washington D.C. ▪ Active member of Women Corporate ▪ Chairman of the Board & National President for Girl Scouts of the ▪ Member of the National Advisory Council on Indian Education, serving under President George W. Bush | | | OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS ▪ Otis Elevator Co. (NYSE: OTIS) ▪ Ginkgo Bioworks (NYSE: DNA) EDUCATION ▪ B.A., Loras College ▪ Ph.D. in Leadership Studies, ▪ Graduate of the Chicago Management Institute at the University of Chicago, Booth School of Business ▪ Graduate of the Institute of Comparative Political & Economic Systems at Georgetown ▪ Completed the Carnegie Mellon/NACD Cyber-Risk Oversight Program and the NACD Master Class: Cyber-Risk Oversight Program and earned the CERT Certificate in Cybersecurity | | |
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ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT| 15
| MICHAEL HAYLON | | | Independent Director since 2008 | | |||
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Independent Chair of the Board COMMITTEES ▪ Nominating/ Corporate Governance ▪ Risk | | | Conning, Inc., a global provider of investment management solutions, services and research to the insurance industry ▪ Head of Conning North America (2018 to 2023) ▪ Managing Director ▪ Head of Asset Management Sales, Products and Marketing ▪ Head of Investment Products General Re — New England Asset Management ▪ Head of Investment Product Management Phoenix Companies, Inc. ▪ Chief Financial Officer ▪ Executive Vice President and Chief Investment Officer (2002 to 2003) | | | OTHER AFFILIATIONS ▪ Prior member of the EDUCATION ▪ B.A. ▪ M.B.A. | | |
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| MARTIN LAGUERRE | | | Independent Director since 2023 | | |||
COMMITTEES ▪ Audit ▪ Corporate Responsibility | | | CAREER HIGHLIGHTS ▪ Senior Advisor to capital solutions, financial services and business services Caisse de dépôt et placement du Québec (“CDPQ”) ▪ Executive Vice President and Global Head of Private Equity and Managing Director of Capital Solutions CPP Investment Board (formerly CPPIB) ▪ Senior Principal (2016 to General Electric Power & Water ▪ Managing Director (2010 to IPG Photonics Corporation, ▪ Held various corporate roles | | | OTHER AFFILIATIONS ▪ Current board member of ▪ Prior board member of BGC Partners (NASDAQ: BGCP) ▪ Representing CDPQ, ▪ Representing CPP Investment Board, EDUCATION ▪ Bachelor of Commerce, ▪ M.B.A., the University of ▪ Desautels’ Global Expert at McGill University’s Desautels Faculty of ▪ Holds the Chartered Financial Analyst®designation | | |
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16 | ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT
| MANON LAROCHE | | | Independent Director since 2023 | | |||
| COMMITTEES Corporate Responsibility ▪ Risk | | | CAREER HIGHLIGHTS Citigroup Inc., a multinational investment bank and financial services firm ▪ Managing Director, Head of Global Spread Products Securitized Sales, North America (2018 to 2023) ▪ Head of Global Securitized Markets Sales, New York (2012 to 2018) ▪ Managing Director in Global Securitized Markets Sales (2002 to 2012) | | | EDUCATION ▪ B.S. in Applied Math and Economics, Brown University | |
DIRECTOR QUALIFICATION HIGHLIGHTS The Board believes that Ms. Laroche’s qualifications include her expertise in Agency MBS, mortgages, fixed income, financing, repo, leverage and liquidity, as well as her experience working with a vast network of institutional investors. | | |||||||
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| ERIC A. REEVES | | | Independent Director since 2021 | | |||
| COMMITTEES ▪ Corporate Responsibility (Chair) ▪ Nominating/ Corporate Governance ▪ Risk | | | CAREER HIGHLIGHTS Prospect Park LLC, a full-service advisory and investment banking firm ▪ Founder and Chief Executive Officer (2023 to present) Duchossois Capital Management (“DCM”) ▪ Managing Director, Head of Private Capital Investments The Duchossois ▪ Chief Administrative Officer (2017 to 2023) ▪ General Counsel & Secretary McDermott, Will & Emery ▪ Law Partner Jones ▪ Corporate Attorney | | | OTHER AFFILIATIONS ▪ Former member of the boards of several DCM portfolio companies and funds ▪ Member of the Advisory Board of Ozinga Bros. ▪ Trustee at Rush University Medical Center and the National Philanthropic ▪ Member of the Henry Crown Fellows at the Aspen Institute ▪ Honored as a Chicago United Business Leader of EDUCATION ▪ B.A. ▪ J.D. | |
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| JOHN H. | | | Independent Director since 2013 | | |||
COMMITTEES ▪ Audit ▪ Management Development and Compensation | | | CAREER HIGHLIGHTS ▪ President and Chief Operating Officer of the Global Wealth Management division (2000 to 2005) ▪ Member of ▪ Executive Vice President and Chief Strategic and Administrative Officer ▪ Managing Director and Head of Strategic Planning and Capital Management | | | OTHER AFFILIATIONS ▪ Board member and EDUCATION ▪ B.B.A. in Accounting, ▪ M.B.A. | | |
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16
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
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| GLENN A. | | | Director since 2019 Independent Director since 2023 | | |||
COMMITTEES ▪ Corporate Responsibility ▪ Risk | | | CAREER HIGHLIGHTS Annaly Capital Management, Inc. Senior Advisor ▪ Interim Chief Executive Officer and President ▪ Chief Financial Officer CIT Group ▪ President of ▪ Executive Vice President and Treasurer OTHER AFFILIATIONS ▪ Board member of ▪ Former member of the Rutgers Business School Alumni Board for Learning | | | EDUCATION ▪ B.S. in Finance and Economics, ▪ M.B.A. in Finance, ▪ Attended the Executive Education Program of the Colgate W. Darden Graduate School of Business Administration, ▪ Completed the Carnegie Mellon/NACD Cyber-Risk Oversight Program and earned the CERT Certificate in Cybersecurity | | |
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| SCOTT WEDE | | | Independent Director since 2023 | | |||
COMMITTEES ▪ Audit ▪ Risk | | | CAREER HIGHLIGHTS ▪ President and Barclays Capital ▪ Global Head of Securitized Products and Municipal Finance (2004 to 2015) | | | OTHER AFFILIATIONS ▪ Member of the board of directors of MPOWER Financing (2021 to present) ▪ Member of the Advisory Board of INFLO (2020 to present) ▪ Member of the board of directors of Rapid Applications Group LLC (2016 to 2023) EDUCATION ▪ B.S. in Business Administration, Creighton University | | |
| DIRECTOR QUALIFICATION HIGHLIGHTS The Board believes that Mr. Wede’s qualifications include his expertise in Agency MBS, mortgages, securitized products, risk management and the mortgage REIT sector. | |
| VICKI WILLIAMS | | | Independent Director since 2018 | | |||
| COMMITTEES ▪ Management Development and Compensation (Chair) ▪ Nominating/ Corporate Governance | | | CAREER HIGHLIGHTS NBCUniversal, a multinational media conglomerate ▪ Chief Human Resources Officer ▪ Senior Vice President, Compensation, Benefits and HRIS Pay Governance LLC ▪ Partner Towers Perrin (now Willis Towers Watson) ▪ Principal | | | EDUCATION ▪ B.S. in Education with a concentration in mathematics education, ▪ M.B.A. with a concentration in finance and quantitative statistics, | |
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ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT| 19
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18
| | | Investor Relations Annaly Capital Management, Inc. 1211 Avenue of the Americas New York, NY 10036 | |
Director | Audit Committee | CR Committee | MDC Committee | NCG Committee | Risk Committee | |||||
Francine J. Bovich
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David L. Finkelstein
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Wellington J. Denahan | n
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Thomas Hamilton | n
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Kathy Hopinkah Hannan | E
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Michael Haylon* | n E
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Martin Laguerre | n E
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Eric A. Reeves |
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John H. Schaefer | n
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Glenn A. Votek(1) | n
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Vicki Williams | n
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% of Independent Members:
| 100%
| 60%
| 100%
| 100%
| 67%
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2022 Meetings: | 6 | 5 | 8 | 5 | 5 |
Director | | | Independent | | | Annaly Committee Membership | | ||||||||||||
| Audit | | | Corporate Responsibility | | | Management Development and Compensation | | | Nominating/Corporate Governance | | | Risk | | |||||
Francine J. Bovich | | | | | | | | | | | | | | | | | |||
David L. Finkelstein | | | | | | | | | | | | | | | | | | | |
Thomas Hamilton | | | | | | | | | | | | | | | | ||||
Kathy Hopinkah Hannan | | | | | | | | | | | | | | | | ||||
Michael Haylon | | | | | | | | | | | | | | | | | |||
Martin Laguerre | | | | | | | | | | | | | | | | | |||
Manon Laroche | | | | | | | | | | | | | | | | | |||
Eric A. Reeves | | | | | | | | | | | | | | | | ||||
John H. Schaefer | | | | | | | | | | | | | | | | | |||
Glenn A. Votek(1) | | | | | | | | | | | | | | | | | |||
Scott Wede | | | | | | | | | | | | | | | | | |||
Vicki Williams | | | | | | | | | | | | | | | | | |||
% of Independent Members | | | | | | 100% | | | 100% | | | 100% | | | 100% | | | 100% | |
2023 Meetings (Board – 12) | | | | | | 6 | | | 4 | | | 8 | | | 5 | | | 5 | |
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| | | | Committee Chair | | | | | Committee Member | | | | | Audit Committee Financial Expert | |
19
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
Committee Membership Determinations
Audit Committee
| AUDIT COMMITTEE | |||||||
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Number of Meetings in | | |||||||
| COMMITTEE MEMBERS Chair Thomas Hamilton Martin Laguerre John H. Schaefer Scott Wede | | | KEY RESPONSIBILITIES ▪ Appoints the independent registered public accounting firm and reviews its qualifications, performance and independence ▪ ▪
Reviews the plan and results of the auditing engagement with the Chief Financial Officer and the independent registered public accounting firm ▪
Oversees internal audit activities ▪
Oversees the quality and integrity of financial statements and financial reporting process ▪
Oversees the adequacy and effectiveness of internal control over financial reporting ▪
Reviews and pre-approves the audit and permitted non-audit services and proposed fees of the independent registered public accounting firm ▪
Prepares the report of the Audit Committee required by ▪
Together with the Risk Committee, jointly oversees practices and policies related to cybersecurity and receives regular reports from management throughout the year on cybersecurity and related risks | | |||
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| | | | For more information on the Audit Committee’s responsibilities and activities, see the “Board Oversight of Risk” and “Report of the Audit Committee” sections of this Proxy Statement. | |
CR Committee
| CORPORATE RESPONSIBILITY COMMITTEE | |||||||
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Number of Meetings in | | |||||||
| COMMITTEE MEMBERS Eric A. Reeves, Chair Martin Laguerre Manon Laroche Glenn A. Votek | | | KEY RESPONSIBILITIES Assists the Board in its oversight of the Company’s items of corporate responsibility that reflect the Company’s values and character, including: – corporate philanthropy – responsible investments, including social impact investments – environmental and sustainability – public policy – reputation | | |||
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For more information on the CR Committee’s responsibilities and activities, see the “Board Oversight of Risk” and “Environmental, Social | |
ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT| 23
MDC Committee
| MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE | |||||||
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Number of Meetings in | | |||||||
| COMMITTEE MEMBERS Vicki Williams, Chair Francine J. Bovich Thomas Hamilton Kathy Hopinkah Hannan John H. Schaefer | | | KEY RESPONSIBILITIES Assists the Board in overseeing the Company’s executive compensation policies and practices ▪
Reviews and recommends to the Independent Directors ▪
Reviews and approves the compensation of the named executive officers (“NEOs”), other than the CEO ▪
Reviews, approves and recommends to the Board the adoption of equity-based compensation or incentive compensation plans ▪
Assists the Board in its oversight of the development, implementation and effectiveness of the Company’s policies and strategies relating to its human capital management, including recruiting, retention, career development, management succession, corporate culture, diversity and employment ▪
Reviews the form and amount of Director compensation ▪
Prepares the report of the Compensation Committee required by | | |||
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| | | | For more information on the MDC Committee’s responsibilities and activities, see the “Compensation of Directors,” “Compensation Discussion and Analysis | |
NCG Committee
| NOMINATING/CORPORATE GOVERNANCE COMMITTEE | |||||||
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Number of Meetings in | | |||||||
| COMMITTEE MEMBERS Francine J. Bovich, Chair Kathy Hopinkah Hannan Michael Haylon Eric A. Reeves Vicki Williams | | | KEY RESPONSIBILITIES Develops and recommends criteria for considering potential Board candidates ▪
Identifies and screens individuals qualified to become Board members and recommends to the Board candidates for nomination for election or re-election to the Board ▪
Develops and recommends to the Board a set of corporate governance guidelines and recommends modifications as appropriate ▪
Provides oversight of the evaluation of the Board ▪
Considers other corporate governance matters, such as Director tenure and retirement policies and potential conflicts of interest of Board members and senior management, and recommends changes as appropriate ▪
Considers continuing education alternatives for Directors and provides oversight of management’s responsibility for providing the Board with educational sessions on matters relevant to the Company and its business | | |||
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standards. | | |||||||
| | | | For more information on the NCG Committee’s responsibilities and activities, see the “Director Criteria and Qualifications,” “Consideration of Board Diversity,” “Board Effectiveness, Self-Evaluations and Refreshment,” “Director Nomination Process | |
24 | ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT
Risk Committee
| RISK COMMITTEE | |||||||
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Number of Meetings in | | |||||||
| COMMITTEE MEMBERS Thomas Hamilton, Chair Michael Haylon Manon Laroche Eric A. Reeves Glenn A. Votek Scott Wede | | | KEY RESPONSIBILITIES Assists the Board in its oversight of the Company’s: – risk governance structure – risk management and risk assessment guidelines and policies regarding capital, liquidity and funding risk, investment/market risk, credit risk, counterparty risk, operational risk, compliance, regulatory and legal risk and such other risks as necessary to fulfill the Committee’s duties and responsibilities – risk appetite, including risk appetite levels and capital adequacy and limits ▪
Together with the Audit Committee, jointly oversees practices and policies related to cybersecurity and receives regular reports from management throughout the year on cybersecurity and related risks | | |||
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For more information on the Risk Committee’s responsibilities and activities, see the “Board Oversight of Risk | |
Starting in 2019, the Board has separated the roles of Chair of the Board and CEO. While the Board believes that whether to have the same person occupy the offices of Chair of the Board and CEO should be decided by the Board from time to time in its business judgment, the Board has determined that having strong independent Board leadership in the form of an Independent Chair is in the best interests of the Company at this time. In addition to the Chair, the Board may elect a Vice Chair from among its members to assist the Chair. Currently, Mr. Haylon serves as Independent Chair of the Board and Ms. Denahan serves as Vice Chair.
The separation of the CEO and Chair roles allows the CEO to focus on our overall business and strategy, while allowing the Chair to focus their attention on governance of the Board and oversight of management. The Vice Chair supports the Chair in carrying out certain of their responsibilities. The Board believes that its independent oversight function is further enhanced by its policy to hold regular executive sessions of the Independent Directors without management present and the fact that a majority of our Directors (and every member of the Audit Committee, MDC Committee and NCG Committee) is independent.
| | | DAVID L. FINKELSTEIN Chief Executive Officer and Chief Investment Officer | |
| | | MICHAEL HAYLON Independent Chair of the Board | |
| Since 2019, the Board has separated the roles of CEO and Chair of the Board. While the Board believes that whether to have the same person occupy the offices of CEO and Chair of the Board should be decided by the Board from time to time in its business judgment, the Board has determined that having strong independent Board leadership in the form of an Independent Chair is in the best interests of the Company at this time. Currently, Mr. Haylon serves as Independent Chair of the Board. The separation of the CEO and Chair roles allows the CEO to focus on our overall business and strategy, while allowing the Chair to focus their attention on governance of the Board and oversight of management. The Board believes that its independent oversight function is further enhanced by its policy to hold regular executive sessions of the Independent Directors without management present and the fact that a majority of our Directors (and every member of the Audit Committee, MDC Committee and NCG Committee) is independent. In addition, the Board believes its approach to risk management ensures that the Board can choose many leadership structures while continuing to effectively oversee risk management. | | | The Independent Chair of the Board | |
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Presides at meetings and executive sessions of the Board ▪
Serves as a liaison between the CEO and the Independent Directors ▪
Presides over ▪
Together with the Board, ▪
Participates, together with the MDC Committee, in the performance evaluation of the CEO ▪
Provides input into the selection of Committee chairs ▪
Approves Board meeting agendas and schedules ▪
Advises the CEO on the Board’s informational needs ▪
Has authority to call and chair meetings and executive sessions of the Board ▪
Authorizes the retention of advisors and consultants who report to the Board ▪
Together with the NCG Committee Chair, leads the Board’s annual performance evaluation ▪
If requested by stockholders, ensures that they are available when appropriate for consultation and direct communication with major stockholders | |
26 | ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT
Annaly’s Corporate Governance Guidelines and NYSE rules require that at least a majority of Board members are Independent Directors. The Board has adopted the definition of “independent director” set forth in Section 303A of the NYSE rules and has affirmatively determined that each Director (other than Ms. Denahan and Messrs. Finkelstein and Votek) has no material relationships with the Company other than as a Director (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) and is therefore independent under all applicable criteria for independence in accordance with the standards set forth in the NYSE rules and our Corporate Governance Guidelines.
| NYSE listing standards and our Corporate Governance Guidelines require that at least a majority of Board members are Independent Directors. The Board has adopted the definition of “independent director” set forth in Section 303A of the NYSE listing standards and has affirmatively determined that each Director (other than Mr. Finkelstein) has no material relationships with the Company other than as a Director (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) and is therefore independent under all applicable criteria for independence in accordance with the standards set forth in the NYSE listing standards and our Corporate Governance Guidelines. However, we recognize that certain institutions would not yet view Mr. Votek as independent for purposes of serving on any of our three key Committees (Audit, MDC and NCG), and therefore the Board has determined not to appoint Mr. Votek to those Committees at this time. | | | | |
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| | | | Dr. Hannan and Mr. Votek | | ||||||||||||||||||||||||||
| completed the Carnegie Mellon/ NACD Cyber-Risk Oversight Program and earned the CERT Certificate in Cybersecurity Oversight in 2021. In 2023, Dr. Hannon completed the NACD Master Class: Cyber-Risk Oversight Program. | ||||||||||||||||||||||||||||||
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The Board has overall responsibility for technology-related oversight and strategy, which includes regular updates on our overall technology strategy, potential technology disruption and emerging technology and innovation trends, along with review of the Company’s approach to major technology spend and innovations. In addition, the Board receives updates from the Audit Committee and Risk Committee, which have joint oversight of cyber and technology-related risks. The Audit Committee has specific oversight of cyber and technology risks related to financial reporting and the Risk Committee has specific oversight of cyber and technology risks related to operations. The Committees receive joint and individual presentations from management and external experts on the foregoing topics and held two joint meetings in 2022. In 2021, Dr. Hannan and Mr. Votek completed the Carnegie Mellon/NACD Cyber-Risk Oversight Program and earned the CERT Certificate in Cybersecurity Oversight. In 2023, Dr. Hannan completed the NACD Master Class: Cyber-Risk Oversight Program.
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
The Board exercises its oversight of ESG risk primarily through the CR Committee with support from the other Board Committees, as more fully described in the “Environmental, Social and Governance(“ESG”)” section of this Proxy Statement. In addition to the risk oversight processes outlined above, the Board annually reviews its risk assessment of the Company’s compensation policies and practices applicable to the Company’s annual cash incentive and equity incentive plans. For additional information on this review, please see the “Risks Related to Compensation Policies and Practices” section of this Proxy Statement.
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Focus areas of the 2022 self-evaluation included Board and Committee leadership structure, dynamics, priorities, skills, processes and fulfillment of responsibilities. Based in part on the results of the 2022 self-evaluation process, the Board’s practices evolved in a number of ways during 2022, including:
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| | | ▪ Determination to identify additional Directors with mortgage and Agency MBS expertise ▪ Increased focus on a formalized Board ▪ Identified additional priority topics for Board’s 2024 agenda | |
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| The Corporate Governance Guidelines formalize the Board’s commitment to seeking out highly qualified candidates of diverse gender and race/ | |
| | | Anthony C. Green Chief Corporate Officer, Chief Legal Officer and Secretary Annaly Capital Management, Inc. 1211 Avenue of the Americas New York, NY 10036 | |
25
ANNALY CAPITAL MANAGEMENT çNominations2023 PROXY STATEMENT.”
Annaly Capital Management, Inc.
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| | | Annaly Capital Management, Inc. [Addressee] 1211 Avenue of the Americas New York, NY 10036 | | | | | Phone 1-888-8 ANNALY | | | | | Facsimile (212) 696-9809 | | | | | Email investor@annaly.com | |
New York, NY 10036ANNALY CAPITAL MANAGEMENT
Phone: 2024 PROXY STATEMENT
Facsimile: (212) 696-9809
Email: investor@annaly.com
During 2022,
In response to revised policies and commentary from leading institutional investors and the considerable time commitment and responsibilities associated with Board and Committee service, in 2020 the Board refined its
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The Company’s “over-boarding” policy limits the number of outside boards on which our Directors can | |
26
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
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| 2023 Annual Non-Employee Director Fees | |
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| Additional Cash Retainers for Board Service | | | Amount ($) | | ||||
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Independent Board Chair | | | | 115,000 | | | |||
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Vice Chair | | | | 10,000 | | | |||
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Committee Member | | | | | 10,000 | | | ||
| Committee Chairs(1): | | | ||||||
| ▪ Audit | | | | | 25,000 | | | |
MDC Committee | | | | | 20,000 | | | ||
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All other Board committees | | | | | 15,000 | | |
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Director Stock Ownership Guidelines
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Name(1) | Fees Earned or ($)(2) | Stock Awards(3) ($) | All Other ($) | Total ($) | ||||||||||||
Francine J. Bovich | 135,000 | 155,000 | — | 290,000 | ||||||||||||
Wellington J. Denahan | 145,000 | 155,000 | 24,240 | (4) | 324,240 | |||||||||||
Katie Beirne Fallon(5) | 101,250 | 155,000 | — | 256,250 | ||||||||||||
Thomas Hamilton | 130,000 | 155,000 | — | 285,000 | ||||||||||||
Kathy Hopinkah Hannan | 155,000 | 155,000 | — | 310,000 | ||||||||||||
Michael Haylon | 240,000 | 155,000 | — | 395,000 | ||||||||||||
Eric A. Reeves | 135,000 | 155,000 | — | 290,000 | ||||||||||||
John H. Schaefer | 130,000 | 155,000 | — | 285,000 | ||||||||||||
Glenn A. Votek | 120,000 | 155,000 | 24,240 | (4) | 299,240 | |||||||||||
Vicki Williams | 140,000 | 155,000 | — | 295,000 |
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| Name | | | Fees Earned or Paid in Cash(1) ($) | | | Stock Awards(2) ($) | | | All Other Compensation ($) | | | Total ($) | | ||||||||||||
| Francine J. Bovich | | | | | 140,000 | | | | | | 155,000 | | | | | | 0 | | | | | | 295,000 | | |
| Wellington J. Denahan(3) | | | | | 72,500 | | | | | | 0 | | | | | | 10,043(4) | | | | | | 82,543 | | |
| Thomas Hamilton | | | | | 141,250 | | | | | | 155,000 | | | | | | 0 | | | | | | 296,250 | | |
| Kathy Hopinkah Hannan | | | | | 155,000 | | | | | | 155,000 | | | | | | 0 | | | | | | 310,000 | | |
| Michael Haylon | | | | | 242,500 | | | | | | 155,000 | | | | | | 0 | | | | | | 397,500 | | |
| Martin Laguerre | | | | | 120,000 | | | | | | 155,000 | | | | | | 0 | | | | | | 275,000 | | |
| Manon Laroche | | | | | 30,000 | | | | | | 155,000 | | | | | | 0 | | | | | | 185,000 | | |
| Eric A. Reeves | | | | | 145,000 | | | | | | 155,000 | | | | | | 0 | | | | | | 300,000 | | |
| John H. Schaefer | | | | | 127,500 | | | | | | 155,000 | | | | | | 0 | | | | | | 282,500 | | |
| Glenn A. Votek | | | | | 120,000 | | | | | | 155,000 | | | | | | 10,043(4) | | | | | | 296,626 | | |
| Scott Wede | | | | | 30,000 | | | | | | 155,000 | | | | | | 0 | | | | | | 185,000 | | |
| Vicki Williams | | | | | 140,000 | | | | | | 155,000 | | | | | | 0 | | | | | | 295,000 | | |
Name | | | Age | | | Title | | |
David L. Finkelstein | | | 51 | | Chief Executive Officer and Chief Investment Officer | |||
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Serena Wolfe | | | 44 | | Chief Financial Officer | |||
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Steven F. Campbell | | | 52 | | President and Chief Operating Officer | |||
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Anthony C. Green | | | 49 | | Chief Corporate Officer, Chief Legal Officer and Secretary | |
Serena Wolfe has served as Chief Financial Officer of the Company since December 2019. Prior to joining the Company in 2019, Ms. Wolfe served as a Partner at Ernst & Young LLP (“EY”) since 2011 and as its Central Region Real Estate Hospitality & Construction (“RHC”) leader from 2017 to November 2019, managing the go-to-market efforts and client relationships across the sector. Ms. Wolfe was previously also EY’s Global RHC Assurance Leader. Ms. Wolfe practiced with EY for over 20 years, including six years with EY Australia and 16 years with the U.S. practice. Ms. Wolfe currently serves on the boards of Berkshire Grey, Inc. and Doma Holdings, Inc. Ms. Wolfe graduated from the University of Queensland with a Bachelor of Commerce in Accounting. Ms. Wolfe is a Certified Public Accountant in the states of New York, California, Illinois and Pennsylvania.
Steven F. Campbell has served as Chief Operating Officer of the Company since June 2020 and President of the Company since December 2022. Prior to these positions, Mr. Campbell served in a number of other senior roles at the Company, including as Head of Business Operations from September 2019 to June 2020, Head of Credit Operations and Enterprise Risk from February 2018 to September 2019, Chief Operating Officer of Annaly Commercial Real Estate Group from December 2016 to February 2018 and Head of Credit Strategy from April 2015 to February 2018. Mr. Campbell has over 25 years of experience in financial services. Prior to joining the Company in 2015, Mr. Campbell held various roles over six years at Fortress Investment Group LLC, including serving as a Managing Director in the Credit Funds business. Prior to that, Mr. Campbell held positions at General Electric Capital Corporation and D.B. Zwirn & Co., L.P. with a focus on credit and debt restructuring. Mr. Campbell currently serves on the Advisory Board for the Fitzgerald Institute of Real Estate at the University of Notre Dame. Mr. Campbell received a B.B.A. from the University of Notre Dame and a M.B.A. from the University of Chicago, Booth School of Business.
Anthony C. Green
| SERENA WOLFE | | ||||||
| | | CAREER HIGHLIGHTS Annaly Capital Management, Inc. ▪ Chief Financial Officer (December 2019 to present) Ernst & Young LLP (“EY”) ▪ Partner and Central Region Real Estate Hospitality & Construction (“RHC”) Leader, managing the go-to-market efforts and client relationships across the sector (2017 to 2019) ▪ Global RHC Assurance Leader (2017 to 2019) ▪ Partner (2011 to 2017) ▪ Practiced with EY for over 20 years, including six years with EY Australia and 16 years with the U.S. practice | | | OTHER PUBLIC COMPANY BOARD SERVICE ▪ Lennar Corporation (NYSE: LEN) ▪ Doma Holdings, Inc. (NYSE: DOMA) EDUCATION ▪ Bachelor of Commerce in Accounting, the University of Queensland ▪ Certified Public Accountant in the states of New York and California | |
| STEVEN F. CAMPBELL | | ||||||
| | | CAREER HIGHLIGHTS Annaly Capital Management, Inc. ▪ President (December 2020 to present) ▪ Chief Operating Officer (June 2020 to present) ▪ Head of Business Operations (2019 to June 2020) ▪ Head of Credit Operations and Enterprise Risk (2018 to 2019) ▪ Chief Operating Officer of Annaly Commercial Real Estate Group (2016 to 2018) ▪ Head of Credit Strategy (2015 to 2018) Fortress Investment Group LLC ▪ Held various roles over six years, including serving as Managing Director in the Credit Funds business | | | OTHER AFFILIATIONS ▪ Member of the Advisory Board for the Fitzgerald Institute of Real Estate at the University of Notre Dame EDUCATION ▪ B.B.A., the University of Notre Dame ▪ M.B.A., the University of Chicago, Booth School of Business | |
| ANTHONY C. GREEN | | ||||||
| | | CAREER HIGHLIGHTS. Annaly Capital Management, Inc. ▪ Chief Corporate Officer, Chief Legal Officer and Secretary (January 2019 to present) ▪ Chief Legal Officer and Secretary (2017 to 2019) ▪ Deputy General Counsel (2009 to 2017) K&L Gates ▪ Law Partner in the Corporate, Securities, Mergers & Acquisitions Group | | | EDUCATION ▪ B.A. in Economics and Political Science, the University of Pennsylvania ▪ J.D. and LL.M. in International and Comparative Law, Cornell Law School | |
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34 | ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
| | | | | 36 | | | |
Introduction | | | | | | | ||
| | | | | 36 | | | |
| | | | | 37 | | | |
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| Stockholder Outreach and Results of 2023 Say-on-Pay Vote | | | | | 38 | | |
| Total Direct Compensation Table | | | | | 39 | | |
| | | | | 40 | | | |
| Overview | | | | | 40 | | |
| Role of the MDC Committee’s Independent Compensation Consultant | | | | | 40 | | |
| Company Market Data | | | | | 40 | | |
| | | | | 42 | | | |
| Overview | | | | | 42 | | |
| Base Salary | | | | | 42 | | |
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| DAVID L. | | | | SERENA WOLFE | | | | STEVEN F. CAMPBELL | | | | ANTHONY C. GREEN | |
| ▪ Chief Executive Officer ▪ Chief Investment Officer | |||||||||||||
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| | | ▪ President ▪ Chief Operating Officer | |||||||||||
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| | | ▪ Chief Corporate Officer, Chief Legal Officer and Secretary | |||||||||||
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Effective July 1, 2020, the Company transitioned from an externally-managed REIT to an internally-managed REIT (the “Internalization”) and the MDC Committee assumed responsibilityevolution of our executive compensation program, and broad oversight of our human capital management. As described further below, the MDC Committee is committed to institutionalizing a market competitive executive compensation program thatwhich we believe incentivizes strong performance, drives alignment with stockholders and reflectsincorporates best practices, market insights and robust corporate governance. This commitmentExecutive compensation is reflected byone of the significant changes tocore pillars of our stockholder engagement strategy and we are proud of the responsive enhancements we have made year-over-year, along with our performance-driven compensation philosophy, practices and program construction, all of which are detailed below.
Executive Compensation Following the Internalization
Following peer benchmarking, stockholder outreach and a reviewmost of best practices, the MDC Committee introduced a number of changes toour stockholders strongly support our executive compensation program, including the changes and enhancements we have made over the last few years. During these conversations, some stockholders noted that, for 2022, the MDC Committee had determined to apply its discretion to reduce total NEO incentive amounts to slightly below the amounts provided for by the Company’s more formulaic annual incentive framework in connectionorder to address the Company’s stock market performance and to increase alignment between the NEOs and our stockholders.
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To further2022 performance, inclusive of the MDC Committee’s discretionary reduction. Based on our conversations with investors, we believe these enhancements for 2023 appropriately address stockholder feedback, including the goal of achieving stronger alignment of our executive compensation program withbetween the interests of our stockholders and supportthose of our NEOs. The MDC Committee will continue to consider the firm’s ownership culture,outcome of future Say-on-Pay votes, as well as stockholder feedback received throughout the year, and invites stockholders to express their views to the MDC Committee made a number of enhancementsas described under “Communications with the Board.”
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Additional Executive Compensation Enhancements for 2022
In order to further strengthen our executive compensation program and in response to stockholder feedback, the MDC Committee adopted a number of additional compensation enhancements for 2022, including:
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Philosophy and Program Objectives
The MDC Committee’sCompany performance without encouraging unnecessary risk taking. Our compensation philosophy seeks to align the interests of our employees with those of our stockholders and is driven by the following principles:
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENTCOMPONENTS OF EXECUTIVE COMPENSATION
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
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allowed for continued cost savings and operating flexibility | ||
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Note: For footnoted information, please refer to “Operational Efficiency” in Endnotes section.
34
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
Components of Executive Compensation
The table below describes the objectives supported by our primary compensation elements for 2022 –2023 — commonly referred to as “total direct compensation” –— along with an overview of the key measures and governance principles for each element.
| 2023 Compensation Element | | | Objectives | | | Key Measures | | | Governance Principles | | ||||||
| ◀ FIXED ▶ | | Term | | |||||||||||||
BASE SALARY | | | Provide a level of fixed pay appropriate to | | | Experience, duties and scope of ▪
Internal and external market factors | | | Comprises minority of overall compensation opportunity compared to “at risk” pay | | |||||||
◀ AT RISK / VARIABLE ▶ | | | ANNUAL CASH INCENTIVES | | | Provide a market competitive annual cash incentive opportunity ▪
Incentivize and reward superior Company and individual performance | | | Considers achievement of financial, risk and other operational performance measures for the performance year | | | No guaranteed minimum award amounts ▪ Maximum award value of 120% of target(1) | | ||||
Long- Term | | | LONG-TERM INCENTIVES | | | Align NEO’s interests with long-term stockholder interests ▪
Encourage long-term, sustainable performance results ▪
Support retention of key talent | | | Award amounts included as part of annual incentive and, as such, consider achievement of financial, risk and other operational performance measures for the performance year ▪
Restricted stock units (“RSUs”) vest based on continued service and provide both retention and stock value accumulation incentives ▪ Performance share units (“PSUs”) vest based on achievement of multiple rigorous Company performance metrics over a three-year performance period | | | No guaranteed minimum award amounts ▪ Maximum award value of 120% of target at grant ▪ PSUs have a maximum award payout of 150% of grant Equally-weighted mix of PSUs and RSUs | |
| 100% | | | | ~90% | | | | >200 | |
| of top 100 institutional investors included in 2023-2024 outreach efforts | | | | held meetings with stockholders representing ~90% of shares of 10 largest stockholders in 2023-2024 outreach season | | | | meetings with stockholders across the U.S., Canada and Europe during 2023 | |
| At our 2023 Annual Meeting, over 88% of the votes cast were in favor of the Say-on-Pay vote. The MDC Committee carefully reviewed these voting results, along with additional feedback from our stockholder engagement efforts, when making executive compensation decisions. Since the beginning of 2023, we initiated outreach to stockholders representing approximately 90% of outstanding institutional shares. During these meetings, we solicited feedback on a number of corporate governance and corporate responsibility topics and requested feedback on stockholders’ preferred practices for executive compensation design and disclosure. | | | | |
| | | As further described under “Recent Stockholder Engagement Efforts” above, the feedback generated through this engagement meaningfully informed the MDC Committee’s executive compensation decisions for 2023 and, as highlighted below, directly contributed to the MDC Committee’s holistic approach to institutionalizing a compensation program that drives performance, supports our culture and reflects the insights and priorities of our long-term investors. | |
| | What the Company Does | | | | | What the Company Does Not Do | | ||
▪ Majority of compensation is “at risk” — for 2023, variable performance-based compensation comprised 94% of the CEO’s total compensation and 86% of the other NEOs’ total compensation(1) ▪ MDC Committee applied a corporate scorecard reflecting both objective financial and non-financial goals (75% weighting) and individual achievements (25% weighting) in determining total incentive awards for 2023 ▪ Multiple performance metrics — diversified mix of rigorous Company performance metrics, including tangible economic return and earnings available for distribution (“EAD”) return on equity ▪ Relative performance metrics require above median (55%+) performance to achieve target payouts ▪ Two clawback policies for NEOs: one that covers financial restatements and a second for misconduct ▪ All NEOs are subject to robust stock ownership requirements and holding restrictions ▪ Annual assessment of NEO compensation practices against peer companies and best practices ▪ Annual compensation risk assessment to ensure compensation program does not encourage excessive risk-taking ▪ Regular stockholder feedback through robust outreach program | | | ▪ No minimum guaranteed bonus amounts ▪ No guaranteed salary increases ▪ No severance benefits paid to an executive other than in connection with their involuntary termination of employment by the Company without “cause” ▪ No enhanced cash severance for terminations in connection with a change in control ▪ No NEO severance payments and benefits exceeding 2.99 times salary and bonus ▪ No “single trigger” cash severance or automatic vesting of equity awards based solely upon a change in control of the Company ▪ No excessive perquisites ▪ No tax gross-ups for change in control excise taxes or on any executive perquisites, other than for non-cash relocation benefits ▪ No hedging or pledging of Company stock ▪ No dividends or dividend equivalents on unvested awards paid unless and until the underlying awards are earned and vested ▪ No repricing of options or stock appreciation rights (“SARs”) or the exchange of underwater options or SARs for cash or other awards without stockholder approval ▪ No supplemental executive retirement plans | |
Awards for Performance | ||||||||||||||||||||
NEO(1) | Year | Salary ($) | Variable Cash Awards ($) | Equity Awards ($) | Total | |||||||||||||||
David L. Finkelstein | 2022 | $1,000,000 | $5,984,000 | (2) | $6,984,000 | (2)(3) | $13,968,000 | (4) | ||||||||||||
2021 | $1,000,000 | $6,325,000 | $7,325,000 | $14,650,000 | ||||||||||||||||
2020 | $950,000 | $7,200,000 | $6,800,000 | (5) | $14,950,000 | |||||||||||||||
Serena Wolfe | 2022 | $750,000 | $1,781,250 | (2) | $1,781,250 | (2)(3) | $4,312,500 | (4) | ||||||||||||
2021 | $750,000 | $3,000,000 | $750,000 | $4,500,000 | ||||||||||||||||
2020 | $750,000 | $2,600,000 | $400,000 | $3,750,000 | ||||||||||||||||
Steven F. Campbell(6) | 2022 | $750,000 | $1,828,750 | (2) | $1,828,750 | (2)(3) | $4,407,500 | (4) | ||||||||||||
2021 | — | — | — | — | ||||||||||||||||
2020 | — | — | — | — | ||||||||||||||||
Anthony C. Green | 2022 | $750,000 | $1,781,250 | (2) | $1,781,250 | (2)(3) | $4,312,500 | (4) | ||||||||||||
2021 | $750,000 | $1,875,000 | $1,875,000 | $4,500,000 | ||||||||||||||||
2020 | $750,000 | $2,800,000 | $1,600,000 | (5) | $5,150,000 |
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NEO | RSUs | PSUs | ||||||
David L. Finkelstein | $3,492,000 | $3,492,000 | ||||||
Serena Wolfe | $890,625 | $890,625 | ||||||
Steven F. Campbell | $914,375 | $914,375 | ||||||
Anthony C. Green | $890,625 | $890,625 |
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NEO | | | Year | | | Salary ($) | | | Awards for Performance | | | | | | | | |||||||||||||||
| Variable Cash Awards ($) | | | Equity Awards ($) | | | Total ($) | | |||||||||||||||||||||||
David L. Finkelstein | | | | | 2023 | | | | | | 1,000,000 | | | | | | 7,328,100(1) | | | | | | 8,328,100(1)(2) | | | | | | 16,656,200(3) | | |
| | | 2022 | | | | | | 1,000,000 | | | | | | 5,984,000 | | | | | | 6,984,000 | | | | | | 13,968,000 | | | ||
| | | 2021 | | | | | | 1,000,000 | | | | | | 6,325,000 | | | | | | 7,325,000 | | | | | | 14,650,000 | | | ||
Serena Wolfe | | | | | 2023 | | | | | | 750,000 | | | | | | 2,348,400(1) | | | | | | 2,348,400(1)(2) | | | | | | 5,446,800(3) | | |
| | | 2022 | | | | | | 750,000 | | | | | | 1,781,250 | | | | | | 1,781,250 | | | | | | 4,312,500 | | | ||
| | | 2021 | | | | | | 750,000 | | | | | | 3,000,000 | | | | | | 750,000 | | | | | | 4,500,000 | | | ||
Steven F. Campbell(4) | | | | | 2023 | | | | | | 750,000 | | | | | | 2,739,800(1) | | | | | | 2,739,800(1)(2) | | | | | | 6,229,600(3) | | |
| | | 2022 | | | | | | 750,000 | | | | | | 1,828,750 | | | | | | 1,828,750 | | | | | | 4,407,500 | | | ||
| | | 2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Anthony C. Green | | | | | 2023 | | | | | | 750,000 | | | | | | 2,035,300(1) | | | | | | 2,035,300(1)(2) | | | | | | 4,820,600(3) | | |
| | | 2022 | | | | | | 750,000 | | | | | | 1,781,250 | | | | | | 1,781,250 | | | | | | 4,312,500 | | | ||
| | | 2021 | | | | | | 750,000 | | | | | | 1,875,000 | | | | | | 1,875,000 | | | | | | 4,500,000 | | |
| NEO | | | RSUs ($) | | | PSUs ($) | | ||||||
| David L. Finkelstein | | | | | 4,164,050 | | | | | | 4,164,050 | | |
| Serena Wolfe | | | | | 1,174,200 | | | | | | 1,174,200 | | |
| Steven F. Campbell | | | | | 1,369,900 | | | | | | 1,369,900 | | |
| Anthony C. Green | | | | | 1,017,650 | | | | | | 1,017,650 | | |
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Stockholder Outreach and Results of 2022 Say-on-Pay Vote
At our 2022 Annual Meeting, over 88% of the votes cast were in favor of the advisory resolution on executive compensation (commonly known as a “Say-on-Pay” vote). The MDC Committee carefully reviewed these voting results, along with additional feedback from our stockholder engagement efforts, when making executive compensation decisions. Since the beginning of 2022, we initiated outreach to stockholders representing approximately 90% of outstanding institutional shares. During these meetings, we solicited feedback on a number of corporate governance and corporate responsibility topics and requested feedback on stockholders’ preferred practices for executive compensation design and disclosure. As further described under “2022–2023 Stockholder Engagement Efforts” above, the feedback generated through this engagement meaningfully informed the MDC Committee’s executive compensation decisions in 2022 and, as highlighted below, directly contributed to the MDC Committee’s holistic approach to institutionalizing a compensation program that drives performance, supports our culture and reflects the insights and priorities of our long-term investors.
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The MDC Committee will continue to consider the outcome of future Say-on-Pay votes, as well as stockholder feedback received throughout the year, and invites stockholders to express their views to the MDC Committee as described under “Communications with the Board.”
Note: For footnoted information, please refer to “What the Company Does” in Endnotes sections.
37
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| | | | ▪ Jefferies Financial Group | | | | ▪ Raymond James Financial, Inc. | | |
| ▪ AGNC Investment Corp. | | | | ▪ Lazard Ltd. | | | | ▪ Redwood Trust, Inc. | |
| ▪ Ameriprise Financial, Inc. | | | | ▪ MFA Financial, Inc. | | | | ▪ The Carlyle Group L.P. | |
| ▪ Chimera Investment Corporation
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New York Mortgage Trust | | | | ▪ Voya Financial | |
| ▪ Franklin Resources, Inc. | | | | ▪ PennyMac Financial Services, Inc. | |
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
| ||||||||||
| | | | ▪ Ellington Financial Inc. | | | | ▪ Orchid Island Capital, Inc. | | |
| ▪ ARMOUR Residential REIT, Inc.
| | | | Invesco Mortgage Capital, Inc. | | | | ▪ Redwood Trust, Inc. | |
| ▪ Chimera Investment Corporation | | | | ▪ MFA Financial, Inc. | | | | ▪ Rithm Capital Corp.(1) | |
| ▪ Dynex Capital, Inc. | | | | ▪ New York Mortgage Trust | | | |
Two Harbors Investment Corp. | |
Overview
The MDC Committee is committed to maintaining an executive compensation program that attracts, retains and incentivizes top executive talent and generates long-term value for stockholders by directly linking compensation payout to Company performance without encouraging unnecessary risk taking. 2023
| NEO | | | 2023 Salary ($) | | | 2022 Salary ($) | | | Percentage Change | | |||||||||
| David L. Finkelstein | | | | | 1,000,000 | | | | | | 1,000,000 | | | | | | 0% | | |
| Serena Wolfe | | | | | 750,000 | | | | | | 750,000 | | | | | | 0% | | |
| Steven F. Campbell | | | | | 750,000 | | | | | | 750,000 | | | | | | 0% | | |
| Anthony C. Green | | | | | 750,000 | | | | | | 750,000 | | | | | | 0% | | |
42 | ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT
2022 Annual Incentives – Cash and Equity Awards
| Name and Position | | | Target Cash Incentive ($) | | | Target RSUs ($) | | | Target PSUs ($) | | | Target Total Incentive ($) | | ||||||||||||
| David L. Finkelstein Chief Executive Officer and Chief Investment Officer | | | | | 7,000,000 | | | | | | 4,000,000 | | | | | | 4,000,000 | | | | | | 15,000,000 | | |
| Serena Wolfe Chief Financial Officer | | | | | 2,250,000 | | | | | | 1,125,000 | | | | | | 1,125,000 | | | | | | 4,500,000 | | |
| Steven F. Campbell President and Chief Operating Officer | | | | | 2,625,000 | | | | | | 1,312,500 | | | | | | 1,312,500 | | | | | | 5,250,000 | | |
| Anthony C. Green Chief Corporate Officer and Chief Legal Officer | | | | | 1,950,000 | | | | | | 975,000 | | | | | | 975,000 | | | | | | 3,900,000 | | |
Name and Position(1) | Target Cash Incentive | Target RSUs | Target PSUs | Target Total Incentive | ||||
David Finkelstein Chief Executive Officer and Chief Investment Officer | $6,325,000 | $3,662,500 | $3,662,500 | $13,650,000 | ||||
Serena Wolfe Chief Financial Officer | $1,875,000 | $937,500 | $937,500 | $3,750,000 | ||||
Steven F. Campbell President and Chief Operating Officer | $1,925,000 | $962,500 | $962,500 | $3,850,000 | ||||
Anthony C. Green Chief Corporate Officer and Chief Legal Officer | $1,875,000 | $937,500 | $937,500 | $3,750,000 |
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As described in detail below, for 2022, whileinterests. For 2024, the MDC Committee determined that the achievement of our corporate/organizational objectives exceeded target performance and that each NEO had attained their individual objectives at target, in light of our stock market performance andnot to increase alignment between the NEOs and our stockholders, the MDC Committee determined it was appropriate to exercise its authority to apply discretion to reduce totalNEOs’ target incentive award amounts for 2022 to slightly below targetawards from their 2023 levels.
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2022 Annual Incentives – Corporate/Organizational Performance
30%. The MDC Committee believes that Relative Tangible Economic Return is a critically important measure of our annual and long-term financial performance and supports sustained value creation for stockholders. The MDC Committee added a TSR governor to the portion of the annual incentive award tied to Relative Tangible Economic Return, which provides that the corresponding payout will be capped at 100% of target if TSR for the performance year is negative. The MDC Committee believes that the TSR governor further enhances the alignment of interests between the NEOsstockholders and stockholders. For 2022, the MDC Committee further enhanced the scorecard’s Relative Tangible Economic Return metric by increasing the relative performance level required to achieve target payout from median (50%+) to above median (55%+). Ourour Operating Efficiency goal of 1.40 – 1.55%1.40% operating expense as a percentage of equity reflects our stated long-term target operating expense ratio. Scorecard results for these metrics are determined based on actual performance for the first three quarters of the year because the annual incentive performance determinations for award payouts are generally made prior to Company and peer financial reporting for the last quarter of the year.
Category | Scorecard Weighting | Measure | Criteria | Illustrative Performance Highlights(1) | Result(2) | Value(3) | Weighted Score(4) | |||||||
Financial Performance | 80% | Operating Efficiency(5) (Absolute) | Exceed < 1.40% Target 1.40 – 1.55% Threshold > 1.55% | ◾ Absolute OpEx to Equity: 1.37% | Exceed | 3.00 | 4.8 | |||||||
Tangible Economic Return(6) (Relative with an Absolute TSR(7) Governor) | Exceed > 75% Target 55 – 75% Threshold < 55% | ◾ Relative Tangible Economic Return: 60%
◾ TSR: (38.38)% | Target | 2.00 | 3.2 | |||||||||
Risk | 20% | Market Risk (Absolute Liquid Box) | Exceed > limit Target = limit Threshold < limit | ◾ Daily, monthly and quarterly liquidity consistently exceeded limits
◾ Maintained strong liquidity position to mitigate risk across the portfolio | Exceed | 3.00 | 1.2 | |||||||
Operational Risk | Control environment, pandemic management and cyber defense | ◾ Strong control environment
◾ Uninterrupted business operations amidst transition back towards in-office work
◾ No cyber breaches at the Company throughout the year | Target | 2.00 | 0.8 | |||||||||
Total | 100% |
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Category | | | Scorecard Weighting | | | Measure | | | Criteria | | | Illustrative Performance Highlights(1) | | | Result(2) | | | Value(3) | | | Weighted Score(4) | |
Financial Performance | | | 50% | | | Relative Tangible Economic Return(5) | | | ▪ Exceed >55% ▪ Target =55% ▪ Threshold <55% | | | ▪ Relative Tangible Economic Return: 86% | | | Exceed | | | 1.8 | | | 3.5 | |
| 30% | | | Operating Efficiency(6) (Absolute) | | | ▪ Exceed <1.40% ▪ Target =1.40% ▪ Threshold < 1.45% | | | ▪ Absolute OpEx to Equity: 1.44% | | | Threshold | | | 0.2 | | | 0.3 | | ||
Risk | | | 10% | | | Market Risk (Average Daily Liquid Box) | | | ▪ Exceed >limit ▪ Target =limit ▪ Threshold < limit | | | ▪ Daily, monthly and quarterly liquidity consistently exceeded limits ▪ Maintained strong liquidity position to mitigate risk across the portfolio | | | Exceed | | | 2.0 | | | 0.8 | |
| 10% | | | Operational Risk | | | ▪ Control environment and cyber defense | | | ▪ Strong control environment ▪ No cyber breaches at the Company throughout the year | | | Target | | | 1.5 | | | 0.6 | | ||
TOTAL | | | 100% | | | | | | | | | | | | | | | | | | 5.2 | |
| | | Range | | | Multiplier | | | | | | ||||
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Score = | | | 120% (Maximum) | | | | | | |||||||
| | | | Score 7.00 – 7.99 | | | | | | | | ||||
| | | | Score 6.00 – 6.99 | | | 110% – 114.9% | | | | | | |||
| | | | Score 5.00 – 5.99 | | | 105% – 109.9% | | | | | | |||
| | | | Score 4.00 – 4.99 | | | 100% – 104.9% | | | | | | |||
| | | | Score 3.00 – 3.99 | | | 95% – 99.9% | | | | | | |||
| | | | Score 2.00 – 2.99 | | | 90% | | | | | | |||
| | | | Score | | | | | | | | ||||
| | | | Score | | | 80% | | | | | | |||
| | | | Score | | | 80% (Minimum Threshold) | | | | | | |||
| | | Score < | | | 0% (Below | |||||||||
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(1)
David L. Finkelstein |Chief Executive Officer and Chief Investment Officer
| DAVID L. FINKELSTEIN | | |||
Chief Executive Officer and Chief Investment Officer | | | 2023 PERFORMANCE HIGHLIGHTS As Chief Executive Officer and Chief Investment Officer, Mr. Finkelstein is responsible for leading the Company | | |
| In ▪
Advanced the Company’s strategic plan focused on ▪ Further scaled the whole loan correspondent channel and ▪ Significantly increased dedicated capital to (1) Continued to proactively manage and ▪ Raised $674 million of accretive common equity through the Company’s at-the-market (“ATM”) sales program(2) ▪ Led recruitment of three new highly qualified Independent Directors to the Board representing diverse views, expertise, racial/ethnic backgrounds and other demographics ▪ Drove the Company’s recognition as a
▪
Oversaw ESG initiatives across the firm, including the year-over-year improvement to the Company’s | |
Serena Wolfe |Chief Financial Officer
| SERENA WOLFE | | |||
Chief Financial Officer | | | 2023 PERFORMANCE HIGHLIGHTS As Chief Financial Officer, Ms. Wolfe manages the firm’s overall financial condition, as well as our financial analysis and reporting. Further to these responsibilities, she also oversees various control functions and shares responsibility for aspects of the Company’s operations and technology groups. | | |
| In ▪
Oversaw the ▪
Ensured diligent focus on costs and capital efficiencies across the Company ▪
Led initiatives to meaningfully increase warehouse financing capacity in light of the ▪ Created a strong partnership and collaboration with investment ▪
Represented the Company in meetings with members of the media, the investor community, industry organizations, competitors and outside parties | |
42
Steven F. Campbell |President and Chief Operating Officer
| STEVEN F. CAMPBELL | | |||
President and Chief Operating Officer | | | 2023 PERFORMANCE HIGHLIGHTS As President and Chief Operating Officer, Mr. Campbell works closely with the executive team to help oversee Annaly’s overall strategy, operations and risk management, and shares responsibility for aspects of the Company’s technology group. | | |
| In ▪
Took on leadership of business operations with additional personnel management and led the ▪
Conducted business planning and budgeting for all investment and support groups ▪
Oversaw the further buildout of the Company’s Operational Risk and Project Management functions ▪
Managed the firm’s Investor Relations and Corporate Communications efforts ▪
Led the firm’s | |
Anthony C. Green |Chief Corporate Officer, Chief Legal Officer and Secretary
| ANTHONY C. GREEN | | |||
Chief Corporate Officer, Chief Legal Officer and Secretary | | | 2023 PERFORMANCE HIGHLIGHTS As Chief Corporate Officer and Chief Legal Officer, Mr. Green is responsible for overseeing the Company’s legal and compliance groups, corporate responsibility efforts, government relations | | |
| In ▪
Played a critical role in the successful ▪ Managed corporate governance relationships with stockholders and provided oversight of the Company’s continuous stockholder engagement program ▪ Ensured appropriate legal and regulatory controls and governance in relation to the expansion of the Company’s Residential Credit and MSR businesses ▪ Provided high-level legal support of the firm’s capital markets
▪
Continued to
| |
| | | | Range of Absolute Tangible Economic Return | | | Impact to Blended Multiplier | | | | | |
| | | | < (5%) | | | (10%) | | | | | |
| | | | (5%) – 0% | | | (10%) – (5%) | | | | | |
| | | | 0% – 5% | | | (5%) – 0% | | | | | |
| | | | 5% – 10% | | | 0% | | | | | |
| | | | 10% – 15% | | | 0% – 5% | | | | | |
| | | | 15% – 20% | | | 5% – 10% | | | | | |
| | | | > 20% | | | 10% | | | | | |
| Name and Position | | | Target Value ($) | | | Final Multiplier(1) | | | Total Annual Incentive Value ($) | | |||||||||
| David L. Finkelstein Chief Executive Officer and Chief Investment Officer | | | | | 15,000,000 | | | | | | 104.4% | | | | | | 15,656,200 | | |
| Serena Wolfe Chief Financial Officer | | | | | 4,500,000 | | | | | | 104.4% | | | | | | 4,696,800 | | |
| Steven F. Campbell President and Chief Operating Officer | | | | | 5,250,000 | | | | | | 104.4% | | | | | | 5,479,600 | | |
| Anthony C. Green Chief Corporate Officer and Chief Legal Officer | | | | | 3,900,000 | | | | | | 104.4% | | | | | | 4,070,600 | | |
43
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT130% if the Absolute Tangible Economic Return modifier is applied at the highest level.
NEO | Target Value | Final Multiplier | Total Annual Incentive Value | |||
David Finkelstein Chief Executive Officer and Chief Investment Officer | $13,650,000 | 95% | $12,968,000 | |||
Serena Wolfe Chief Financial Officer | $3,750,000 | 95% | $3,562,500 | |||
Steven F. Campbell President and Chief Operating Officer | $3,850,000 | 95% | $3,657,500 | |||
Anthony C. Green Chief Corporate Officer and Chief Legal Officer | $3,750,000 | 95% | $3,562,500 |
| | | | |||||
Pay Mix Ratios | | |||||||
| NEO | | | Total Annual Incentive Pay Mix (Cash / | | | Equity Component Pay Mix (RSUs / | |
| Chief Executive Officer | | 47% cash/53% equity | | | 50% | | |
| All Other Executive Officers | | | 50% | | | 50% | |
NEO | | Cash ($)(1) | | RSUs ($)(2) | | PSUs ($)(2) | Total | |||||||||
David Finkelstein Chief Executive Officer and Chief Investment Officer | $5,984,000 | $3,492,000 | $3,492,000 | $12,968,000 | ||||||||||||
Serena Wolfe Chief Financial Officer | $1,781,250 | $890,625 | $890,625 | $3,562,500 | ||||||||||||
Steven F. Campbell President and Chief Operating Officer | $1,828,750 | $914,375 | $914,375 | $3,657,500 | ||||||||||||
Anthony C. Green Chief Corporate Officer and Chief Legal Officer | $1,781,250 | $890,625 | $890,625 | $3,562,500 |
|
|
44
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
RSUs | ||||||||||||
NEO | ($) | (#) | ||||||||||
David L. Finkelstein | 3,492,000 | 145,500 | ||||||||||
Serena Wolfe | 890,625 | 37,109 | ||||||||||
Steven F. Campbell | 914,375 | 38,098 | ||||||||||
Anthony C. Green | 890,625 | 37,109 |
2022
| | | | RSUs | | |||||||||
| NEO | | | ($) | | | (#) | | ||||||
| David L. Finkelstein | | | | | 4,164,050 | | | | | | 212,777 | | |
| Serena Wolfe | | | | | 1,174,200 | | | | | | 60,000 | | |
| Steven F. Campbell | | | | | 1,369,900 | | | | | | 70,000 | | |
| Anthony C. Green | | | | | 1,017,650 | | | | | | 52,000 | | |
Target PSUs | ||||||||||||
NEO | ($) | (#) | ||||||||||
David L. Finkelstein | 3,492,000 | 145,500 | ||||||||||
Serena Wolfe | 890,625 | 37,109 | ||||||||||
Steve F. Campbell | 914,375 | 38,098 | ||||||||||
Anthony C. Green | 890,625 | 37,109 |
45
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT2023:
| | | | Target PSUs | | |||||||||
| NEO | | | ($) | | | (#) | | ||||||
| David L. Finkelstein | | | | | 4,164,050 | | | | | | 212,777 | | |
| Serena Wolfe | | | | | 1,174,200 | | | | | | 60,000 | | |
| Steven F. Campbell | | | | | 1,369,900 | | | | | | 70,000 | | |
| Anthony C. Green | | | | | 1,017,650 | | | | | | 52,000 | | |
Performance Metric(1) | Metric Weight | Performance | Percent of Target PSUs Earned | |||
Relative Tangible Economic Return(2) | 50% | <25th Percentile | 0% | |||
25th Percentile (threshold) | 50% | |||||
55th Percentile (target)(3) | 100% | |||||
75th Percentile (above target)(3) | 125% | |||||
>90th Percentile (maximum)(3) | 150% | |||||
Average EAD Return on Equity(4) | 50% | <9.00% | 0% | |||
9.00% (threshold) | 50% | |||||
9.50% (target) | 100% | |||||
10.00% (above target) | 125% | |||||
10.75% (maximum) | 150% |
(1) For performance results between the achievement levels specified for each performance goal above threshold levels, the number of PSUs for that portion |
|
|
|
Payout of Internalization PSUs Granted in 2020(1)
In connection with the closing of the Internalization,award shall be determined by interpolating results on a straight-line basis.
Performance Metric(2) | Metric Weight | Performance | Percent of Target PSUs Earned | |||
Relative Tangible Economic Return(3) | 50% | <25th Percentile | 0% | |||
25th Percentile (threshold) | 50% | |||||
50th Percentile (target) | 100% | |||||
75th Percentile | 125% | |||||
>90th Percentile (maximum) | 150% | |||||
Average EAD Return on Equity(4) | 50% | <9.0% (threshold) | 0% | |||
9.5% (threshold) | 75% | |||||
10.4% (target) | 100% | |||||
10.65% (above target) | 125% | |||||
11.25% (maximum) | 150% |
|
|
46
Performance Metric(2) | | | Metric Weight | | | Performance | | | Percent of Target PSUs Earned | |
Relative Tangible Economic Return(3) | | | 50% | | | <25th Percentile | | | 0% | |
| 25th Percentile (threshold) | | | 50% | | |||||
| 50th Percentile (target)(4) | | | 100% | | |||||
| 75th Percentile (above target)(4) | | | 125% | | |||||
| >90th Percentile (maximum)(4) | | | 150% | | |||||
Average EAD Return on Equity(5) | | | 50% | | | <9.00% | | | 0% | |
| 9.50% (threshold) | | | 75% | | |||||
| 10.40% (target) | | | 100% | | |||||
| 10.65% (above target) | | | 125% | | |||||
| 11.25% (maximum) | | | 150% | |
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENTMr. Finkelstein did not receive an award of PSUs in early 2021 as part of his total annual incentive compensation for 2020 as he instead received a one-time PSU grant in June 2020 upon the completion of the Company’s management internalization transaction, which the MDC Committee considered to be part of Mr. Finkelstein’s total annual incentive compensation for 2020 performance.
|
|
| NEO | | | Target PSUs (#)(1) | | | Multiplier | | | PSUs Awarded (#) | | |||||||||
| Serena Wolfe | | | | | 4,540 | | | | | | 125% | | | | | | 5,675 | | |
| Steven F. Campbell | | | | | 4,540 | | | | | | 125% | | | | | | 5,675 | | |
| Anthony C. Green | | | | | 20,438 | | | | | | 125% | | | | | | 25,547 | | |
47
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
As described above, in light of their involuntary terminations by the Company without cause in November 2022 and February 2022, respectively, our former Chief Investment Officer Mr. Ertas and former Chief Credit Officer Mr. Coffey were ineligible to receive incentive awards for 2022 performance and received the majority of their compensation for 2022 in the form of severance. An overview of each element of such former executives’ 2022 total direct compensation from the Company is set forth below:
Total Direct Compensation Element
| Context
| Total
| ||||||||
I. Ertas
|
T. Coffey
| |||||||||
Salary | ∎ Received pro-rata portion of their $750,000 annual salaries through their respective termination dates | $687,500 | $93,750 | |||||||
Cash Award for 2022 Performance | ∎ Ineligible to receive incentive awards for 2022 performance due to their respective involuntary terminations by the Company without cause during 2022 | $0 | $0 | |||||||
Equity Award for 2022 Performance(1) | ∎ Ineligible to receive incentive awards for 2022 performance due to their respective involuntary terminations by the Company without cause during 2022 | $0 | $0 | |||||||
Cash Severance Benefits Under the Executive Severance Plan | ∎ Received cash severance benefits in an amount equal to the sum of (i) 1.25 times their annual base salary ($750,000 salary for each of Messrs. Ertas and Coffey) and (ii) 1.25 times their target cash bonus for the plan year in which the involuntary termination of employment occurred (target of $2,375,000 for Mr. Ertas and $2,125,000 for Mr. Coffey) | $3,906,250 | $3,593,750 | |||||||
Pro-rated Cash Bonus Payment Under the Executive Severance Plan | ∎ An executive officer who experiences an involuntary termination of employment without cause after March 31st of a calendar year will be eligible to receive a prorated cash bonus payment based on the amount of their cash bonus earned for the prior year. Accordingly, based on their respective termination dates, Mr. Ertas received a pro-rated cash bonus payment, while Mr. Coffey did not. | $2,101,442 | $0 |
|
| Position | | | ||
| Annaly Ownership Guideline | | |||
| Chief Executive Officer | | | 6x base salary | |
| All Other Executive Officers | | | 3x base salary | |
48
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
| THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE | | ||||||||||||||||
| | | | | | | | | | |||||||||
| Vicki Williams, | | | Francine J. Bovich | | | Thomas Hamilton | | | Kathy Hopinkah Hannan | | | John H. Schaefer | |
ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT| 53
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total(2) | ||||||||||||||||||
David L. Finkelstein Chief Executive Officer, | 2022 | $1,000,000 | $5,984,000 | $7,324,950 | $14,732 | (3) | $14,323,682 | |||||||||||||||||
2021 | $1,000,000 | $6,325,000 | $1,800,001 | $13,763 | $9,138,764 | |||||||||||||||||||
2020 | $500,000 | $7,200,000 | $5,000,006 | $3,772 | $12,703,778 | |||||||||||||||||||
Serena Wolfe Chief Financial Officer | 2022 | $750,000 | $1,781,250 | $749,992 | $13,032 | (4) | $3,294,274 | |||||||||||||||||
2021 | $750,000 | $3,000,000 | $399,999 | $12,363 | $4,162,362 | |||||||||||||||||||
2020 | $375,000 | $2,600,000 | — | $29,831 | $3,004,831 | |||||||||||||||||||
Steven F. Campbell(5) President and | 2022 | $750,000 | $1,828,750 | $1,799,961 | $14,732 | (3) | $4,393,443 | |||||||||||||||||
2021 | — | — | — | — | — | |||||||||||||||||||
2020 | — | — | — | — | — | |||||||||||||||||||
Anthony C. Green Chief Corporate Officer, Chief | 2022 | $750,000 | $1,781,250 | $1,874,948 | $14,732 | (3) | $4,420,930 | |||||||||||||||||
2021 | $750,000 | $1,875,000 | $1,100,000 | $13,763 | $3,738,763 | |||||||||||||||||||
2020 | $375,000 | $2,800,000 | $500,003 | $3,772 | $3,678,775 | |||||||||||||||||||
Ilker Ertas(6) Former Chief Investment Officer | 2022 | $687,500 | — | $2,324,962 | $6,065,692 | (7) | $9,078,154 | |||||||||||||||||
2021 | $750,000 | $2,325,000 | $1,100,002 | $13,763 | $4,088,765 | |||||||||||||||||||
2020 | $375,000 | $3,350,000 | $100,058 | $2,328 | $3,827,386 | |||||||||||||||||||
Timothy P. Coffey(8) Former Chief Credit Officer | 2022 | $93,750 | — | $2,174,989 | $3,644,947 | (9) | $5,913,686 | |||||||||||||||||
2021 | $750,000 | $2,175,000 | $599,995 | $13,763 | $3,538,758 | |||||||||||||||||||
2020 | $375,000 | $3,200,000 | $1,250,001 | $4,278 | $4,829,279 |
Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) | | | Stock Award(1) ($) | | | All Other Compensation ($) | | | Total ($) | | ||||||||||||||||||
David L. Finkelstein Chief Executive Officer, Chief Investment Officer and Director | | | | | 2023 | | | | | | 1,000,000 | | | | | | 7,328,100 | | | | | | 6,984,000 | | | | | | 15,200(2) | | | | | | 15,327,300 | | |
| | | 2022 | | | | | | 1,000,000 | | | | | | 5,984,000 | | | | | | 7,324,950 | | | | | | 14,732 | | | | | | 14,323,682 | | | ||
| | | 2021 | | | | | | 1,000,000 | | | | | | 6,325,000 | | | | | | 1,800,001 | | | | | | 13,763 | | | | | | 9,138,764 | | | ||
Serena Wolfe Chief Financial Officer | | | | | 2023 | | | | | | 750,000 | | | | | | 2,348,400 | | | | | | 1,781,232 | | | | | | 14,250(3) | | | | | | 4,893,882 | | |
| | | 2022 | | | | | | 750,000 | | | | | | 1,781,250 | | | | | | 749,992 | | | | | | 13,032 | | | | | | 3,294,274 | | | ||
| | | 2021 | | | | | | 750,000 | | | | | | 3,000,000 | | | | | | 399,999 | | | | | | 12,363 | | | | | | 4,162,362 | | | ||
Steven F. Campbell(4) President and Chief Operating Officer | | | | | 2023 | | | | | | 750,000 | | | | | | 2,739,800 | | | | | | 1,828,704 | | | | | | 15,200(2) | | | | | | 5,333,704 | | |
| | | 2022 | | | | | | 750,000 | | | | | | 1,828,750 | | | | | | 1,799,961 | | | | | | 14,732 | | | | | | 4,393,443 | | | ||
| | | 2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Anthony C. Green Chief Corporate Officer, Chief Legal Officer and Secretary | | | | | 2023 | | | | | | 750,000 | | | | | | 2,035,300 | | | | | | 1,781,232 | | | | | | 15,200(2) | | | | | | 4,581,732 | | |
| | | 2022 | | | | | | 750,000 | | | | | | 1,781,250 | | | | | | 1,874,948 | | | | | | 14,732 | | | | | | 4,420,930 | | | ||
| | | 2021 | | | | | | 750,000 | | | | | | 1,875,000 | | | | | | 1,100,000 | | | | | | 13,763 | | | | | | 3,738,763 | | |
| | | Grant Date Fair Value | | |
| David L. Finkelstein | | | $8,515,388 | |
| Serena Wolfe | | | $2,171,800 | |
| Steven F. Campbell | | | $2,229,676 | |
| Anthony C. Green | | | $2,171,800 | |
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Estimated Future Payouts Under Equity Incentive
| ||||||||||||||||||||||||||||
Name | Grant Date | Type of Award | Threshold | Target | Maximum | All Other Stock Awards: Number of Shares of Stock(3) | Grant Date Fair Value of Stock Awards ($)(4) | |||||||||||||||||||||
David L. Finkelstein | 2/01/2022 | RSU | — | — | — | 116,048 | $3,662,475 | |||||||||||||||||||||
2/01/2022 | PSU | 29,012 | 116,048 | 174,072 | — | $3,662,475 | ||||||||||||||||||||||
Serena Wolfe | 2/01/2022 | RSU | — | — | — | 11,882 | $374,996 | |||||||||||||||||||||
2/01/2022 | PSU | 2,971 | 11,882 | 17,823 | — | $374,996 | ||||||||||||||||||||||
Steven F. Campbell | 2/01/2022 | RSU | — | — | — | 28,517 | $899,997 | |||||||||||||||||||||
2/01/2022 | PSU | 7,129 | 28,516 | 42,774 | — | $899,965 | ||||||||||||||||||||||
Anthony C. Green | 2/01/2022 | RSU | — | — | — | 29,705 | $937,490 | |||||||||||||||||||||
2/01/2022 | PSU | 7,426 | 29,704 | 44,556 | — | $937,458 | ||||||||||||||||||||||
Ilker Ertas | 2/01/2022 | RSU | — | — | — | 36,834 | $1,162,481 | |||||||||||||||||||||
2/01/2022 | PSU | 9,209 | 36,834 | 55,251 | — | $1,162,481 | ||||||||||||||||||||||
Timothy P. Coffey | 2/01/2022 | RSU | — | — | — | 34,458 | $1,087,494 | |||||||||||||||||||||
2/01/2022 | PSU | 8,615 | 34,458 | 51,687 | — | $1,087,494 |
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51
Name | | | Grant Date | | | Type of Award | | | Estimated Future Payouts Under Equity Incentive Plan Awards (# of Shares of Common Stock)(1) | | | All Other Stock Awards: Number of Shares of Stock(2) (#) | | | Grant Date Fair Value of Stock Awards(3) ($) | | |||||||||||||||||||||||||||
| Threshold (#) | | | Target (#) | | | Maximum (#) | | |||||||||||||||||||||||||||||||||||
David L. Finkelstein | | | | | 2/01/2023 | | | | | | RSU | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 145,500 | | | | | | 3,492,000 | | |
| | | 2/01/2023 | | | | | | PSU | | | | | | 36,375 | | | | | | 145,500 | | | | | | 218,250 | | | | | | 0 | | | | | | 3,492,000 | | | ||
Serena Wolfe | | | | | 2/01/2023 | | | | | | RSU | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 37,109 | | | | | | 890,616 | | |
| | | 2/01/2023 | | | | | | PSU | | | | | | 9,277 | | | | | | 37,109 | | | | | | 55,664 | | | | | | 0 | | | | | | 890,616 | | | ||
Steven F. Campbell | | | | | 2/01/2023 | | | | | | RSU | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 38,098 | | | | | | 914,352 | | |
| | | 2/01/2023 | | | | | | PSU | | | | | | 9,525 | | | | | | 38,098 | | | | | | 51,147 | | | | | | 0 | | | | | | 914,352 | | | ||
Anthony C. Green | | | | | 2/01/2023 | | | | | | RSU | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 37,109 | | | | | | 890,616 | | |
| | | 2/01/2023 | | | | | | PSU | | | | | | 9,277 | | | | | | 37,109 | | | | | | 55,664 | | | | | | 0 | | | | | | 890,616 | | |
Stock Awards | ||||||||||||||||||||
Name
| Grant Date
| Number of Shares or
| Market Value of Shares
| Equity Incentive Plan
| Equity Incentive Plan
| |||||||||||||||
David L. Finkelstein | 6/30/2020 | 42,900 | $904,331 | — | — | |||||||||||||||
1/29/2021 | 45,769 | $964,809 | — | — | ||||||||||||||||
2/1/2022 | 129,738 | $2,734,876 | — | — | ||||||||||||||||
2/1/2022 | — | — | 162,172 | $3,418,595 | ||||||||||||||||
Serena Wolfe | 1/29/2021 | 7,627 | $160,787 | — | — | |||||||||||||||
1/29/2021 | — | — | 4,766 | $100,464 | ||||||||||||||||
2/1/2022 | 13,284 | $280,019 | — | — | ||||||||||||||||
2/1/2022 | — | — | 16,605 | $350,023 | ||||||||||||||||
Steven F. Campbell | 1/31/2020 | 1,194 | $25,171 | — | — | |||||||||||||||
1/29/2021 | 11,441 | $241,180 | — | — | ||||||||||||||||
1/29/2021 | — | — | 4,766 | $100,464 | ||||||||||||||||
2/1/2022 | 31,881 | $672,050 | — | — | ||||||||||||||||
2/1/2022 | — | — | 39,850 | $840,034 | ||||||||||||||||
Anthony C. Green | 6/30/2020 | 8,579 | $180,835 | — | — | |||||||||||||||
1/29/2021 | 16,258 | $348,401 | — | — | ||||||||||||||||
1/29/2021 | — | — | 21,452 | $452,199 | ||||||||||||||||
2/1/2022 | 33,209 | $700,047 | — | — | ||||||||||||||||
2/1/2022 | — | — | 41,510 | $875,031 | ||||||||||||||||
Ilker Ertas | 1/31/2020 | 1,194 | $25,171 | — | — | |||||||||||||||
1/29/2021 | 19,071 | $402,011 | — | — | ||||||||||||||||
1/29/2021 | — | — | 11,917 | $251,216 | ||||||||||||||||
2/1/2022 | 41,179 | $868,054 | — | — | ||||||||||||||||
2/1/2022 | — | — | 51,474 | $1,085,068 | ||||||||||||||||
Timothy P. Coffey | 6/30/2020 | 21,449 | $452,155 | — | — | |||||||||||||||
1/29/2021 | 2,542 | $53,588 | — | — | ||||||||||||||||
1/29/2021 | — | — | 23,387 | $502,486 | ||||||||||||||||
2/1/2022 | 38,523 | $812,059 | — | — | ||||||||||||||||
2/1/2022 | — | — | 48,153 | $1,015,074 |
| | | Stock Awards | | |||||||||||||||||||||||||||
Name | | | Grant Date | | | Number of Shares or Units of Stock that Have Not Vested(1)(2) (#) | | | Market Value of Shares or Units of Stock that Have Not Vested ($) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested(2)(3) (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | | |||||||||||||||
David L. Finkelstein | | | | | 2/1/2021 | | | | | | 26,360 | | | | | | 510,602 | | | | | | 0 | | | | | | 0 | | |
| | | 2/1/2022 | | | | | | 99,633 | | | | | | 1,929,896 | | | | | | 0 | | | | | | 0 | | | ||
| | | 2/1/2022 | | | | | | 0 | | | | | | 0 | | | | | | 224,179 | | | | | | 4,342,341 | | | ||
| | | 2/1/2023 | | | | | | 161,552 | | | | | | 3,129,268 | | | | | | 0 | | | | | | 0 | | | ||
| | | 2/1/2023 | | | | | | 0 | | | | | | 0 | | | | | | 242,328 | | | | | | 4,693,903 | | | ||
Serena Wolfe | | | | | 2/1/2021 | | | | | | 4,392 | | | | | | 85,069 | | | | | | 0 | | | | | | 0 | | |
| | | 2/1/2022 | | | | | | 10,000 | | | | | | 197,578 | | | | | | 0 | | | | | | 0 | | | ||
| | | 2/1/2022 | | | | | | 0 | | | | | | 0 | | | | | | 22,953 | | | | | | 444,604 | | | ||
| | | 2/1/2023 | | | | | | 41,203 | | | | | | 798,103 | | | | | | 0 | | | | | | 0 | | | ||
| | | 2/1/2023 | | | | | | 0 | | | | | | 0 | | | | | | 61,805 | | | | | | 1,197,155 | | | ||
Steven F. Campbell | | | | | 2/1/2021 | | | | | | 6,589 | | | | | | 127,631 | | | | | | 0 | | | | | | 0 | | |
| | | 2/1/2022 | | | | | | 25,502 | | | | | | 474,235 | | | | | | 0 | | | | | | 0 | | | ||
| | | 2/1/2022 | | | | | | 0 | | | | | | 0 | | | | | | 57,381 | | | | | | 1,111,474 | | | ||
| | | 2/1/2023 | | | | | | 41,203 | | | | | | 819,373 | | | | | | 0 | | | | | | 0 | | | ||
| | | 2/1/2023 | | | | | | 0 | | | | | | 0 | | | | | | 63,452 | | | | | | 1,229,060 | | | ||
Anthony C. Green | | | | | 2/1/2021 | | | | | | 9,518 | | | | | | 184,355 | | | | | | 0 | | | | | | 0 | | |
| | | 2/1/2022 | | | | | | 25,502 | | | | | | 493,978 | | | | | | 0 | | | | | | 0 | | | ||
| | | 2/1/2022 | | | | | | 0 | | | | | | 0 | | | | | | 71,155 | | | | | | 1,378,266 | | | ||
| | | 2/1/2023 | | | | | | 41,203 | | | | | | 798,103 | | | | | | 0 | | | | | | 0 | | | ||
| | | 2/1/2023 | | | | | | 0 | | | | | | 0 | | | | | | 61,805 | | | | | | 1,197,155 | | |
| | | Remaining Vesting Date(s) | | |
| 2/1/2021 | | | February 1, 2024 | |
| 2/2/2022 | | | February 1, 2024 and 2025 | |
| 2/1/2023 | | | February 1, 2024, 2025 and 2026 | |
|
|
Stock Awards | ||||||||||
Name | Number of Shares Acquired on Vesting (#)(1)(2) | Value Realized on Vesting ($)(3) | ||||||||
David L. Finkelstein | 247,098 | $5,525,806 | ||||||||
Serena Wolfe | 3,414 | $107,882 | ||||||||
Steven F. Campbell | 6,193 | $195,699 | ||||||||
Anthony C. Green | 15,335 | $421,384 | ||||||||
Ilker Ertas | 9,605 | $303,518 | ||||||||
Timothy P. Coffey | 20,988 | $505,223 |
|
|
|
| | | | Stock Awards | | |||||||||
| Name | | | Number of Shares Acquired on Vesting(1) (#) | | | Value Realized on Vesting(2) ($) | | ||||||
| David L. Finkelstein | | | | | 116,056 | | | | | | 2,587,258 | | |
| Serena Wolfe | | | | | 14,228 | | | | | | 313,099 | | |
| Steven F. Campbell | | | | | 23,876 | | | | | | 542,946 | | |
| Anthony C. Green | | | | | 55,095 | | | | | | 1,162,358 | | |
In connection with Mr. Ertas’ involuntary termination of employment by the Company without cause in November 2022, Mr. Ertas received a cash severance benefit in the amount of $3,906,250 and a pro-rated cash bonus payment of $2,101,442 under the terms of the Executive Severance Plan, a cash payment for accrued and unused vacation in the amount of $43,268,
53
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENTQUANTIFICATION OF TERMINATION PAYMENTS
as well as the continued vesting of his outstanding equity awards pursuant to the terms of the applicable equity award agreement (including, as applicable, the satisfaction of any time and/or performance conditions therein). In connection with his termination, Mr. Ertas entered into a separation and release agreement pursuant to the terms of the Executive Severance Plan.
Termination of Former Chief Credit Officer
In connection with Mr. Coffey’s involuntary termination of employment from the Company without cause in February 2022, Mr. Coffey received a cash severance benefit in the amount of $3,593,750 under the terms of the Executive Severance Plan, a cash payment for accrued and unused vacation in the amount of $24,035, as well as the continued vesting of his outstanding equity awards pursuant to the terms of the applicable equity award agreement (including, as applicable, the satisfaction of any time and/or performance conditions therein). In connection with his termination, Mr. Coffey entered into a separation and release agreement pursuant to the terms of the Executive Severance Plan. Under the separation and release agreement, the Company agreed to pay Mr. Coffey an amount of $22,317 for his legal fees related to the separation and release agreement.
Quantification of Termination Payments
Name(1)
| Termination by
| Termination by
| Death
| Disability
| Termination by
| |||||||||||||||
David L. Finkelstein | ||||||||||||||||||||
Severance | $10,476,000 | $10,476,000 | $0 | $0 | $0 | |||||||||||||||
Bonus | $5,984,000 | $5,984,000 | $0 | $0 | $0 | |||||||||||||||
Accelerated Equity Awards(2) | $0 | $8,022,610 | $7,338,891 | $4,604,016 | $0 | |||||||||||||||
Benefits | $0 | $0 | $0 | $0 | $0 | |||||||||||||||
Total | $16,460,000 | $24,482,610 | $7,338,891 | $4,604,016 | $0 | |||||||||||||||
Serena Wolfe | ||||||||||||||||||||
Severance | $3,164,063 | $3,164,063 | $0 | $0 | $0 | |||||||||||||||
Bonus | $1,781,250 | $1,781,250 | $0 | $0 | $0 | |||||||||||||||
Accelerated Equity Awards(2) | $0 | $891,293 | $801,196 | $440,806 | $0 | |||||||||||||||
Benefits | $0 | $0 | $0 | $0 | $0 | |||||||||||||||
Total | $4,954,313 | $5,836,606 | $801,196 | $440,806 | $0 | |||||||||||||||
Steven F. Campbell | ||||||||||||||||||||
Severance | $3,223,438 | $3,223,438 | $0 | $0 | $0 | |||||||||||||||
Bonus | $1,828,750 | $1,828,750 | $0 | $0 | $0 | |||||||||||||||
Accelerated Equity Awards(2) | $0 | $1,878,899 | $1,690,800 | $938,401 | $0 | |||||||||||||||
Benefits | $0 | $0 | $0 | $0 | $0 | |||||||||||||||
Total | $5,052,188 | $6,931,087 | $1,690,800 | $938,401 | $0 |
54
Name | | | Potential Payments | | | Termination by Company Without Cause (Other than within Two Years of Change in Control) ($) | | | Termination by Company Without Cause (within Two Years of a Change in Control) ($) | | | Death ($) | | | Disability ($) | | | Termination by Company for Cause or Voluntary Termination by Executive (with or without Good Reason) ($) | | |||||||||||||||
David L. Finkelstein | | | Severance | | | | | 12,000,000 | | | | | | 12,000,000 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| Bonus | | | | | 7,328,100 | | | | | | 7,328,100 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | ||
| Accelerated Equity Awards(1) | | | | | 0 | | | | | | 13,882,287 | | | | | | 11,593,929 | | | | | | 5,569,766 | | | | | | 0 | | | ||
| Benefits | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | ||
| TOTAL | | | | | 19,328,100 | | | | | | 33,210,387 | | | | | | 11,593,929 | | | | | | 5,569,766 | | | | | | 0 | | | ||
Serena Wolfe | | | Severance | | | | | 3,750,000 | | | | | | 3,750,000 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| Bonus | | | | | 2,348,400 | | | | | | 2,348,400 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | ||
| Accelerated Equity Awards(1) | | | | | 0 | | | | | | 2,648,408 | | | | | | 2,175,256 | | | | | | 1,080,751 | | | | | | 0 | | | ||
| Benefits | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | ||
| TOTAL | | | | | 6,098,400 | | | | | | 8,746,808 | | | | | | 2,175,256 | | | | | | 1,080,751 | | | | | | 0 | | | ||
Steven F. Campbell | | | Severance | | | | | 4,218,750 | | | | | | 4,218,750 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| Bonus | | | | | 2,739,800 | | | | | | 2,739,800 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | ||
| Accelerated Equity Awards(1) | | | | | 0 | | | | | | 3,539,485 | | | | | | 2,951,961 | | | | | | 1,421,240 | | | | | | 0 | | | ||
| Benefits | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | ||
| TOTAL | | | | | 6,958,550 | | | | | | 10,498,035 | | | | | | 2,951,961 | | | | | | 1,421,240 | | | | | | 0 | | | ||
Anthony C. Green | | | Severance | | | | | 3,375,000 | | | | | | 3,375,000 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| Bonus | | | | | 2,035,300 | | | | | | 2,035,300 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | ||
| Accelerated Equity Awards(1) | | | | | 0 | | | | | | 3,599,819 | | | | | | 3,015,521 | | | | | | 1,476,435 | | | | | | 0 | | | ||
| Benefits | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | ||
| TOTAL | | | | | 5,410,300 | | | | | | 9,010,119 | | | | | | 3,015,521 | | | | | | 1,476,435 | | | | | | 0 | | |
Name(1)
| Termination by
| Termination by
| Death
| Disability
| Termination by
| |||||||||||||||
Anthony C. Green | ||||||||||||||||||||
Severance | $3,164,063 | $3,164,063 | $0 | $0 | $0 | |||||||||||||||
Bonus | $1,781,250 | $1,781,250 | $0 | $0 | $0 | |||||||||||||||
Accelerated Equity Awards(2) | $0 | $2,556,513 | $2,291,067 | $1,229,283 | $0 | |||||||||||||||
Benefits | $0 | $0 | $0 | $0 | $0 | |||||||||||||||
Total | $4,954,313 | $7,501,826 | $2,291,067 | $1,229,283 | $0 |
|
|
|
|
|
|
55
ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
|
|
56
| (a) | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | ||||||||||||||||||||||||||||||||||||
| | | | Summary Compensation Table Total for PEOs(1) | | | Compensation Actually Paid to PEOs(4) | | | Average Summary Compensation Table Total for Non-PEO NEOs(5) ($) | | | Average Compensation Actually Paid to Non-PEO NEOs(6) ($) | | | Value of Initial Fixed $100 Investments Based on: | | | GAAP Net Income ($000s)(9) ($) | | | Tangible Economic Return(10) (%) | | |||||||||||||||||||||||||||||||||||||||
| Year | | | D. Finkelstein(2) ($) | | | G. Votek(3) ($) | | | D. Finkelstein(2) ($) | | | G. Votek(3) ($) | | | TSR(7) ($) | | | Peer Group TSR(8) ($) | | ||||||||||||||||||||||||||||||||||||||||||
| 2023(11) | | | | | 15,327,300 | | | | | | 0 | | | | | | 16,790,236 | | | | | | 0 | | | | | | 4,936,439 | | | | | | 5,299,208 | | | | | | 86.79 | | | | | | 79.21 | | | | | | (1,638,457) | | | | | | 6.1 | | |
| 2022 | | | | | 14,323,682 | | | | | | 0 | | | | | | 11,087,169 | | | | | | 0 | | | | | | 5,420,097 | | | | | | 4,916,762 | | | | | | 82.75 | | | | | | 69.20 | | | | | | 1,726,420 | | | | | | (23.7) | | |
| 2021 | | | | | 9,138,764 | | | | | | 0 | | | | | | 9,511,494 | | | | | | 0 | | | | | | 3,882,162 | | | | | | 4,027,576 | | | | | | 105.00 | | | | | | 91.50 | | | | | | 2,396,280 | | | | | | 0.1 | | |
| 2020 | | | | | 12,703,778 | | | | | | 2,070,906 | | | | | | 16,250,879 | | | | | | 1,761,597 | | | | | | 3,835,068 | | | | | | 3,994,675 | | | | | | 102.43 | | | | | | 77.80 | | | | | | (889,772) | | | | | | 1.6 | | |
| Year | | | Reported Summary Compensation Table Total ($) | | | Reported Value of Equity Awards(a) ($) | | | Adjusted Equity Value(b) ($) | | | Compensation Actually Paid ($) | | ||||||||||||
| 2023 | | | | | 15,327,300 | | | | | | (6,984,000) | | | | | | 8,446,936 | | | | | | 16,790,236 | | |
| 2022 | | | | | 14,323,682 | | | | | | (7,324,950) | | | | | | 4,088,437 | | | | | | 11,087,169 | | |
| 2021 | | | | | 9,138,764 | | | | | | (1,800,001) | | | | | | 2,172,731 | | | | | | 9,511,494 | | |
| 2020 | | | | | 12,703,778 | | | | | | (5,000,006) | | | | | | 8,547,107 | | | | | | 16,250,879 | | |
| Year | | | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year ($) | | | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards ($) | | | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | | | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | | | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year ($) | | | Value of Dividends or Other Earnings Paid on Stock or Option Awards Not Otherwise Reflected in Fair Value or Total Compensation ($) | | | Total Equity Award Adjustments ($) | | |||||||||||||||||||||
| 2023 | | | | | 6,258,536 | | | | | | (2,003,499) | | | | | | 0 | | | | | | 2,587,260 | | | | | | 0 | | | | | | 1,604,639 | | | | | | 8,446,936 | | |
| 2022 | | | | | 5,469,751 | | | | | | (5,839,034) | | | | | | 0 | | | | | | 4,399,928 | | | | | | 0 | | | | | | 57,792 | | | | | | 4,088,437 | | |
| 2021 | | | | | 1,868,886 | | | | | | (998,385) | | | | | | 0 | | | | | | 1,259,860 | | | | | | 0 | | | | | | 42,370 | | | | | | 2,172,731 | | |
| 2020 | | | | | 6,837,672 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 1,709,435 | | | | | | 8,547,107 | | |
| Year | | | Reported Summary Compensation Table Total ($) | | | Reported Value of Equity Awards ($) | | | Equity Award Adjustments(c) ($) | | | Compensation Actually Paid ($) | | ||||||||||||
| 2020 | | | | | 2,070,906 | | | | | | (999,999) | | | | | | 690,690 | | | | | | 1,761,597 | | |
| Year | | | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year ($) | | | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards ($) | | | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | | | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | | | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year ($) | | | Value of Dividends or Other Earnings Paid on Stock or Option Awards Not Otherwise Reflected in Fair Value or Total Compensation ($) | | | Total Equity Award Adjustments ($) | | |||||||||||||||||||||
| 2020 | | | | | 0 | | | | | | 0 | | | | | | 690,690 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 690,690 | | |
| Year | | | Average Reported Summary Compensation Table Total for Other NEOs ($) | | | Average Reported Value of Equity Awards ($) | | | Average Equity Award Adjustments(d) ($) | | | Average Compensation Actually Paid to Other NEOs ($) | | ||||||||||||
| 2023 | | | | | 4,936,439 | | | | | | (1,797,056) | | | | | | 2,159,824 | | | | | | 5,299,208 | | |
| 2022 | | | | | 5,420,097 | | | | | | (1,784,970) | | | | | | 1,281,635 | | | | | | 4,916,762 | | |
| 2021 | | | | | 3,882,162 | | | | | | (774,999) | | | | | | 920,413 | | | | | | 4,027,576 | | |
| 2020 | | | | | 3,835,068 | | | | | | (462,516) | | | | | | 622,123 | | | | | | 3,994,675 | | |
| Year | | | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year ($) | | | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards ($) | | | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | | | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | | | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year ($) | | | Value of Dividends or Other Earnings Paid on Stock or Option Awards Not Otherwise Reflected in Fair Value or Total Compensation ($) | | | Total Equity Award Adjustments ($) | | |||||||||||||||||||||
| 2023 | | | | | 1,610,387 | | | | | | (490,495) | | | | | | 0 | | | | | | 625,172 | | | | | | 0 | | | | | | 414,760 | | | | | | 2,159,824 | | |
| 2022 | | | | | 1,332,883 | | | | | | (508,169) | | | | | | 0 | | | | | | 306,741 | | | | | | 0 | | | | | | 150,180 | | | | | | 1,281,635 | | |
| 2021 | | | | | 804,772 | | | | | | (197,067) | | | | | | 0 | | | | | | 228,326 | | | | | | 0 | | | | | | 84,382 | | | | | | 920,413 | | |
| 2020 | | | | | 622.123 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 622,123 | | |
Year (a) | Summary Compensation Table Total for CEO (1) (b) | Compensation Actually Paid to CEO (4) (c) | Average Summary Compensation Table Total for Other NEOs (5) (d) | Average Compensation Actually Paid to Other NEOs (6) (e) | Value of initial fixed $100 investment based on: | GAAP Net Income ($000s) (9) (h) | Tangible Economic Return (10) (i) | |||||||||||||||||||||||||||||||||
D. Finkelstein (2) | G. Votek (3) | D. Finkelstein (2) | G. Votek (3) | TSR (7) (f) | Peer Group TSR (8) (g) | |||||||||||||||||||||||||||||||||||
2022 (11) | $14,323,682 | $0 | $11,087,169 | $0 | $5,420,097 | $4,916,762 | $82.75 | $69.20 | $1,726,420 | (23.70 | %) | |||||||||||||||||||||||||||||
2021 | $9,138,764 | $0 | $9,511,494 | $0 | $3,882,162 | $4,027,576 | $105.00 | $91.50 | $2,396,280 | 0.00 | % | |||||||||||||||||||||||||||||
2020 | $12,703,778 | $2,070,906 | $16,250,879 | $1,761,597 | $3,835,068 | $3,994,675 | $102.43 | $77.80 | ($889,772 | ) | 1.56 | % |
Year | Reported Summary Compensation Table Total | Reported Value of Equity Awards (a) | Adjusted Equity Value (b) | Compensation Actually Paid | ||||||||||||
2022 | $14,323,682 | ($7,324,950 | ) | $4,088,437 | $11,087,169 | |||||||||||
2021 | $9,138,764 | ($1,800,001 | ) | $2,172,731 | $9,511,494 | |||||||||||
2020 | $12,703,778 | ($5,000,006 | ) | $8,547,107 | $16,250,879 |
Year | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | |||||||||||||||||||||
2022 | $5,469,751 | ($5,839,034 | ) | $0 | $4,399,928 | $0 | $57,792 | $4,088,437 | ||||||||||||||||||||
2021 | $1,868,886 | ($998,385 | ) | $0 | $1,259,860 | $0 | $42,370 | $2,172,731 | ||||||||||||||||||||
2020 | $6,837,672 | $0 | $0 | $0 | $0 | $1,709,435 | $8,547,107 |
Year | Reported Summary Compensation Table Total | Reported Value of Equity Awards | Equity Award Adjustments (c) | Compensation Actually Paid | ||||||||||||
2020 | $2,070,906 | ($999,999 | ) | $690,690 | $1,761,597 |
Year | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | |||||||||||||||||||||
2020 | $0 | $0 | $690,690 | $0 | $0 | $0 | $690,690 |
Year | Average Reported Summary Compensation Table Total for Other NEOs | Average Reported Value of Equity Awards | Average Equity Award Adjustments (d) | Average Compensation Actually Paid to Other NEOs | ||||||||||||
2022 | $5,420,097 | ($1,784,970 | ) | $1,281,635 | $4,916,762 | |||||||||||
2021 | $3,882,162 | ($774,999 | ) | $920,413 | $4,027,576 | |||||||||||
2020 | $3,835,068 | ($462,516 | ) | $622,123 | $3,994,675 |
Year | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | |||||||||||||||||||||
2022 | $1,332,883 | ($508,169 | ) | $0 | $306,741 | $0 | $150,180 | $1,281,635 | ||||||||||||||||||||
2021 | $804,772 | ($197,067 | ) | $0 | $228,326 | $0 | $84,382 | $920,413 | ||||||||||||||||||||
2020 | $622,123 | $0 | $0 | $0 | $0 | $0 | $622,123 |
| ▪ Tangible Economic Return |
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| ▪ Total |
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| ▪ OpEx to Equity |
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| ▪ Average EAD Return on Equity | |
| The graph to the right presents the relationship between the amount of compensation actually paid (“CAP”) to our PEO, Mr. Finkelstein, and the average amount of CAP to the Non-PEO NEOs with our cumulative TSR over 2020, 2021, 2022 and 2023. In 2020, we had two PEOs, Mr. Finkelstein and Mr. Votek, as shown in the table above, and the graph to the right shows the CAP to each PEO for 2020. As described in the Compensation Discussion and Analysis, we utilize an Absolute Tangible Economic Return modifier, which impacts overall incentive award opportunity. | |
| The graph to the left presents the relationship of our cumulative TSR to that of our peer group (Bloomberg Mortgage REIT Index) for 2020, 2021, 2022 and 2023. In 2020, we had two PEOs, Mr. Finkelstein and Mr. Votek, as shown in the table above, and the graph to the left shows the CAP to each PEO for 2020. For a graph and table comparing the yearly percentage change in the Company’s cumulative TSR to that of the Bloomberg Mortgage REIT Index for the five-year period ended December 31, 2023, please refer to the Share Performance Graph included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. | |
| The graph to the left presents the relationship between the amount of CAP to our PEO, Mr. Finkelstein, and the average amount of CAP to the Non-PEO NEOs with our GAAP net income for 2020, 2021, 2022 and 2023. In 2020, we had two PEOs, Mr. Finkelstein and Mr. Votek, as shown in the table above, and the graph to the left shows the CAP to each PEO for 2020. While we do not use GAAP net income as a performance measure in the overall executive compensation program, we use a non-GAAP adjusted earnings-linked measure (Average EAD Return on Equity) to determine 50% of PSU award payouts. For a reconciliation of EAD to GAAP net income, please refer to the Appendix. | |
64 | ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT
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| | | ADVISORY APPROVAL OF EXECUTIVE COMPENSATION | |
| | The MDC Committee is committed to institutionalizing an executive compensation program that attracts, retains and incentivizes top executive talent and generates long-term value for stockholders by directly linking compensation payout to Company performance without encouraging unnecessary risk-taking. | |
| | The Board unanimously recommends that the stockholders vote FOR the following resolution: “RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and related narrative discussion, is hereby APPROVED. While this vote is advisory and non-binding, the Board and the MDC Committee value the views of the Company’s stockholders and will consider the voting results when making compensation decisions in the future. | |
ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT| 65
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As required pursuant to Section 14A of the Exchange Act, the Company is seeking a vote from stockholders as to how frequently (a “Say-on-Frequency” vote) the Company should hold Say-on-Pay votes. By voting on this proposal, stockholders may indicate whether they would prefer that the Company conduct future Say-on-Pay votes every one, two or three years. Stockholders may also abstain from casting a vote on this proposal. The Company currently holds a Say-on-Pay vote every year, and the Board has determined that conducting a Say-on-Pay vote every year is the most appropriate alternative for, and in the best interests of, the Company. In reaching this recommendation, the Board considered that holding an annual Say-on-Pay vote is consistent with the preference expressed by the Company’s stockholders in response to our prior Say-on-Frequency vote in 2017, where a majority of the votes cast voted to hold an annual Say-on-Pay vote. In addition, the Board recognizes that holding a Say-on-Pay vote on an annual basis is a corporate governance best practice and is consistent with the Company’s policy of facilitating communications of stockholders with the Board and its various committees, including the MDC Committee. Although the Board intends to carefully consider the voting results of this proposal, the vote is advisory and not binding on the Company or the Board. The Board may decide that it is in the best interests of the Company to hold an advisory vote to approve our executive compensation more or less frequently than the frequency preferred by stockholders.
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
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The Board has authorized and declared advisable an amendment to the Company’s articles of incorporation (as amended, the “Charter”) that reduces the number of authorized shares of common stock from 2,936,500,000 to 1,468,250,000, and reduces, consistent with the foregoing, the number of overall shares of capital stock from 3,000,000,000 to 1,531,750,000. The proposed amendment is subject to approval by the holders of our common stock.
The Board has determined that it is advisable and in the best interests of the Company to amend the Charter in light of the 1-for-4 reverse stock split of our outstanding common stock, which was completed on September 23, 2022 (the “Reverse Stock Split”). Immediately prior to the Reverse Stock Split, we had 2,936,500,000 shares of common stock authorized for issuance, of which 1,869,274,630 shares were outstanding and 620,014,753 shares were reserved for issuance under various Company plans, including our Direct Purchase and Dividend Reinvestment Program, our equity incentive plans, and shares to be issued upon exchange or conversion of outstanding preferred stock (collectively referred to as our shares “reserved for issuance”). Thus, prior to the Reverse Stock Split, our outstanding shares of common stock plus our shares reserved for issuance represented approximately 85% of our available shares of common stock (referred to as our share “usage” rate).
Following the Reverse Stock Split, we continued to have 2,936,500,000 shares of common stock authorized for issuance. However, after giving effect to the Reverse Stock Split and as of the Record Date for this Annual Meeting, 493,880,722 shares of our common stock were issued and outstanding and approximately 203,348,533 shares of common stock were reserved for issuance, resulting in an approximate 24% usage of our available shares of common stock.
The proposed amendment would result in us having 1,468,250,000 shares of common stock available for issuance and, based on the 493,880,722 shares of common stock outstanding and 203,348,533 shares reserved for issuance as of the Record Date, would represent an approximate 47% usage of our available shares of common stock post reduction. The proposed amendment does not impact the number of authorized or outstanding shares of our preferred stock.
Neither Maryland law nor the Charter require a reduction in the total number of authorized shares of the Company’s common stock as a result of the Reverse Stock Split. In determining to recommend such a reduction, the Board considered the number of shares that would be available for issuance following a reduction that is proportionate to the 1-for-4 split ratio of the Reverse Stock Split. The Board also considered the potential for future stock issuances, which may include possible equity financings, opportunities for expanding our business through investments or acquisitions, management incentives and employee benefit plans, stock dividends or stock splits, and for other general corporate purposes. The Board determined that a proportionate reduction would result in approximately 95% usage of our available shares of common stock post reduction, which would not provide the Company with sufficient availability of stock to provide for our future needs. Therefore, the Board believes that the reduction of authorized shares contemplated by this proposal is advisable and in the best interests of the Company because it will maintain a sufficient but not excessive number of available shares of common stock for our future operations and financing needs while still reducing the overall number of authorized shares to account for the Reverse Stock Split.
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
If the proposal is approved, the Charter would be amended by deleting the first two sentences of ARTICLE VI(A) and replacing them with the following:
“A. The total number of shares of stock of all classes which the Corporation has authority to issue is one billion five hundred thirty-one million seven hundred fifty thousand (1,531,750,000) shares of capital stock, par value one cent ($0.01) per share, amounting in the aggregate par value to $15,317,500. Of these shares of capital stock, 1,468,250,000 shares are classified as “Common Stock,” 28,800,000 shares are classified as “6.95% Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock,” 17,000,000 shares are classified as “6.50% Series G Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock,” and 17,700,000 shares are classified as “6.75% Series I Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock.”"
If the amendment is approved, the Company will file articles of amendment to the Charter containing the amendment with the State Department of Assessments and Taxation of Maryland, which will become effective upon its acceptance for record of the articles of amendment or at such other time as set forth in the articles of amendment. If the amendment is not approved, the Company’s current authorized stock will remain unchanged.
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
AUDIT COMMITTEE MATTERS
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| | | RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |
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| The Board unanimously recommends a vote FOR the ratification of the appointment of Ernst & Young LLP as the Company’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, | |
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| Kathy Hopinkah Hannan, Chair | | | Thomas Hamilton | | Martin Laguerre | | | John H. Schaefer | | | Scott Wede | |
ANNALY CAPITAL MANAGEMENTç2023 2024 PROXY STATEMENT| 67
Service Category | 2022 | 2021 | ||||||||||||
Audit Fees(1) | $3,421,075 | $3,022,800 | ||||||||||||
Audit-Related Fees(2) | — | $64,000 | ||||||||||||
Tax Fees(3) | $336,670 | $393,660 | ||||||||||||
All Other Fees(4) | $405,000 | $313,675 | ||||||||||||
Total(5) | $4,162,745 | $3,794,135 |
(1) Audit |
(2) Audit-related fees are primarily for assurance and related services that are traditionally |
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The Audit Committee has also adopted policies and procedures for pre-approving all non-audit work performed by the independent registered public accounting firm.
| | The Audit Committee has adopted policies and procedures for pre-approving all non-audit services performed by the independent auditor. | |
The Audit Committee determined that the provision by EY of these non-audit services is compatible with EY maintaining its independence.
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We understand
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John Chevedden, whose address is 2215 Nelson Avenue, Redondo Beach, California, has notified the Company of his intention to present the proposal printed below for stockholder consideration at the Annual Meeting.
The Company has printed verbatim the text of Mr. Chevedden’s proposal and his supporting statement. His proposal will be voted on at the Annual Meeting only if it is properly presented by or on behalf of Mr. Chevedden.
Stockholder Proposal
Proposal 6 - Adopt a Shareholder Right to Call a Special Shareholder Meeting
Shareholders ask our board to take the steps necessary to amend the appropriate company governing documents to give the owners of a combined 10% of our outstanding common stock the power to call a special shareholder meeting regardless of length of stock ownership.
One of the main purposes of this proposal is to give all shareholders the right to formally participate in calling for a special shareholder meeting and to clear up any ambiguity that could prevent street name shareholders from the same formal participation in calling for a special shareholder meeting as non street name shareholders to the fullest extent possible.
Currently it appears only non street name shareholders can formally participate in calling for a special shareholder meeting. Thus if one makes the reasonable estimate that 50% of Annaly Capital stock is non street name stock, it means that our current requirement that 25% of shares are needed to call for a special shareholder meeting translates into 50% of this one category of stock.
Thus what seems to be a somewhat favorable 25% right to call for a special shareholder meeting turns into an unfavorable 50% right to call for a special shareholder meeting plus we have no right to act by written consent. A 50% stock ownership threshold to call for a special shareholder meeting means that any fleeting shareholder thought of calling for a special shareholder meeting is killed in the crib.
Plus many companies allow for both a right to call a shareholder meeting and a shareholder right to act by written consent and Annaly Capital Management shareholders have no right to act by written consent.
Calling for a special shareholder meeting is hardly ever used by shareholders but the main point of the right to call for a special shareholder meeting is that it gives shareholders at least significant standing to engage effectively with management.
Management will have an incentive to genuinely engage with shareholders instead of stonewalling shareholders if shareholders have a realistic Plan B option of calling a special shareholder meeting. Management likes to claim that shareholders have multiple means to communicate with management but in most cases these low impact means are as effective as mailing a post card to the CEO. A reasonable shareholder right to call a special shareholder meeting is an important step for effective shareholder engagement with management.
Please vote yes:
Adopt a Shareholder Right to Call a Special Shareholder Meeting - Proposal 6
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
Board of Directors’ Statement
The Board has carefully considered the above proposal and unanimously recommends a vote AGAINSTTABLE OF CONTENTS
The Company recently addressed stockholder special meeting rights by proactively lowering the threshold for stockholders to call a special meeting to 25% of shares outstanding after conducting extensive stockholder engagement
In February 2022, in response to stockholder engagement and to further enhance the Company’s corporate governance and stockholder rights framework, the Board affirmatively amended and restated our bylaws (the “Bylaws”) to reduce the ownership threshold required for stockholders to call a special meeting from a majority of shares outstanding to 25%. The Board believes that this existing special meeting right is the most appropriate for the Company at this time because it preserves a reasonable balance between providing stockholders with a meaningful right to call a special meeting and protecting stockholders against the unnecessary waste of corporate resources and disruption associated with convening a special meeting called by a small minority of stockholders to advance a narrow special interest or agenda. The Company has conducted substantial engagement with stockholders on this topic, meeting with 25% of our outstanding stockholders for their feedback on the appropriate special meeting right in the last three years. In addition, the Board also reviewed the policies of our major investors and considered that the 25% stock ownership threshold is the most common threshold used by companies in the S&P 500 with special meeting rights. Moreover, a 10% ownership threshold is lower than that of approximately 83% of S&P 500 companies that offer special meeting rights.
Special meeting rights are available to all stockholders, including beneficial holders
Our Bylaws provide all stockholders with the right to call a special meeting. Any stockholder, whether beneficial or of record, may exercise the right to call a special meeting. Stockholders that hold their shares through a broker, dealer, bank or another entity may, if they desire, either easily direct their broker or bank to participate in calling a special meeting or freely move their shares into registered name. In order to participate in calling a special meeting, beneficial holders can provide proof of ownership by submitting a written statement from the record holder of the securities (usually a bank or broker). When lowering the threshold to call a special meeting in 2022, our Board determined that it was in the best interest of our stockholders to provide this meaningful right to all stockholders.
Special meetings require substantial resources
Convening a special meeting of stockholders requires a substantial commitment of time, effort and resources, including significant legal and administrative fees, by the Company, our management and the Board, regardless of whether the meeting is held in person or virtually. The Company must pay to prepare, print and distribute to stockholders the legal disclosure documents related to the meeting, solicit proxies, tabulate votes and, for a virtual meeting, engage a service provider to host the meeting online. Management must also divert time to preparing for and conducting the meeting that could otherwise be dedicated to operating the business. Because of the considerable financial and administrative burdens associated with special meetings, the Board believes that special meetings should occur only to address extraordinary or urgent matters of importance to a reasonable percentage of our stockholders. If such a situation were to occur, the Company’s current 25% ownership threshold affords stockholders a meaningful opportunity to call a special meeting. A failure to receive 25% support to convene a special meeting is a strong indication that the issue is unduly narrow and not deemed critical by our stockholders generally. Lowering the ownership threshold to 10% may result in the right being used by special interest stockholders or stockholders with short-term outlooks seeking to advance narrow objectives that do not advance value for all stockholders, which would be costly and disruptive to the Company. The Board does not consider these objectives to be in the best long-term interests of all of our stockholders. Such a low threshold would give a small number of stockholders a disproportionate amount of influence over the affairs of the Company.
The Company engages in robust and meaningful engagement with our stockholders year-round
We actively and meaningfully engage with our stockholders throughout the year to provide an open and constructive forum for stockholders to express any concerns between annual meetings. Our stockholder engagement efforts allow us to better understand our stockholders’ priorities and perspectives, and enable the Company to effectively address the issues that matter most to our stockholders. In 2022, we reached out to 100% of all institutional investors and held over 125 meetings with stockholders across the U.S., Canada and Europe since 2022. In fact, it was in response to such robust and meaningful engagement with our stockholders that our Board determined that it was in the best interests of our stockholders to proactively lower the ownership threshold to call a special meeting to 25% of shares outstanding in 2022.
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
The Company maintains a strong and effective corporate governance framework that demonstrates our commitment to remaining responsive and accountable to our stockholders
We are dedicated to strong and effective corporate governance and our Board regularly assesses and refines our corporate governance policies and practices. In addition to providing all stockholders with the meaningful right to call a special meeting at a 25% ownership threshold, we have also implemented a number of other corporate governance measures to safeguard the interests of our stockholders over the last five years. These measures include:
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The Board believes that the Company’s strong and effective corporate governance policies and procedures provide the appropriate balance between ensuring accountability to our stockholders and enabling us to effectively oversee the Company’s business and affairs for the long-term benefit of our stockholders. The Board recently determined to lower the threshold to call a special meeting to 25% of shares outstanding, which aligns with best practices and strikes the appropriate balance between allowing stockholders to vote on important matters that arise between annual meetings and protecting against the potential for misuse of that right by a small group of stockholders with narrow short-term interests. In light of this recent amendment to our special meeting right and the Board’s demonstrated commitment to strong corporate governance and meaningful engagement with stockholders throughout the year, the Board believes that the adoption of this proposal is unnecessary and not in the best long-term interests of all of our stockholders.
Based on the foregoing governance considerations, stockholder feedback and market practice, and after careful consideration, the Board unanimously recommends that you vote AGAINST this proposal.
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
STOCK OWNERSHIP INFORMATION
Beneficial Owner(1) | Amount and Nature of Beneficial Ownership(2) | Percent of Class(3) | ||||||
David L. Finkelstein | 249,154 | * | ||||||
Serena Wolfe | 10,858 | * | ||||||
Steven F. Campbell | 24,932 | * | ||||||
Anthony C. Green | 61,820 | * | ||||||
Timothy P. Coffey(4) | 31,606 | * | ||||||
Ilker Ertas(5) | 30,191 | * | ||||||
Francine J. Bovich | 63,573 | * | ||||||
Wellington J. Denahan | 473,554 | * | ||||||
Thomas Hamilton(6) | 134,531 | * | ||||||
Kathy Hopinkah Hannan | 19,530 | * | ||||||
Michael Haylon | 67,463 | * | ||||||
Martin Laguerre(7) | 0 | * | ||||||
Eric A. Reeves | 11,334 | * | ||||||
John H. Schaefer | 61,295 | * | ||||||
Glenn A. Votek | 97,508 | * | ||||||
Vicki Williams | 22,746 | * | ||||||
All Executive Officers & Directors as a Group (14 People)(8) | 1,298,298 | * | ||||||
The Vanguard Group, Inc.(9) | 44,821,374 | 9.1% | ||||||
BlackRock, Inc.(10) | 54,334,796 | 11.0% |
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| Name and Address of Beneficial Owner(1) | | | Amount and Nature of Beneficial Ownership(2) (#) | | | Percent of Class(3) | | ||||||
| NEOs | | | | | | | | | | | | | |
| David L. Finkelstein | | | | | 314,010 | | | | | | * | | |
| Serena Wolfe | | | | | 25,387 | | | | | | * | | |
| Steven F. Campbell | | | | | 44,374 | | | | | | * | | |
| Anthony C. Green | | | | | 97,187 | | | | | | * | | |
| Non-Employee Directors | | | | | | | | | | | * | | |
| Francine J. Bovich | | | | | 81,581 | | | | | | * | | |
| Thomas Hamilton(4) | | | | | 142,699 | | | | | | * | | |
| Kathy Hopinkah Hannan | | | | | 27,698 | | | | | | * | | |
| Michael Haylon | | | | | 86,547 | | | | | | * | | |
| Martin Laguerre | | | | | 9,082 | | | | | | * | | |
| Manon Laroche(5) | | | | | 0 | | | | | | * | | |
| Eric A. Reeves | | | | | 21,020 | | | | | | * | | |
| John H. Schaefer | | | | | 72,411 | | | | | | * | | |
| Glenn A. Votek | | | | | 105,676 | | | | | | * | | |
| Scott Wede(6) | | | | | 0 | | | | | | * | | |
| Vicki Williams | | | | | 30,914 | | | | | | * | | |
| All Executive Officers & Directors as a Group (15 People) | | | | | 1,058,586 | | | | | | * | | |
| 5% Owners | | | | | | | | | | | | | |
| The Vanguard Group, Inc.(7) 100 Vanguard Blvd. Malvern, PA 19355 | | | | | 49,300,019 | | | | | | 9.9% | | |
| BlackRock, Inc.(8) 50 Hudson Yards New York, NY 10001 | | | | | 56,856,178 | | | | | | 11.4% | | |
| | | # DSUs | | ||||
| Francine J. Bovich | | | | | 78,206 | | |
| Thomas Hamilton | | | | | 27,699 | | |
| Kathy Hopinkah Hannan | | | | | 18,163 | | |
| Michael Haylon | | | | | 86,547 | | |
| Martin Laguerre | | | | | 9,082 | | |
| Name | | | #DSUs | | |||
| Eric A. Reeves | | | | | 12,452 | | |
| John H. Schaefer | | | | | 50,538 | | |
| Glenn A. Votek | | | | | 18,163 | | |
| Vicki Williams | | | | | 30,914 | | |
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Section 16(a) Beneficial Ownership Reporting Compliance
We believe that based solely on our reviewinformation contained in the Schedule 13G/A filed by Vanguard.
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OTHER INFORMATION
www.sec.gov.
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| | Investor Relations Annaly Capital Management, Inc. 1211 Avenue of the Americas New York, NY 10036 | | | | | | or email your request to: investor@annaly.com | |
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| | Anthony C. Green Chief Corporate Officer, Chief Legal Officer and Secretary Annaly Capital Management, Inc. 1211 Avenue of the Americas New York, NY 10036 | |
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Q | | | When and where is the Annual Meeting? | |
| A | | | The Annual Meeting will be held on May www.virtualshareholdermeeting.com/ If you plan to attend the Annual Meeting online, you will need the 16-digit control number included in your Notice, on your proxy card or on the instructions that accompany your proxy materials. |
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| | Date and Time | | | May 15, 2024 9:00 a.m., Eastern Time | |
| | Virtual Meeting | | | www.virtualshareholder meeting.com/NLY2024 | |
| | Q | | | Why did I receive a Notice in the mail regarding the Internet availability of proxy materials instead of a paper copy of proxy materials? |
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| A | | | The SEC has approved “Notice and Access” rules relating to the delivery of proxy materials over the Internet. These rules permit the Company to furnish proxy materials, including this Proxy Statement and the Annual Report, to stockholders by providing access to such documents on the Internet instead of mailing printed copies. Most stockholders will not receive paper copies of the proxy materials unless they request them. Instead, the Notice, which will be mailed to stockholders, provides instructions regarding how you may access and review all of the proxy materials on the Internet. The Notice also instructs you as to how you may authorize your proxy via the Internet or by telephone. If you would like to receive a paper or email copy of the Company’s proxy materials, you should follow the instructions for requesting such materials printed on the Notice. |
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
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| | Q | | | Can I vote my shares by filling out and returning the Notice? | |
| A | | | No. The Notice identifies the items to be considered and voted on at the Annual Meeting, but you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to authorize your proxy via the Internet or by telephone or how to vote at the Annual Meeting or to request a paper proxy card, which will contain instructions for authorizing a proxy by the |
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| A | | | You may vote online during the Annual Meeting prior to the closing of the polls at meeting.com/NLY2024, or by proxy via Internet | | |
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| | | | | | Your vote is very important. Please exercise your right to vote. | | | ||||||||||||
| | Vote Before the Meeting | | | | Vote During the Meeting | | | ||||||||||||
| | Internet | | | Mobile Device | | | | | Phone | | | | | | Attend the Meeting | | | ||
| | Online at www.proxyvote.com | | | Scan the QR code to visit www.proxyvote.com | | | Call toll-free 24/7 1-800-690-6903 | | | Complete & return your proxy card | | | | Online at www.virtualshareholder meeting.com/NLY2024 | | |
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Q | | | What quorum is required for the Annual Meeting? | |
| A | | | A quorum will be present at the Annual Meeting if stockholders entitled to cast a majority of all the votes entitled to be cast on any matter are present, in person or by proxy. At the close of business on the Record Date there were |
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| | Q | | | What are the voting requirements that apply to the proposals discussed in this Proxy Statement? | |
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Proposal | | | Vote Required | | |||||||||||||||||
Discretionary Voting Allowed | | | Effect of Abstentions | | | Effect of Broker Non-Votes | | | Board | | |||||||||||
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| | Majority of votes cast | | No | | | No effect | | | No effect | | | | | FOR each Director nominee | | |||||
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| | Majority of votes cast | | No | | | No effect | | | No effect | | | | | FOR | | |||||
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votes cast | |||||||||||||||||||||
votes entitled to be cast | |||||||||||||||||||||
| | Majority of votes cast | | Yes | |||||||||||||||||
| | No effect | | ||||||||||||||||||
| N/A | |
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“Majority of votes entitled to be cast” means, with regard to the amendment of our charter, the affirmative vote of the holders of a majority of the total number of shares outstanding and entitled to vote on the matter.
“Plurality” means, with regard to the advisory vote on the frequency of future advisory votes to approve our executive compensation, the option (every one, two or three years) receiving the greatest number of “for” votes will be considered the frequency recommended by stockholders.
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“Broker 1, Proposal 2 or Proposal 3. “Broker non-votes,” if any, will have no effect on Proposal 1, or Proposal 2, Proposal 3 or Proposal 6.2. As they areit is a routine matters and discretionary voting is allowed, “broker non-votes” are not applicable to Proposal 4 or Proposal 5.
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Q | | | How will my shares be voted if I do not specify how they should be voted? | |
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| | Q | | | What do I do if I want to change my vote? | |
| A | | | You may revoke a proxy at any time before it is exercised by filing a duly executed revocation of proxy, ▪ submitting a duly executed proxy with a later date, ▪ using the phone or online voting procedures, or ▪ by participating in the Annual Meeting via live webcast and voting online during the Annual Meeting prior to the closing of the polls. You may revoke a proxy by any of these methods, regardless of the method used to deliver your previous proxy. Virtual attendance at the Annual Meeting without voting online will not itself revoke a proxy. |
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| | Q | | | How will voting on any other business be conducted? | |
| A | | | Other than the |
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| | Q | | | Who will count the vote? | |
| A | | | Representatives of American Election Services, LLC, the independent inspector of elections, will count the votes. | |
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Q | | | How can I attend the Annual Meeting? | |
| A | | | All stockholders of record as of the close of business on the Record Date can attend the Annual Meeting online at www.virtualshareholdermeeting.com/ An audio broadcast of the Annual Meeting will also be available to stockholders by telephone toll-free at 1-888-700-7644 in the United States or 1-929-207-8058 if calling from outside the United States, and Please note that listening to the telephonic audio broadcast will not be deemed to be attending the Annual Meeting, and you cannot vote from such audio broadcast. If you plan to attend the Annual Meeting online or listen to the telephonic audio broadcast, you will need the 16-digit control number included in your Notice, on your proxy card or on the instructions that accompany your proxy materials. Online check-in will begin at 8:30 a.m. (Eastern Time), and you should allow ample time for online check-in procedures. |
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| | Q | | | Will I be able to ask questions and participate in the Annual Meeting? | |
| A | | | The virtual |
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Meeting. | | ||
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| | Q | | | What is the pre-meeting forum and how can I access it? | |
| A | | | One of the benefits of the online Annual Meeting format is that it allows the Company to communicate more effectively with our stockholders via a pre-meeting forum that you can access by visiting |
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| | Q | | | Why is the Company holding the Annual Meeting online? | |
| A | | | We believe that the virtual meeting format allows enhanced participation of, and interaction with, our global stockholder base. Virtual meetings also reduce costs for both the Company and our stockholders and reflect the Company’s commitment to environmentally-friendly practices. |
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| | Q | | | What if I have difficulties accessing the pre-meeting forum or locating my 16-digit control number prior to the day of the Annual Meeting on May |
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| A | | | Prior to the day of the Annual Meeting on May |
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| | Q | | | What if during the check-in time or during the Annual Meeting I have technical difficulties or trouble accessing the live webcast of the Annual Meeting? |
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| A | | | If you encounter any difficulties accessing the live webcast of the Annual Meeting during the check-in or during the Annual Meeting itself, including any difficulties with your 16-digit control number, please call toll-free 1-844-986-0822 in the United States or 1-303-562-9302 if calling from outside the United States, for assistance. Technicians will be ready to assist you beginning at 8:30 a.m. Eastern Time with any difficulties. |
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| | Q | | | How will the Company solicit proxies for the Annual Meeting? | |
| A | | | The expense of soliciting proxies will be borne by the Company. Proxies will be solicited principally through the use of mail, but Directors, executive officers and employees, who will not be specially compensated, may solicit proxies from stockholders by telephone, facsimile or other electronic means or in person. Also, the Company will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for any reasonable expenses in forwarding proxy materials to beneficial owners. |
The Company has retained Georgeson Inc. (“Georgeson”), a proxy solicitation firm, to assist in the solicitation of proxies in connection with the Annual Meeting. We will pay Georgeson a fee of $18,000 for its services. In addition, we may pay Georgeson additional fees depending on the extent of additional services requested by the Company and will reimburse Georgeson for expenses Georgeson incurs in connection with its engagement by the Company. In addition to the fees paid to Georgeson, we will pay all other costs of soliciting proxies.
Stockholders have the option to vote over the Internet or by telephone. Please be aware that if you vote over the telephone, you may incur costs such as telephone and access charges for which you will be responsible.
The Company has retained Georgeson Inc. (“Georgeson”), a proxy solicitation firm, to assist in the solicitation of proxies in connection with the Annual Meeting. We will pay Georgeson a fee of $19,000 for its services. In addition, we may pay Georgeson additional fees depending on the extent of additional services requested by the Company and will reimburse Georgeson for expenses Georgeson incurs in connection with its engagement by the Company. In addition to the fees paid to Georgeson, we will pay all other costs of soliciting proxies. Stockholders have the option to vote over the Internet or by telephone. Please be aware that if you vote over the telephone, you may incur costs such as telephone and access charges for which you will be responsible. | | ||
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| | Q | | | What is “Householding” and does the Company do this? | |
| A | | | “Householding” is a procedure approved by the SEC under which stockholders who have the same address and do not participate in electronic delivery of proxy materials receive only one copy of a company’s proxy statement and annual report unless one or more of these stockholders notifies the company or their respective bank, broker or other intermediary that they wish to continue to receive individual copies. The Company engages in this practice as it reduces printing and postage costs. However, if a stockholder of record residing at such an address wishes to receive a separate Annual Report or Proxy Statement, ▪ by writing Annaly Capital Management, Inc. 1211 Avenue of the Americas, New York, NY 10036 Attention: Investor Relations ▪ by emailing investor@annaly.com, or by ▪ calling 212-696-0100 and the Company will promptly deliver the requested Annual Report or Proxy Statement. If a stockholder of record residing at such an address wishes to receive a separate Annual Report or Proxy Statement in the future, If you are an eligible stockholder of record receiving |
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENT
multiple copies of the Company’s Annual Report and Proxy Statement, you can request householding by contacting the Company in the same manner. If you own your shares through a bank, broker or other nominee, you can request householding by contacting the bank, broker or other nominee. |
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| | Q | | | Could the Annual Meeting be postponed or adjourned? | |
| A | | | If a quorum is not present or represented, the Company’s bylaws and Maryland law permit the Chair of the meeting to adjourn the Annual Meeting, without notice other than an announcement at the Annual Meeting. Additionally, the |
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| | Q | | | Who can help answer my questions? | |
| A | | | If you have any questions or need assistance voting your shares or if you need copies of this Proxy Statement or the proxy card, you should contact: | | |
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Annaly Capital Management, Inc.
1211 Avenue of the Americas
New York, NY 10036
Phone: 1-888-8 ANNALY
Facsimile: (212) 696-9809
Email: investor@annaly.com
Attention: Investor Relations
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| | | Annaly Capital Management, Inc. 1211 Avenue of the Americas New York, NY 10036 | | | | | Phone 1-888-8 ANNALY | | ||
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| | | Facsimile (212) 696-9809 | | | | | Email investor@annaly.com Attention: Investor Relations | |
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79
Annaly at a Glance & Evolution of Annaly (page 3)
Note: Financial data as of December 31, 2022.
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Recent Operating Achievements & Annaly’s Shared Capital Model and Strategic Focus (page 4)
Note: Market data and financial data as of December 31, 2022.
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Delivering Significant Value for Stockholders (page 5)
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Board Composition, Structure and Refreshment (page 7)
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Continuing Director Diversity (page 8)
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Corporate Governance at Annaly (page 11)
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2022 Investment Strategy and Performance (page 32)
Source: Company filings and Bloomberg. Financial data as of December 31, 2022, unless otherwise noted. Market data as of December 31, 2022.
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ANNALY CAPITAL MANAGEMENT ç2023 PROXY STATEMENTNon-GAAP Reconciliations
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Financing, Capital and Liquidity (page 33)
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Operational Efficiency (page 34)
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What the Company Does (page 37)
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Executive Compensation Design and Award Decisions for 2022 (page 39)
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APPENDIX – NON-GAAP RECONCILIATIONS
To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company provides non-GAAP financial measures. These measures should not be considered a substitute for, or superior to, financial measures computed in accordance with GAAP. These non-GAAP measures provide additional detail to enhance investor understanding of the Company’s period-over-period operating performance and business trends, as well as for assessing the Company’s performance versus that of industry peers. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP results are provided below.
For the Year Ended | For the Quarters Ended | |||||||||||||||||||||||
12/31/22 | 12/31/22 | 9/30/22 | 6/30/22 | 3/31/22 | ||||||||||||||||||||
GAAP Net Income to Earnings Available for Distribution Reconciliation | ||||||||||||||||||||||||
GAAP net income (loss) | $1,726,420 | ($886,814) | ($273,977) | $863,317 | $2,023,894 | |||||||||||||||||||
Net income (loss) attributable to non-controlling interests | 1,095 | 1,548 | 1,287 | (3,379) | 1,639 | |||||||||||||||||||
Net income (loss) attributable to Annaly | 1,725,325 | (888,362) | (275,264) | 866,696 | 2,022,255 | |||||||||||||||||||
Adjustments to exclude reported realized and unrealized (gains) losses: | ||||||||||||||||||||||||
Net (gains) losses on investments and other | 4,602,456 | 1,124,924 | 2,702,512 | 615,216 | 159,804 | |||||||||||||||||||
Net (gains) losses on derivatives (1) | (4,493,013) | 202,337 | (1,976,130) | (1,014,651) | (1,704,569) | |||||||||||||||||||
Loan loss provision (reversal) (2) | (22,923) | 7,258 | (1,613) | (29,380) | 812 | |||||||||||||||||||
Business divestiture-related (gains) losses (3) | 40,258 | 13,013 | 2,936 | 23,955 | 354 | |||||||||||||||||||
Other adjustments: | ||||||||||||||||||||||||
Depreciation expense related to commercial real estate and amortization of intangibles (4) | 3,948 | 758 | 758 | 1,302 | 1,130 | |||||||||||||||||||
Non-EAD (income) loss allocated to equity method investments (5) | (15,499) | (306) | (2,003) | (3,270) | (9,920) | |||||||||||||||||||
Transaction expenses and non-recurring items (6) | 7,620 | 807 | 1,712 | 1,751 | 3,350 | |||||||||||||||||||
Income tax effect of non-EAD income (loss) items | 46,070 | (418) | (9,444) | 28,841 | 27,091 | |||||||||||||||||||
TBA dollar roll income and CMBX coupon income (7) | 431,475 | 34,767 | 105,543 | 161,673 | 129,492 | |||||||||||||||||||
MSR amortization (8) | (114,992) | (38,633) | (22,897) | (33,810) | (19,652) | |||||||||||||||||||
Plus: | ||||||||||||||||||||||||
Premium amortization adjustment (PAA) cost (benefit) | (360,587) | (8,136) | (45,414) | (127,521) | (179,516) | |||||||||||||||||||
Earnings available for distribution * | 1,850,138 | 448,009 | 480,696 | 490,802 | 430,631 | |||||||||||||||||||
Dividends on preferred stock | 110,623 | 29,974 | 26,883 | 26,883 | 26,883 | |||||||||||||||||||
Earnings available for distribution attributable to common stockholders * | $1,739,515 | $418,035 | $453,813 | $463,919 | $403,748 | |||||||||||||||||||
GAAP net income (loss) per average common share (9) | $3.93 | ($1.96) | ($0.70) | $2.21 | $5.46 | |||||||||||||||||||
Earnings available for distribution per average common share (9) * | $4.23 | $0.89 | $1.06 | $1.22 | $1.11 |
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| | | | For the Year Ended | | | For the Quarters Ended | | ||||||||||||||||||||||||
| GAAP Net Income to Earnings Available for Distribution Reconciliation | | | 12/31/23 ($) | | | 12/31/23 ($) | | | 9/30/23 ($) | | | 6/30/23 ($) | | | 3/31/23 ($) | | |||||||||||||||
| GAAP net income (loss) | | | | | (1,638,457) | | | | | | (391,232) | | | | | | (569,084) | | | | | | 161,187 | | | | | | (839,328) | | |
| Adjustments to exclude reported realized and unrealized (gains) losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net (gains) losses on investments and other(1) | | | | | 2,137,538 | | | | | | (1,887,795) | | | | | | 2,710,208 | | | | | | 1,316,837 | | | | | | (1,712) | | |
| Net (gains) losses on derivatives(2) | | | | | 1,184,961 | | | | | | 2,681,288 | | | | | | (1,732,753) | | | | | | (1,050,032) | | | | | | 1,286,458 | | |
| Loan loss provision (reversal) | | | | | (219) | | | | | | — | | | | | | — | | | | | | — | | | | | | (219) | | |
| Other adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortization of intangibles | | | | | 4,573 | | | | | | 673 | | | | | | 2,384 | | | | | | 758 | | | | | | 758 | | |
| Non-EAD (income) loss allocated to equity method investments(3) | | | | | 354 | | | | | | 197 | | | | | | (140) | | | | | | 541 | | | | | | (244) | | |
| Transaction expenses and non-recurring items(4) | | | | | 8,209 | | | | | | 2,319 | | | | | | 1,882 | | | | | | 2,650 | | | | | | 1,358 | | |
| Income tax effect of non-EAD income (loss) items | | | | | 31,570 | | | | | | 1,484 | | | | | | 9,444 | | | | | | 12,364 | | | | | | 8,278 | | |
| TBA dollar roll income and CMBX coupon income(5) | | | | | 20,621 | | | | | | 1,720 | | | | | | (1,016) | | | | | | 1,734 | | | | | | 18,183 | | |
| MSR amortization(6) | | | | | (182,151) | | | | | | (48,358) | | | | | | (49,073) | | | | | | (41,297) | | | | | | (43,423) | | |
| EAD attributable to noncontrolling interests | | | | | (14,639) | | | | | | (4,014) | | | | | | (3,811) | | | | | | (3,344) | | | | | | (3,470) | | |
| Premium amortization adjustment (PAA) cost (benefit) | | | | | 1,654 | | | | | | 19,148 | | | | | | (6,062) | | | | | | (11,923) | | | | | | 491 | | |
| Earnings available for distribution* | | | | | 1,554,014 | | | | | | 375,430 | | | | | | 361,979 | | | | | | 389,475 | | | | | | 427,130 | | |
| Dividends on preferred stock | | | | | 141,676 | | | | | | 37,181 | | | | | | 36,854 | | | | | | 35,766 | | | | | | 31,875 | | |
| Earnings available for distribution attributable to common stockholders* | | | | | 1,412,338 | | | | | | 338,249 | | | | | | 325,125 | | | | | | 353,709 | | | | | | 395,255 | | |
| GAAP net income (loss) per average common share(7) | | | | | (3.61) | | | | | | (0.88) | | | | | | (1.21) | | | | | | 0.27 | | | | | | (1.79) | | |
| Earnings available for distribution per average common share(7)* | | | | | 2.86 | | | | | | 0.68 | | | | | | 0.66 | | | | | | 0.72 | | | | | | 0.81 | | |
For the periods ended | ||||||||
12/31/2022 | 12/31/2021 | |||||||
Economic leverage ratio reconciliation | ||||||||
Repurchase agreements | $59,512,597 | $54,769,643 | ||||||
Other secured financing | 250,000 | 903,255 | ||||||
Debt issued by securitization vehicles | 7,744,160 | 5,155,633 | ||||||
Participations issued | 800,849 | 1,049,066 | ||||||
Debt included in liabilities of disposal group held for sale | — | 112,144 | ||||||
Total GAAP debt | $68,307,606 | $61,989,741 | ||||||
Less non-recourse debt: | ||||||||
Credit facilities (1) | $— | ($903,255) | ||||||
Debt issued by securitization vehicles | (7,744,160) | (5,155,633) | ||||||
Participations issued | (800,849) | (1,049,066) | ||||||
Non-recourse debt included in liabilities of disposal group held for sale | — | (112,144) | ||||||
Total recourse debt | $59,762,597 | $54,769,643 | ||||||
Plus / (Less): | ||||||||
Cost basis of TBA and CMBX derivatives | $11,050,351 | �� | $20,690,768 | |||||
Payable for unsettled trades | 1,157,846 | 147,908 | ||||||
Receivable for unsettled trades | (575,091) | (2,656) | ||||||
Economic debt * | $71,395,703 | $75,605,663 | ||||||
Total equity | $11,369,426 | $13,195,325 | ||||||
Economic leverage ratio * | 6.3x | 5.7x |
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| Economic Leverage Ratio Reconciliation | | | 12/31/2023 ($) | | | 12/31/2022 ($) | | ||||||
| Repurchase agreements | | | | | 62,201,543 | | | | | | 59,512,597 | | |
| Other secured financing | | | | | 500,000 | | | | | | 250,000 | | |
| Debt issued by securitization vehicles | | | | | 11,600,338 | | | | | | 7,744,160 | | |
| Participations issued | | | | | 1,103,835 | | | | | | 800,849 | | |
| Debt included in liabilities of disposal group held for sale | | | | | 2,132,751 | | | | | | — | | |
| TOTAL GAAP DEBT | | | | | 77,538,467 | | | | | | 68,307,606 | | |
| Less non-recourse debt: | | | | | — | | | | | | — | | |
| Debt issued by securitization vehicles | | | | | (11,600,338) | | | | | | (7,744,160) | | |
| Participations issued | | | | | (1,103,835) | | | | | | (800,849) | | |
| TOTAL RECOURSE DEBT | | | | | 64,834,294 | | | | | | 59,762,597 | | |
| Plus / (Less): | | | | | | | | | | | | | |
| Cost basis of TBA and CMBX derivatives | | | | | (555,221) | | | | | | 11,050,351 | | |
| Payable for unsettled trades | | | | | 3,249,389 | | | | | | 1,157,846 | | |
| Receivable for unsettled trades | | | | | (2,710,224) | | | | | | (575,091) | | |
| Economic debt* | | | | | 64,818,238 | | | | | | 71,395,703 | | |
| TOTAL EQUITY | | | | | 11,345,091 | | | | | | 11,369,426 | | |
| Economic leverage ratio* | | | | | 5.7x | | | | | | 6.3x | | |
For the years ended | ||||||||
12/31/2022 | 12/31/2021 | |||||||
Average economic cost of interest bearing liabilities * | ||||||||
Average interest bearing liabilities | $64,512,269 | $66,607,057 | ||||||
GAAP interest expense | $1,309,735 | $249,243 | ||||||
Add: | ||||||||
Net interest component of interest rate swaps | (366,161) | 276,142 | ||||||
Economic interest expense * | $943,574 | $525,385 | ||||||
Average economic cost of interest bearing liabilities * | 1.46% | 0.79% |
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