UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
| ☑ | Filed by the Registrant | |
| ☐ | Filed by a Party other than the Registrant |
| CHECK THE APPROPRIATE BOX: | ||
| Preliminary Proxy Statement | ||
| Confidential, | ||
| Definitive Proxy Statement | ||
| Definitive Additional Materials | ||
| Soliciting Material | ||
Annaly Capital Management, Inc.
(Name of Registrant as Specified In Its Charter) Message from our Chairman, CEO and President Dear Fellow Shareholders, 2018 was a year of transformation for Annaly. We successfully delivered on many of the key corporate goals we communicated to you last year, and despite a difficult macro environment, reached a number of significant strategic milestones made possible by the institutionalization and diversification of Annaly over the past five years. The progress made in 2018 further establishes Annaly as a market and governance leader and positions the Company to continue executing upon the most integral components of our platform and strategy, which are outlined in the themes below. Operating & Investment Platform Diversified Shared Capital Model Financing, Capital & Liquidity Diversification in the ways we access capital and the broadening of our financing alternatives are equally important in driving our outperformance and capital efficiency. Since the beginning of 2016, we have increased our capital base by $6.5 billion, more than half of which was sourced from avenues besides common equity offerings, further illustrating our leadership in the capital markets.(2) We continue to enhance our capital efficiency through non-recourse, dedicated financing structures for each of our credit businesses – improving terms of existing arrangements, increasing financing capacity and establishing new counterparty relationships. Specifically, since the beginning of 2018, we have added $2.4 billion of additional borrowing capacity across our three credit businesses and expanded our financing diversification by establishing Annaly as a repeat issuer in the residential and commercial securitization markets.(3) Operational Efficiency Continuing to scale our differentiated operating platform has provided a foundation for growth, diversification and efficiency that is unmatched in the industry. Since 2014, we have made significant investments across our four businesses, adding expertise and depth to our investment teams and best-in-class infrastructure to support our strategies. Notably, we have grown our total number of IT professionals by over 40% during this time period. Our expanded in-house technology capabilities have led to the development of proprietary portfolio analytics, financial and capital allocation models, risk testing and accounting software, providing Annaly with distinct competitive advantages and cost savings. Growth Strategies & Performance Growth & Income We have demonstrated, and the market has clearly validated, that size and scale drive performance. 2018 marked another successful year for Annaly and the execution of our long-term growth strategy. We capitalized on a number of opportunities that continue to solidify Annaly’s brand as a market and governance leader. Since 2016, amidst a market backdrop with the Fed raising rates eight times and the yield curve flattening by Note: For footnoted information, please refer to “Message from our Chairman, CEO and Organically, we have continued to Risk-Adjusted Returns The diversification and size of Annaly’s lower-levered capital base and investment businesses, along with our prudent risk management processes, continue to drive outperformance of Annaly’s total return. Since 2014, our total shareholder return of 83% is 1.2x higher than mREITs, 1.3x higher than the S&P 500 and 2.3x higher than the Yield Sectors.(4)In addition to our absolute returns, our proprietary model is producing higher cash flow margins than most any other financial services company – our pre-tax margins of approximately 60% are 3x higher than the average for corporations in the Yield Sectors.(5) Corporate Responsibility and Governance Corporate Governance Our dedication to corporate responsibility and governance also sets us apart from the market – and undoubtedly is another contributor to Annaly’s historical outperformance. We believe that continually evaluating the framework of our corporate responsibility and governance practices ensures alignment and transparency, resulting in increased value to our shareholders over the long term. In order to more specifically frame our efforts and illustrate our industry leading commitment to governance, we recently published a comprehensive narrative on our website detailing our commitment to ESG, which others are now, of course, beginning to emulate. In 2018, we also announced two important governance enhancements: the decision to declassify our Board initiating annual election of all Directors, along with adopting an enhanced Board Refreshment Policy that contains both tenure and age limit provisions. Our commitment to Board refreshment is further demonstrated by the election of four new independent directors since the beginning of 2018, three of whom are women, which will bring the percentage of women on the Board to 45% following the 2019 Annual Meeting of Stockholders(6), which is nearly 2x higher than the average for the S&P 500. Human Capital Behind the achievements and successes highlighted in this letter, and in everything we do, is the deep and varied expertise of our most important asset – our people. Today we have over 170 talented professionals, the largest number in the Company’s history, who have supported our successful evolution from a mono-line Agency mortgage REIT to the Industry Innovator we are today.(7)We are very proud of how hard we work at the Company each day and how well we treat each other as partners, and in 2018 we recorded the highest level of employee satisfaction since we initiated our annual employee engagement survey in 2015.(8) We continue to expand our initiatives focused on advancing diversity throughout the Firm, which remains a key business priority. In 2018, 47% of new hires identified as racially diverse, increasing overall firm diversity to 32%, which is 60% higher than our industry based on Bureau of Labor Statistics data.(9)Additionally, nearly 40% of new hires in 2018, 40% of Managing Director promotions and 50% of additions to Annaly’s Operating Committee since 2015 have been women. Note: For footnoted information, please refer to “Message from our Chairman, CEO and President” in Endnotes section. Responsible Investments Finally, our dedication to ESG principles, as well as our deep investment capabilities, uniquely positions us to support the vitality of local communities and the economy. This past year, we As we look ahead, Finally, this year we are excited to once again virtually “host” investors from around the world at our Note: For footnoted information, please refer to “Message from our Chairman, CEO and President” in Endnotes section. To the Stockholders of Annaly Capital Management, Inc.: Your vote is very important. Please exercise your right to vote. To view the Proxy Statement and other materials about the Annual Meeting, go to www.annalyannualmeeting.com or www.proxyvote.com. All stockholders are cordially invited to attend the Annual Meeting, which will be conducted via a live webcast for a second consecutive year. The Company saw increased stockholder attendance and participation at its first virtual stockholder meeting in 2018 and is confident that this format will once again allow enhanced interaction with our global stockholder base. During the upcoming virtual meeting, you may ask questions and will be able to vote your shares electronically from your home or any remote location with Internet connectivity. You may also submit questions in advance of the Annual Meeting by visiting www.proxyvote.com. The Company will respond to as many inquiries at the Annual Meeting as time allows. An audio broadcast of the Annual Meeting will also be available to stockholders by telephone toll-free at 1-877-328-2502. 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. Please note that listening to the audio broadcast will not be deemed to be attending the Annual Meeting, and you cannot ask questions or vote from such audio broadcast. The Annual Meeting will begin promptly at 9:00 a.m. (Eastern Time). Online check-in will begin at 8:30 a.m. (Eastern Time), and you should allow ample time for the online check-in procedures. By Order of the Board of Directors, Chief Corporate Officer, Chief Legal Officer and Secretary This summary contains highlights about the Company and the Annual Meeting. This summary does not contain all of the information that you should consider in advance of the Annual Meeting, and Stockholders are able to vote by Internet at Voting Stockholders may Internet Telephone Online Information After years of declining attendance at Annaly’s in-person annual meetings and marked growth of our international stockholder base over the same time period, the Company saw increased stockholder attendance and participation at its first virtual annual meeting in 2018. The Company is excited to once againembrace the virtual meeting format for the 2019 Annual Meeting. This environmentally-friendly approach also aligns with the Company’s broader sustainability goals and reduces costs for both the Company and its stockholders. The virtual meeting will be available to stockholders across the globe via any Internet-connected device and has been designed to provide the same rights to participate as you would have at an in-person meeting, including providing opportunities to make statements and ask questions. You are entitled to participate and vote at the Annual Meeting by visiting www.virtualshareholdermeeting.com/NLY2019. An audio broadcast of the Annual Meeting will also be available to stockholders by telephone toll-free at 1-877-328-2502. 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. Stockholders can access Annaly’s interactive pre-meeting forum, where you can submit questions in advance of the Annual Meeting and view copies of the Company’s proxy materials, by visiting www.proxyvote.com. If you wish to view the webcast at a location provided by the Company, the Company’s Maryland counsel, Venable LLP, will air the webcast at its offices located at 750 E. Pratt Street, Suite 900, Baltimore, MD 21202. Please note that no members of management or the Board will be in attendance at this location. If you wish to view the Annual Meeting via webcast at Venable LLP’s office, please complete the Reservation Request Form found at the end of this Proxy Statement. Proxy Summary NLY 1997 $14.6 billion The Company has $4.2 billion 37 50% $906 million $900 million 44% Note: For footnoted information, please refer to “Annaly at a Glance & Recent Operating Achievements ” in Endnotes section. Annaly's Diversified Shared Capital Model Diversification is a The Company has 37 investment options across its four investment groups, which is nearly three times more than in 2013 and up from 26 options at the end of 2015. While managing investment decisions, the Company combines a robust capital allocation process with careful risk management. This process enables Annaly to take advantage of market fluctuations and inefficiencies and rotate into credit markets when dislocations occur and Note: For footnoted information, please refer to “Annaly’s Diversified Shared Capital Model” in Endnotes section. Proxy Summary Growth and Income $5.7 billion $4.2 billion 55% Since January 2016, Annaly has grown its market cap by $5.7 billion, or 64%, and declared over $4.2 billion in cumulative dividends to stockholders amidst a challenging market backdrop, where the Federal Reserve has raised rates 8 times and the Treasury curve has flattened by 86%. Note: For footnoted information, please refer to “Growth and Income” in Endnotes section. Proxy Summary Delivering Significant Value Since 2014 (the first full year Note: Proxy Summary Stockholder Outreach and ~275 ~110 Over 94% Annaly’s stockholder engagement efforts generated significant feedback for both the Board and management and have resulted in a number of enhancements to corporate governance and compensation practices and Proxy Summary Stockholder Engagement Review Classified Focus on Board Enhance Board Deepen Corporate Note: For footnoted information, please refer to “Stockholder Engagement” in Endnotes section. Proxy Summary Corporate Responsibility As responsible stewards of capital, Annaly takes into account ESG factors that contribute to our ability to drive positive impacts and deliver attractive risk-adjusted returns over the long term. Annaly’s Corporate Responsibility efforts were institutionalized by the establishment of a dedicated Corporate Responsibility team in 2018, which is led by Tanya Rakpraja as Annaly’s Head of Corporate Responsibility and Government Relations. The Corporate Responsibility team collaborates across business areas to develop initiatives, monitor progress and manage reporting, and provides routine updates to the Corporate Responsibility Committee(1) of the Board (and, as appropriate, to the full Board). The Company provides extensive disclosure on its ESG efforts on the “Corporate Responsibility” section of Annaly’s corporate website at www.annaly.com/corporate-responsibility. The Manager and The Management Agreement 0.75% 29% $300 million In 2019, the Manager reduced Annaly’s management fee is Approximate compensation All of Proxy Summary The Manager’s Executive Compensation Program 90.5% 9.5% 16.8% of NEO compensation was variable and paid in the form of performance-based incentive bonuses of NEO compensation was paid in the form of fixed base salaries of aggregate management fees and expense reimbursements paid to the Manager were allocated by the Manager as NEO compensation Although Annaly neither employs nor compensates the NEOs, the Company is committed to providing its stockholders with information about the Manager’s executive compensation program in order to enable an informed Say-on-Pay vote. The Manager’s Executive Compensation Philosophy and Process The key principle of the Manager’s compensation philosophy for all employees, including the NEOs, is to pay for performance. The Manager’s NEO compensation planning process incorporates key areas of evaluation including: external market data, internal benchmarking, and quantitative and qualitative assessments of Company, group and individual performance. Individuals are evaluated based on mid-year and year-end manager reviews and the utilization of a 9-box talent review model, which assesses individual performance and potential. In establishing and reviewing individual NEO compensation packages, the Manager also considers the nature and scope of each NEO’s role and responsibilities, retention considerations and feedback from stakeholders. Overview of the Manager’s 2018 Executive Compensation Program For additional information about the Manager, the management agreement and executive compensation, see “Certain Relationships and Related Party Transactions,” “Management Structure,” “Compensation Paid by the Manager to the Named Executive Officers” and “Compensation Discussion and Analysis.” Note: For footnoted information, please refer to “Overview of Manager’s 2018 Executive Compensation Program” in Endnotes section. Proxy Summary Board Composition, Structure And Refreshment 12 or 73 2021 45% Independent Directors may All Directors will stand for of Annaly’s Continuing The NCG Committee seeks to achieve a balance of knowledge, experience and capability on the Board. Newer Directors offer fresh ideas and perspectives, while deeply experienced Directors bring extensive knowledge of the Company’s complex operations. The table below summarizes key qualifications, skills, and attributes most relevant to the Continuing Directors’(1)service on the Board. For additional information about individual Director’s qualifications and experience, please see the Director biographies beginning on page 15. Skill / Experience Summary of Continuing Directors(1) The Board annually evaluates its overall composition and rigorously evaluates individual Directors to ensure a continued match of their skill sets and projected tenure against the needs of the Company. As a result of this process, the Board elected new Independent Directors, Kathy Hopinkah Hannan and Thomas Hamilton, effective February 13, 2019 and March 6, 2019, respectively. In 2018, the Board also underwent a comprehensive third-party facilitated self-evaluation, which included assessments of the full Board, each Board committee and individual Directors. Focus areas of this evaluation included Board and Committee skills, structure, dynamics, processes, leadership and refreshment. Based on the results of its self-evaluation, the Board determined to conduct a follow-up review to further analyze considerations related to Board refreshment, including Director term and tenure. This review, which benefitted from significant stockholder feedback, ultimately led to the adoption of a Board refreshment policy requiring that Independent Directors may not stand for re-election following the earlier of their 12thanniversary of Board service or their 73rdbirthday. In addition, this analysis informed the Board’s unanimous approval and adoption of a bylaw amendment to declassify the Board over a three-year period beginning with the 2019 Annual Meeting, with all Directors standing for annual election commencing with the 2021 Annual Meeting. Note: For footnoted information, please refer to “Board Composition, Structure and Refreshment” in Endnotes section. 2015 Note: For footnoted information, please refer to “Corporate Governance at Annaly” in Endnotes section. Corporate Governance at Annaly Consistent with its commitment to strong corporate governance practices, the Board is in the process of Lead Independent Director. For more details, see page 26. Corporate Governance at Annaly Director Nominees Mr. Keyes serves as Annaly’s Chairman, Chief Executive Officer and President. Mr. Keyes has served as Chairman since January 2018, Chief Executive Officer Director Qualification Highlights Director since Committees Corporate Governance at Annaly Director Qualification Highlights Director since Committees Corporate Governance at Annaly Directors Whose Current Terms Expire in 2020 Ms. Bovich has over 30 years of investment management experience lastly serving as a Managing Director of Morgan Stanley Investment Management from 1993-2010. Since 2011, Ms. Bovich has been a trustee of The Bradley Trusts. Ms. Bovich has also served as a board member of The Dreyfus Family of Funds since 2012, and serves as a board member of a number of registered investment companies within the fund complex. These funds represent a broad scope of investment strategies including equities Director Qualification Highlights Director since Committees Corporate Governance at Annaly Lead Independent Mr. Green served as a special advisor to Rockefeller Group International, Inc., a wholly owned subsidiary of Mitsubishi Estate Company, Ltd., operating under the brand of Director Qualification Highlights Mr. Schaefer has over 40 years of financial services experience including serving as a member of the management committee of Morgan Stanley from 1998 through Director Qualification Highlights Corporate Governance at Annaly Ms. Denahan co-founded Annaly in 1996 and has served as a Director since that time. Until December 2017, Ms. Denahan served as Chairman of the Board Director Qualification Highlights Mr. Haylon has served as Managing Director and Head of Director Qualification Highlights Director since Mr. Segalas Director Qualification Highlights Corporate Governance at Annaly The Board’s Role and Responsibilities The Company is committed to maintaining a strong ethical culture and robust governance practices that benefit the long-term interests of stockholders, which include: Note: For footnoted information, please refer to “The Board’s Role and Responsibilities” in Endnotes section. Corporate Governance at Annaly The Director Criteria and Qualifications The NCG Committee seeks to achieve a balance of knowledge, experience and capability on the Board and considers a wide range of factors when assessing potential Director nominees, including a candidate’s background, skills, expertise, diversity, accessibility and availability to serve effectively on the Board. All candidates should (i) possess the highest personal and professional ethics, integrity and values, exercise good business judgment and be committed to representing the long-term interests of the Company and its stockholders, and (ii) have an inquisitive and objective perspective, practical wisdom and mature judgment. It is expected that all Directors will Consideration of Board Diversity Stockholder Recommendation of Director Candidates Stockholders who wish the NCG Committee to consider their recommendations for Director candidates should submit their recommendations in writing to Table of Contents Board Effectiveness, Self-Evaluations and Refreshment The Company’s comprehensive Board and Committee refreshment and succession planning process is designed to ensure that the Board and each Committee is comprised of highly qualified Directors, with the independence, diversity, skills and perspectives to provide strong and effective oversight. The Board, led by the NCG Committee, annually evaluates the composition of the Board and each Committee, and rigorously evaluates individual Directors to ensure a continued match of their skill sets and tenure against the needs of the Company. As a result of this process, the Board elected new Independent Directors Kathy Hopinkah Hannan and Thomas Hamilton, effective February 13, 2019 and March 6, 2019, respectively. Dr. Hannan and Mr. Hamilton were identified as potential Director nominees by two separate members of senior management, and were elected to the Board after an extensive and careful search was conducted, and after numerous other candidates proposed by Directors, members of management and a professional search firm were considered. The NCG Committee is responsible for overseeing an annual self-evaluation process for the Board. The self-evaluation process seeks to identify specific areas, if any, that need improvement or strengthening in order to increase the effectiveness of the Board as a whole and its members and committees. In early 2018, the Board adopted an enhanced Board self-evaluation process that includes annual assessments of the full Board, each Board committee and individual Directors, along with periodic use of an external facilitator. In the summer of 2018, an outside governance expert facilitated this comprehensive self-evaluation. Focus areas included Board and Committee skills, structure, dynamics, processes, fulfillment of responsibilities, leadership and refreshment. Based on the results of its self-evaluation, the Board determined to conduct a follow-up review to further analyze considerations related to Board refreshment, including Director term and tenure. This review, which benefitted from significant stockholder feedback, ultimately led to the adoption of a Board refreshment policy requiring that Independent Directors may not stand for re-election following the earlier of their 12thanniversary of Board service or their 73rdbirthday. In addition, this analysis informed the Board’s unanimous approval and adoption of a bylaw amendment to declassify the Board over a three-year period beginning with the 2019 Annual Meeting, with all Directors standing for annual election commencing with the 2021 Annual Meeting. Board Commitment and Over-Boarding Policy In order to provide sufficient time for informed participation in their Board responsibilities: All Directors are Note: For footnoted information, please refer to “Board Effectiveness, Self-Evaluations and Refreshment” in Endnotes section. Corporate Governance at Annaly Risk management begins with the Board, through review and oversight of the Company’s risk management framework, and continues with executive management, through ongoing formulation of risk management practices and related execution in managing risk. The Board exercises its oversight of risk management primarily through its Risk Committee and Audit Committee. At least annually, the full Board reviews with management the Company’s risk management program, which identifies and quantifies a broad spectrum of enterprise-wide risks, including cyber and technology-related risks, and related action plans Assists the Board in its oversight of the Company’s risk governance structure, risk management and risk assessment guidelines and policies, and risk appetite, including risk appetite levels and capital adequacy and limits Assists the Board in its oversight of the quality and integrity MANAGEMENT Responsible for day-to-day risk assessment and risk management. A series of management committees have decision-making responsibilities for risk assessment and risk management CEO Performance Reviews and Management Succession Planning The Lead Independent Director and the Chair of the Compensation Committee jointly coordinate and lead the Board’s annual performance evaluation of the CEO, which reflects input from all non-executive Directors. The Board Corporate Governance at Annaly Stockholders and other persons interested in communicating with an individual Director (including the Lead Independent Director), the Independent Directors as a group, any committee of the Board or the Board as a whole, may do so by submitting such communication to: Annaly Capital Management, Inc. The Legal Department reviews all communications to the Directors and forwards those communications related to the duties and responsibilities of the Approval of Related Party Transactions The Board recognizes the fact that transactions with related persons present a heightened risk of conflicts of interests and/or improper valuation (or the perception thereof). The Board has adopted a written policy on transactions with related persons that is in conformity with NYSE listing standards. Under this policy any related person transaction, and any material amendment or modification to a related person transaction, must be reviewed and approved or ratified by any standing or ad hoc committee of the Board composed solely of Independent Directors who are disinterested or by the disinterested members of the full Board. In connection with the review and approval or ratification of a related person transaction, management must: In addition, the related person transaction policy provides that the committee or disinterested Directors, as applicable, in connection with any approval or ratification of a related person transaction involving a non-employee Director or Director nominee, should consider whether such transaction would compromise the Director or Director nominee’s status as an “independent,” or “non-employee” Director, as applicable, under the rules and regulations of the SEC, the NYSE and the Code of Business Conduct and Ethics. Corporate Governance at Annaly Management Agreement The Management If the Company elects to terminate the Management Agreement, The Management Agreement provides that during its term and, in the event of termination of the Management Agreement by The Manager Note: For footnoted information, please refer to “Management Agreement” in Endnotes section. CEO Board Structure and Processes Executive Sessions of Independent Directors Director Orientation and Continuing Education The Board believes that Director orientation and board education programs, along with research on governance trends and Code of Business Conduct and Ethics Corporate Governance Guidelines Other Governance Policies Annaly’s Directors, executive officers and employees are also subject to the Company’s other governance policies, including a Foreign Corrupt Practices Act and Anti-Bribery Compliance Policy, an Insider Trading Policy, and a Regulation FD Policy. Where You Can Find The Code of Conduct, Corporate Governance Guidelines, Compensation Committee Charter, Audit Committee Charter, NCG Committee Charter, Corporate Responsibility Committee Charter and Risk Committee Charter are available on Board Structure and Processes The Board created the new Member Chairperson E Financial Expert Committee Membership Determinations Note: For footnoted information, please refer to “Board Committees” in Board Structure and Processes For more information on the Audit Committee’s responsibilities and activities, Compensation Committee Number of Meetings Each member of the Compensation Committee is independent of the Company and management under the listing standards of the NYSE. For more information on the Compensation Committee’s responsibilities and activities, Note: For footnoted information, please refer to “Audit Committee & Compensation Committee” in Endnotes section. Board Structure and Processes NCG Committee Number of Meetings in Each member of the NCG Committee is independent of the Company and management under the applicable listing standards of the NYSE. For more information on the NCG Committee’s responsibilities and activities, Corporate Responsibility Committee(3) Number of Meetings Risk Committee Number of Meetings Note: For footnoted information, please refer to “NCG Committee, Corporate Responsibility Committee Board Structure and Processes During The annual compensation elements paid to Each DSU is equivalent in value to one share of Director Stock Ownership Guideline Board Structure and Processes Role of the Independent Compensation Consultant During Director Compensation The table below summarizes the compensation paid by The following table sets forth information with respect to the aggregate The following table sets forth certain information with respect to Biographical information on Mr. Keyes Glenn A. Votekhas served as Chief Financial Officer of Annaly since August 2013. Mr. Votek also served as Chief Financial Officer of Fixed Income Discount Advisory Company, Timothy P. Coffeyhas served as Chief Credit Officer of Annaly since January 2016. Mr. Coffey served as Annaly’s Head of Middle Market Lending from 2010 until January 2016. Mr. Coffey has over 20 years of experience in leveraged finance and has held a variety of origination, execution, structuring and distribution positions. Prior to joining Annaly in 2010, Mr. Coffey served as Managing Director and Head of Debt Capital Markets in the Leverage Finance Group at Bank of Ireland. Prior to that, Mr. Coffey held positions at Scotia Capital, the holding company of Saul Steinberg’s Reliance Group Holdings, and SC Johnson International. Mr. Coffey received his B.A. in Finance from Marquette University. Anthony C. Greenhas served as Chief Corporate Officer of Annaly since January 2019 and Chief Legal Officer and Secretary Stock Purchases by Executive Officers Since 2011 Since 2011, From the inception of the Company's management externalization transaction (the “Externalization”) in 2013 through March 2019, the Company paid the Manager a flat monthly management fee for its management services equal to 1/12thof 1.05% of Stockholders’ Equity(2). In March 2019, the Manager and the Company amended the Management Agreement for the sole purpose of reducing the monthly management fee on Incremental Stockholders’ Equity(3). Pursuant to this amendment, which recognizes the efficiencies that have been gained with scale, the Company pays the Manager a monthly management fee equal to 1/12thof the sum of: (i) 1.05% of Base Stockholders’ Equity(4), and (ii) 0.75% of Incremental Stockholders’ Equity(3). In addition to the management fee, the Company continues to reimburse the Manager for certain legal, tax, accounting and other support and advisory services provided by employees of the Manager to the Company as permitted pursuant to the terms of the Management Agreement. Note: For footnoted information, please refer to “Overview, Recent Changes & Management Agreement Management Structure Structure and Amount of the Management Fee The Compensation Committee annually reviews both the structure of the management fee as well as the amount of such fee to determine whether they incentivize the Moreover, the Compensation Committee believes that a management fee that is based upon The Compensation Committee also believes that the structure of the management fee is more favorable to In addition to the management fee, in August 2018, following the unanimous approval of the Independent Directors, the Company began reimbursing the Manager for certain legal, tax, accounting and other support and advisory services provided by employees of the Manager to the Company. These reimbursements (which totaled $9.2 million for 2018) are permitted pursuant to the terms of the Management Agreement provided the related costs are no greater than those that would be payable to comparable third party providers. Clawback for the Management Fee Pursuant to the Management Agreement, the Company is entitled to receive reimbursement from the Manager if the Board determines that a computation error (regardless of the reason for or amount of such error) resulted in the overpayment of a management fee to the Manager. Continued Cost Savings Related to the Externalization Note: For footnoted information, please refer to “Structure and Amount of the Management Fee & Management Structure Annual Review of Manager Performance and Management Fee Considerations The Compensation Committee annually reviews The Compensation Committee also reviews In its review of these operating expense ratios, the Compensation Committee noted that the Company has outperformed both Note: For footnoted information, please refer to “Annual Review of Manager Performance and The NEOs for 2018 are: As discussed above in “Management Structure,” the Company is externally managed by the Manager and pays the Manager a management fee, the purpose of which is not to provide compensation to the NEOs, but rather to compensate the Manager for the services it provides for the day-to-day management of the Company. The proceeds of the management fee are used by the Manager in part to pay compensation to the NEOs other than Mr. Keyes (who does not receive any compensation for serving as the Company’s Chairman, CEO and President, but has an interest in the management fee as an indirect equityholder of the Manager). As an externally-managed issuer, the Company does not determine the compensation payable by the Manager to the NEOs, does not al-locate any specific portion of the management fee it pays to the compensation of the NEOs, and does not reimburse the Manager for the cost of such compensation. Aside from a severance agreement directly between the Company and Mr. Keyes and the ability of the Compensation Committee to grant plan-based equity awards to the NEOs (which it has not exercised since the Externalization), the Manager makes all decisions relating to compensation it pays to the NEOs based on the factors, including individual and Company performance, it determines to be appropriate and subject to any employment agreements entered into between the Manager and individual NEOs. The Manager’s Executive Compensation Program In order to enable the Company’s stockholders to make an informed Say-on-Pay vote, the Manager has provided the following information about the compensation it paid to the NEOs for 2018: Summary of 2018 NEO Compensation Note: For footnoted information, please refer to “Summary of 2018 NEO Compensation” in Endnotes section. Compensation Paid by the Manager to the Named Executive Officers NEO Compensation Philosophy and Process Individuals are evaluated assesses based on mid-year and year-end manager reviews and the utilization of a 9-box talent review model, which assesses individual performance and potential. In establishing and reviewing individual NEO compensation packages, the Manager also considers the nature and scope of each NEO’s role and responsibilities, retention considerations and feedback from stakeholders. The Company utilizes a third party compensation consultant to advise on external benchmarking and other compensation practices (as further described below under “Role of the Manager’s Compensation Consultants” and “Market Compensation Data”). NEO Compensation Practices The Manager’s pay-for-performance philosophy is reflected in the Manager’s compensation practices: Majority of compensation is “at risk” – variable performance-based compensation comprises 90.5% of the NEOs’ total compensation Multiple performance metrics – diversified mix of rigorous Company performance metrics, including core return on equity, core return on assets and operating expenses as a percentage of average equity and as a percentage of average assets, along with group and individual performance objectives Annual assessment of NEO compensation practices against peer companies and best practices External legal review Third-party compensation consultant Regular stockholder feedback through robust outreach program No guaranteed salary increases No targeting of specific percentiles versus peers in setting compensation levels No incentive or additional performance awards for growing assets under management or for exceeding returnbenchmarks No excessive perquisites No tax gross-ups Compensation Paid by the Manager to the Named Executive Officers Components of the NEOs’ Compensation The Manager’s executive compensation program includes both a base salary and a performance-based incentive bonus. Although the Compensation Committee has discretion to grant equity awards of Company common stock to the NEOs (which it has not exercised since the Externalization), the management fee the Company pays to the Manager is paid entirely in cash and therefore the Manager has no independent ability to provide awards of Company stock as part of the NEOs’ compensation. To address this limitation in the Manager’s executive compensation program, the Manager has structured the NEOs’ performance-based incentive bonuses with a mix of both rigorous Company performance metrics and group and individual performance objectives, which aligns the interests of the NEOs with the interests of the Company’s stockholders. This alignment is strengthened by the Company’s stock ownership guidelines, pursuant to which the NEOs purchase shares of the Company’s common stock in the open market (as further described under “Stock Ownership Guidelines/Commitments”). The table below describes the objectives supported by each of the Manager’s primary compensation elements, along with an overview of the key design features of each element. Base Salary Performance-Based NEO Pay Mix The Manager’s executive compensation program is designed so that the majority of compensation is performance-based and “at-risk” to promote alignment of the NEOs’ interests with those of stockholders. In determining payout of the NEOs’ performance-based incentive bonuses (which represents the variable portion of their compensation packages), the Manager considered achievement of both rigorous performance metrics, including core return on equity, core return on assets and operating expenses as a percentage of average equity and as a percentage of average assets, along with group and individual performance objectives. During 2018, Messrs. Votek, Finkelstein, Coffey, and Green received aggregate performance-based incentive bonuses of $28.7 million from the Manager. The base salaries for the NEOs (which represent the fixed portion of their compensation packages) are reviewed annually and may be increased or decreased as the Manager deems appropriate. During 2018, Messrs. Votek, Finkelstein, Coffey, and Green received aggregate salaries of $3.0 million from the Manager. On an aggregated basis, Messrs. Votek, Finkelstein, Coffey and Green received 9.5% of their total compensation in the form of base salaries and the remaining 90.5% in the form of performance-based incentive bonuses. Compensation Paid by the Manager to the Named Executive Officers Role of the Manager’s Compensation Consultant During 2018, the Manager retained a third-party compensation consultant for advice and perspectives regarding market trends that may impact decisions about the Manager’s executive compensation program and practices. Company Market Data The Manager considers compensation data and practices of a group of peer companies (the “Peer Group”), as well as current market trends and practices generally, in developing appropriate compensation packages for the NEOs. Compensation Peer Group The Board is committed to corporate governance best practices and recognizes the significant interest of stockholders in executive compensation matters. As described in detail under the headings The NEOs are eligible to receive equity awards pursuant to The Board unanimously recommends that the stockholders vote in favor of 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 Executive Compensation Compensation Discussion and Analysis As discussed above, the Manager pays all of the compensation, including benefits, to the NEOs. As a private company not subject to the disclosure requirements of the SEC, the Manager has sole discretion to determine the compensation it pays to its employees, including the NEOs. The Manager makes all compensation determinations for the NEOs without any direction by the Board and without reference to any specific policies or programs under the oversight of the Board or the Compensation Committee. The Manager compensates the NEOs for a variety of services performed for the benefit of the Manager. Thus, the compensation paid by the Manager to its employees who are serving as the Company’s NEOs is not considered to be part of the Company’s executive compensation program. Pursuant to the terms of the Management Agreement, the Company pays the Manager a monthly management fee for its management services equal to 1/12thof the sum of: (i) 1.05% of Base Stockholders’ Equity(1), and (ii) 0.75% of Incremental Stockholders’ Equity(2). In addition to the management fee, the Company reimburses the Manager for the cost of certain legal, tax, accounting and other support and advisory services provided by employees of the Manager to the Company. During the year ended December 31, 2018, the Company incurred $179.8 million in management fees and $9.2 million in permitted reimbursement payments under the Management Agreement. None of the reimbursement payments were attributable to compensation of the Company’s NEOs. The proceeds of the management fee are used in part to pay compensation to the NEOs other than Mr. Keyes (who does not receive any compensation for serving as the Company’s Chairman, CEO and President, but has an interest in the management fee as an indirect equityholder of the Manager). The Company does not determine the compensation that the Manager pays to the NEOs, the Company does not allocate any specific portion of the management fee that the Company pays to the compensation of the NEOs, and the Company does not reimburse the Manager for the cost of such compensation. Accordingly, the Company did not pay any cash compensation to the NEOs, nor did the Company grant them any plan-based awards, for 2018. The Company does not provide the NEOs with pension benefits, perquisites or other personal benefits. As a result, no compensation is includable in the Summary Compensation Table. The Company is not party to any employment agreements entered into between the Manager and individual NEOs. However, the Company is party to the CEO Severance Agreement with Mr. Keyes, which provides for cash severance to be paid by the Company to Mr. Keyes in certain termination events. For more information, see “CEO Severance Agreement” and “Potential Payments upon Termination or Change in Control” below. No “single-trigger” severance amounts are payable to Mr. Keyes solely upon a change in control of the Company. The Company believes that providing appropriate severance benefits to Mr. Keyes upon certain termination events helps the Company retain Mr. Keyes’ services as its CEO. The CEO Severance Agreement also allows the Company to protect its interests through noncompetition provisions that continue to apply following Mr. Keyes’ termination as CEO of the Company. In connection with its review and recommendation of the CEO Severance Agreement, a special committee of the Board comprised of four independent Directors considered the executive compensation arrangements of its compensation peer group. Consideration of “Say-on-Pay” Voting Results At the Company’s 2018 Annual Meeting, over 94% of the votes cast supported the Company’s Say-on-Pay vote. Upon consideration of the high percentage of votes cast in support of the Say-on-Pay vote, along with additional feedback from engagement with stockholders, the Compensation Committee determined it was appropriate to continue providing detailed quantitative information about the Manager’s executive compensation program in the Company’s proxy materials. For additional details, please see “Compensation Paid by the Manager to the Named Executive Officers” above. The Company and the Board will continue to consider the outcome of future Say-on-Pay votes, as well as stockholder feedback received throughout the year, and invite stockholders to express their views to the Independent Directors as described under “Communications with the Board.” Note: For footnoted information, please refer to “Compensation Discussion and Analysis” in Endnotes section. Executive Compensation Executive Compensation Policies Stock Ownership Guidelines/Commitments Stock Holding Period The Manager’s employees (including the NEOs) are required to hold for a period of four years the net after-tax shares of Company stock they receive through stock option exercises or vesting of equity incentive awards. Prohibition on Hedging Company Securities The Company has a policy prohibiting the Manager’s employees (including the NEOs), employees of the Company and its subsidiaries, and members of the Board from engaging in any hedging transactions with respect to Company securities held by them. Such prohibited transactions include the purchase of any financial instrument (including forward contracts and zero cost collars) designed to hedge or offset any decrease in the market value of Company securities. Prohibition on Pledging Company Securities The Company has a policy prohibiting the Manager’s employees (including the NEOs), employees of the Company and its subsidiaries, and members of the Board from holding Company securities in a margin account or pledging Company securities as collateral for a loan. Risks Related to Compensation Policies and Practices As discussed above in “Management Structure,” the Compensation Committee is not entitled to approve compensation decisions made by the Manager and the Manager does not consult with the Compensation Committee prior to making any such decisions. Therefore, the Compensation Committee has no compensation policies or practices applicable to, or decision-making role regarding, the manner in which the Manager uses the management fee to compensate the NEOs. However, in connection with the Compensation Committee’s administration of the Company’s equity incentive plan and oversight of the CEO Severance Agreement, the Compensation Committee conducts an annual risk assessment of the Company’s applicable compensation policies and practices. In 2018, the Compensation Committee determined that these compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Report of the Compensation Committee The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Note: For footnoted information, please refer to “Stock Ownership Guidelines/Commitments” in Endnotes section. Executive Compensation Executive Compensation Tables and Related Narrative Summary Compensation Table The Company did not pay any compensation to the NEOs, and did not reimburse the Manager for any compensation paid to the NEOs, with respect to the years ended December 31, 2018, December 31, 2017 or December 31, 2016. The Company did not grant the NEOs any plan based awards in 2018. Outstanding Equity Awards at Fiscal Year-End None of the NEOs had outstanding equity awards at December 31, 2018. Options Exercised and Stock Vested The Company does not provide the NEOs with any benefits pursuant to defined benefit plans and nonqualified deferred compensation plans. CEO Severance Agreement On August 1, 2018, the Company and Mr. Keyes entered into the CEO Severance Agreement. The term of the CEO Severance Agreement continues through July 31, 2020, and will automatically renew for successive one-year terms unless either party gives written notice (a “Notice of Non-Renewal”) to the other of its intention not to renew at least 180 days prior to the expiration of the then-current term. Upon (i) the removal of Mr. Keyes as the Company’s Chief Executive Officer without “cause” (as defined in the CEO Severance Agreement), (ii) the resignation of Mr. Keyes with “good reason” (as defined in the CEO Severance Agreement) or (iii) the expiration of the then-current term following a Notice of Non-Renewal provided by the Company (each, a “Severance Event”), the Company shall pay Mr. Keyes a cash payment equal to $30 million (the “Severance Payment”). The Severance Payment shall be payable in 12 equal monthly installments after Mr. Keyes’ separation from service upon or following a Severance Event (the “Severance Period”); provided that if such separation from service occurs within two years immediately following a “change of control” (as defined in the CEO Severance Agreement), the Severance Payment shall be made in a single lump sum. The payment of the Severance Payment shall be subject to the execution of a waiver and release of claims against the Company and its subsidiaries and affiliates and on Mr. Keyes’ continued compliance with applicable noncompetition provisions. For additional information about the CEO Severance Agreement, see “Compensation Discussion and Analysis.” Potential Payments upon Termination or Change in Control The following table sets forth quantitative information with respect to potential payments to Mr. Keyes or his beneficiaries upon various termination events described above, assuming termination on December 31, 2018. Other than Mr. Keyes, the Company has no responsibility to provide any payments or benefits to any NEO in connection with a termination of service or change in control. Payments are subject to the execution of a waiver and release of claims and compliance with applicable noncompetition provisions. Executive Compensation Compensation Committee Interlocks and Insider Participation The Manager is responsible for managing the Company’s affairs pursuant to This information is being provided for compliance purposes. Neither the Compensation Committee nor the Manager used the pay ratio measure in making any Executive Compensation As of March 25, 2019, we had 1,442,971,679 shares of Our charter currently allows us to issue up to a combined total of 2,000,000,000 shares of capital stock, par value $0.01 per share. The proposed amendment of our charter raises the total number of authorized shares of capital stock we are permitted to issue from 2,000,000,000 shares to 3,000,000,000 shares. Although our charter permits our Board to classify and reclassify any unissued shares of capital stock by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of The proposed amendment to our charter deletes the current ARTICLE VI(A) of our charter and replaces it with the following: “ARTICLE VI The Board declared advisable, and unanimously recommends a voteFORthe approval of an amendment to our charter to increase the number of authorized shares to 3,000,000,000 shares. Executive Compensation To retain the The approval of the proposed amendment to the Company’s charter requires the affirmative vote of the holders of a majority of the total number of issued and outstanding shares of our The Audit Committee operates pursuant to a charter which it reviews annually, and a brief description of the Audit Committee’s primary responsibilities is included under the heading “Board Committees – Audit Committee” in this Proxy Statement. Under the Audit Committee’s charter, management is responsible for the preparation of the Company’s financial statements and the independent registered public accounting firm is responsible for auditing those financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles. In addition, the independent registered public accounting firm is responsible for auditing and expressing an opinion on the Company’s internal controls over financial reporting. The Audit Committee has discussed with Ernst & Young the matters required to be discussed by In reliance on these reviews and discussions, and the report of the independent registered public accounting firm, the Audit Committee has recommended to Audit Committee Matters Relationship with Independent Registered Public Accounting Firm The aggregate fees billed for The Audit Committee has also adopted policies and procedures for pre-approving all non-audit work performed by accounting consultations on matters addressed during the audit or interim reviews The Audit Committee determined that the provision by EY of these non-audit services is compatible with EY maintaining its independence. The Company understands the need for Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information as of March Knowledge of the beneficial ownership of Amount and Stock Ownership Information Includes: (i) 10,000 shares owned by Includes: (i) 3,000 shares owned by the Hercules Segalas Irrevocable Trust, (ii) 900 shares owned by Mr. Segalas’ daughters, and (iii) 2,100 shares owned by the Katherine Lacy Segalas Devlin Irrevocable Trust. Mr. Segalas disclaims beneficial ownership of these 6,000 shares. BlackRock, Inc., 55 East 52nd Street, New York, NY The Vanguard Group, Inc., 100 Vanguard Blvd., Malvern, PA 19355, as a parent holding company or control person of certain named funds (“Vanguard”), filed a Schedule 13G/A on February Section 16(a) Beneficial Ownership Reporting Compliance The Company files annual, quarterly and current reports, proxy statements and other information with the SEC. SEC filings are available to the public from commercial document retrieval services and at the Internet worldwide web site maintained by the SEC at www.sec.gov. Annaly’s website is www.annaly.com. The Company makes available on this website under “Investors - SEC Filings,” free of charge, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as well as proxy statement and other information filed with or furnished to the SEC as soon as reasonably practicable after such materials are electronically submitted to the SEC. Any stockholder intending to Pursuant to Any such nomination or proposal should be sent to Anthony C. Green, the Chief Corporate Officer, Chief Legal Officer and Secretary, Annaly Capital Management, Inc., 1211 Avenue of the Americas, New York, NY 10036 and, to the extent applicable, must include the information required by As of the date of this Questions and Answers When and where is the Annual Meeting? The Annual Meeting will be held on Other Information Why did I receive a Notice in the mail regarding the Internet availability of proxy materials instead of a paper copy of proxy materials? 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. Can I vote my shares by filling out and returning the Notice? 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 Internet, by telephone or by returning a signed paper proxy card. Who is entitled to vote at the Annual Meeting? Only common stockholders of record as of the close of business on the Record Date (March How can I vote my shares? You may vote online during the Annual Meeting prior to the closing of the polls at www.virtualshareholdermeeting.com/NLY2019, or by proxy via Internet (www.proxyvote.com), telephone (1-800-690-6903), or by completing and returning your proxy card. The Company recommends that you authorize a proxy to vote even if you plan to virtually attend the Annual Meeting as you can always change your vote online at the meeting. You can authorize a proxy to vote via the Internet or by telephone at any time prior to 11:59 p.m., Eastern Time, May 21, 2019, the day before the meeting date. What quorum is required for the Annual Meeting? A quorum will be present at the Annual Meeting if a majority of the votes entitled to be cast on any matter are present, in person or by proxy. share. Abstentions and What are the voting requirements that apply to the proposals discussed in this Proxy Statement? “Majority” means (a) with regard to an uncontested election of Directors, the affirmative vote of a majority of total votes cast for and against the election of each Director; (b) with regard to the advisory approval of executive compensation and the ratification of the appointment of Ernst & Young, a majority of the votes cast on the matter at the Annual Meeting; and (c) with regard to the proposed amendment to our charter, the affirmative vote of the holders of a majority of the total number of issued and outstanding shares of our common stock entitled to vote on the proposal. Other Information “Discretionary voting” occurs when a bank, broker, or other holder of record does not receive voting instructions from the beneficial owner and votes those shares in its discretion on any proposal as to which the rules of the NYSE permit such bank, broker, or other holder of record to vote (“routine matters”). When banks, brokers, and other holders of record are not permitted under the NYSE rules to vote the beneficial owner’s shares on a proposal (“non-routine matters”), if you do not provide voting instructions, your shares will not be voted on such proposal. This is referred to as a “broker non-vote.” For each of the proposals above, you can vote or authorize a proxy to vote “FOR,” “AGAINST” or “ABSTAIN.” What is the effect of abstentions and “broker non-votes” on the proposals submitted at the Annual Meeting? Abstentions “Broker non-votes,” if any, will have no effect on How will my shares be voted if I do not specify how they should be voted? Properly executed proxies that do not contain voting instructions will be voted as follows: (1) Proposal No. 1: (2) Proposal No. 2: (3) Proposal No. 3: (4) Proposal No. 4: FOR the ratification of the appointment of Ernst & Young LLP as The Company officers you You may revoke a proxy at any time before it is Other than the Who will count the vote? Representatives of Other Information All stockholders of record as of the Record Date can attend the Annual Meeting What is the pre-meeting forum and how can I access it? One of the benefits of the online Annual Meeting format is that it allows the Company to communicate more effectively with its stockholders via a pre-meeting forum that you After years of declining attendance by stockholders at Annaly’s in-person annual meetings and marked growth of our international stockholder base over the same time period, the Company moved to an online format for 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 Prior to the day of the Annual Meeting on May 22, 2019, if you need assistance with your 16-digit control number and you hold your shares in your own name, please call toll-free 1-866-232-3037 in the United States or 1-720-358-3640 if calling from outside the United States If you hold your shares in the name of a bank or brokerage firm, you will need to contact your bank or brokerage firm for assistance with your 16-digit control number. 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? 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 1-855-449-0991 in the United States or 1-720-378-5962 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. How will The expense of soliciting proxies will be borne by the Company. Proxies will be solicited principally through the use of mail, but Other Information The Company has retained Stockholders have the option to vote over the Internet or by telephone. Please be aware that if you vote over the Internet, you may incur costs such as telephone and access charges for which you will be responsible. What is “Householding” and does Annaly do this? “Householding” is a procedure approved by the SEC under which stockholders who have the same address and last name and do not participate in electronic delivery of proxy materials receive only one copy of a company’s Could the Annual Meeting be postponed or adjourned? If a quorum is not present or represented, Who can help answer my questions? If you have any questions or need assistance voting your shares or if you need copies of this Annaly Capital Management, Inc. The Company’s principal executive offices are located at the address above. Endnotes Message from our Chairman, CEO and President (page i) Annaly at a Glance & Recent Operating Achievements (page 3) Annaly’s Diversified Shared Capital Model (page 4) Endnotes Annaly’s Diversified Shared Capital Model(cont’d)(page 4) Growth and Income (page 5) Delivering Significant Value for Stockholders (page 6) Stockholder Engagement (page 8) Corporate Responsibility & The Manager and the Management Agreement (page 9) Overview of the Manager’s 2018 Executive Compensation Program (page 10) Board Composition, Structure and Refreshment (page 11) Corporate Governance at Annaly (page 13) Endnotes The Board’s Role and Responsibilities (page 20) Board Effectiveness, Self-Evaluations and Refreshment (page 22) Management Agreement (page 25) Board Committees (page 28) Audit Committee & Compensation Committee (page 29) NCG Committee, Corporate Responsibility Committee & Risk Committee (page 30) Overview, Recent Changes & Management Agreement Terms (page 34) Endnotes Overview, Recent Changes & Management Agreement Terms(cont’d)(page 34) Structure and Amount of the Management Fee & Continued Cost Savings Related to the Externalization (page 35) Annual Review of Manager Performance and Management Fee Considerations (page 36) Summary of 2018 NEO Compensation (page 37) Compensation Discussion and Analysis (page 42) Stock Ownership Guidelines/Commitments (page 43) 2019 ANNUAL MEETING OF STOCKHOLDERS If you wish to view Annaly Capital Management, Inc.’s 2019 Annual Meeting of Stockholders webcast at the offices of Venable LLP (located at 750 E. Pratt Street, Suite 900, Baltimore, MD 21202), please complete the following information and return to Anthony C. Green, Chief Corporate Officer, Chief Legal Officer and Secretary, Annaly Capital Management, Inc., 1211 Avenue of the Americas, New York, NY 10036. Please note that no members of management or of the Board of Directors will be present at Venable LLP’s offices. In addition, you must bring a valid, government-issued photo identification, such as a driver’s license or a passport to Venable LLP’s offices. If the shares listed above are not registered in your name, please identify the name of the registered stockholder belowand include evidence that you beneficially own the shares. ANNALY CAPITAL MANAGEMENT, INC. VOTE BY INTERNET During The Meeting - Go towww.virtualshareholdermeeting.com/NLY2019 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 VOTE BY MAIL THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. ANNALY CAPITAL MANAGEMENT, INC. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Annaly Capital Management, Inc. Important Notice Regarding the Availability of Annaly Capital Management, Inc. Revoking all prior proxies, the undersigned hereby appoints Kevin G. Keyes and Anthony C. Green, and each of them, as proxies for the undersigned, with full power of substitution, to appear on behalf of the undersigned and to vote all shares of Common Stock, par value $.01 per share, of Annaly Capital Management, Inc. (the "Company") that the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company, which will be a virtual meeting conducted via live webcast to be held at 9:00 a.m., Eastern Time, on Wednesday, May 22, 2019 at www.virtualshareholdermeeting.com/NLY2019, and at any postponement or adjournment thereof as fully and effectively as the undersigned could do if personally present and voting, hereby approving, ratifying and confirming all that said attorneys and agents or their substitutes may lawfully do in place of the undersigned as indicated below. The shares represented by this proxy when properly executed, will be voted as directed.If no directions are given, this proxy will be voted in accordance with the Board of Directors' recommendations as listed on the reverse side of this card and at their discretion on any other matter that may properly come before the meeting. Address Changes/Comments: ANNALY CAPITAL MANAGEMENT, INC.(Name of Registrant as Specified In Its Charter)(Name of Person(s) Filing Proxy Statement, if other than the Registrant)Payment of Filing Fee (Check the appropriate box)PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):[X]☑ No fee required. [ ]☐Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: ☐ [ ]Fee paid previously with preliminary materials.materials:☐ [ ]Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Formform or Scheduleschedule and the date of its filing.1) Amount Previously Paid:previously paid: 2) Form, Schedule or Registration Statement No.: 3) Filing Party: 4)Date Filed:4) Date Filed: 
Notice of 2016Annual Meeting of Stockholdersand Proxy StatementMay 26, 2016, at 9:00 a.m.The Warwick Hotel65 West 54th StreetNew York, NY 10019
May 22, 2019 9:00 a.m. (Eastern Time) www.virtualshareholdermeeting.com/NLY2019 AmidstThe most important theme of 2018 was diversification. Annaly has transformed into a challenging macroeconomic environmentdiversified operating company built to capitalize on numerous strategic opportunities across multiple complementary businesses. Since our diversification strategy began in 2014, Annaly has broadly invested in over $10 billion of credit assets through continued development of our platform, expanded institutional partnerships and corporate acquisitions.(1)As a result, today each of our three credit businesses would rank among the top ten industry leaders in their respective industry sectors by size on a standalone basis.unprecedented volatility across all asset classes,86%, Annaly delivered strong financial results in 2015, declaring over $1.2has grown its market capitalization 64%, while delivering an additional $4.2 billion in cumulative dividends to shareholders.producing an attractive return on equity while maintaining a low leverage ratio relativePresident” in Endnotes section.Annaly Capital Management Inc. 2019 Proxy Statement i the industry.grow each of our four business platforms by expanding our internal investment options and continuing to broaden our proprietary partnerships. Today, Annaly has established over 20 strategic relationships with industry leading, dedicated partners across our four businesses, which have resulted in improved efficiencies and increased origination capabilities. In addition to our dividend program,organic growth, expansion of partnerships and superior capital markets access, Annaly remains well-positioned to continue to gain market share through further consolidation, as demonstrated by our acquisition of Hatteras Financial Corp. in August2016 and most recently of lastMTGE Investment Corp. in 2018.ii Annaly Capital Management Inc. 2019 Proxy Statement authorizedcollaborated once again with Capital Impact Partners, a repurchase plan of upnational mission-driven non-profit community development financial institution, to $1 billion oflaunch our common shares through December 31, 2016. As of March 31, 2016, we have cumulatively repurchased $614 million of stock under both our current programsecond social impact joint venture, which is specifically aimed at supporting affordable housing and our previous share repurchase program, which was initiatedother community development projects in 2012.Washington, D.C.Annaly delivered strong financial results in 2015, declaring over$1.2 billion in dividendsThroughout 2015, we continued to execute on our strategic plan to diversify our investments in assets with complementary cash flows. During the year, we expanded our allocation of capital into lower-levered, largely floating rate credit businesses from 11% to 23% of our total equity capital. We invested $1.3 billion in growing our commercial real estate business, launching our own residential credit platform and nearly tripling the size of our middle market lending portfolio. On a stand-alone basis of roughly $3 billion of equity capital, these three businesses would amount to one of the largest hybrid mortgage REITs in the world and three times the size of the average market capitalization for the 40 other mortgage REITs in the industry.As of March 31, 2016, we have cumulatively repurchased$614 million of stockthrough 2016we will continue our diversified and beyond, we remain focused both on returning valuecomplementary growth strategies and reward our shareholders by taking advantage of opportunities in the market that are unique to Annaly. We are more prepared than ever to benefit from our stockholderssize, liquidity, optionality and enhancing our corporate governance, compensation and management structures. The Board of Directors continually evaluates these structures to further alignoperational efficiency. I am grateful for the interestsconfidence of our Board, which has empowered us to be the industry leader we have become. I want to thank my fellow shareholders for their steadfast commitment, support and trust of this management with those of shareholders. Among numerous other initiatives, we announced the expansion of our stock ownership guidelines in the first quarter of 2016. Pursuantteam. And, to these guidelines, more than 40%each Annaly employee, I sincerely appreciate all of the Annaly team (includinghard work and dedication, every day. We have so much opportunity in front of us.executive officers)Annual Shareholder Meeting. The meeting will be asked to purchase predetermined amounts of shares in the open market. These guidelines reflect our desire to establish an ownership culture throughout the firm, which is also evidenced by the fact that senior management has purchased nearly 1.9 million common shares with an aggregate purchase price of $22.0 million since 2011.We expanded our allocation of capital into lower-levered, largely floating rate credit businesses from 11% to23%of our total equity capitalWe are proud of our attention and focus on our shareholders over the years – and our industry best practices are exemplified by what I believe is one of the most shareholder friendly management agreements in the asset management industry. Our management contract is structured without termination or incentive fees, has one of the lowest fixed management fee percentages in the industry and a two-year term that provides our Board and shareholders with the opportunity to actively monitor and assess our performance over reasonable time frames. In addition to the stock ownership guidelines discussed above, other recent enhancements include the adoption of a robust clawback policyconducted online via live webcast for the management fee, increased stock ownership guidelines forsecond consecutive year and we look forward to engaging with you then.
Kevin Keyes
Chairman, Chief Executive Officer & President
April [___], 2019Senior management has purchased nearly1.9 million common shares since 2011www.annalyannualmeeting.com IAnnaly Capital Management Inc. 2019 Proxy Statementiii Independent Directors, a four-year stock holding period requirement, an anti-pledging policy (which is complementary to our existing anti-hedging policy) and the creation of the role of Lead Independent Director, which is currently held by Jon Green.Also, given the various changes to the market, our industry and our business, we have dedicated tremendous focus and resources to enhancing our financial disclosure and risk management practices. Over the past year, we provided increased transparency into our amended capital allocation policy and more granular portfolio detail on our growing credit businesses. This year’s proxy statement, which includes an updated format and graphics, also reflects our continued focus on accuracy and transparency. Our paramount responsibility, as long term stewards of capital, is to ensure that we have appropriate clarity within our financial statements, strong risk management practices and the comprehensive operational infrastructure needed to support our evolving businesses. In 2015, significant achievements were made within our operating strategies including: attracting numerous key hires into our risk, legal, accounting, human resources and information technology teams; implementing enhanced asset, portfolio and risk management systems, including a comprehensive risk rating system across the various investment businesses; and restructuring our internal management reporting lines and governance committees to more appropriately monitor and manage our evolving strategies.I look forward to welcoming many of you to our 2016 Annual Meeting of Stockholders.Sincerely,
Kevin G. KeyesChief Executive Officer and PresidentApril 12, 2016Creation of the role ofLead Independent DirectorEnhancing our financial disclosure and risk management practicesScaling our operating platform to support growth anddiversification of our portfolioIIAnnaly Capital Management, Inc.► 2016 Proxy Statement
>Notice of Annual Meeting of StockholdersTo Be Held May 26, 2016at 9:00 a.m. (Eastern Time)The Warwick Hotel, 65 West 54th Street,New York, NY 10019WeAnnaly Capital Management, Inc., a Maryland corporation (“Annaly” or the “Company”), will hold theits annual meeting of the stockholders of Annaly(the “Annual Meeting”) on May 26, 2016,22, 2019, at 9:00 a.m. (Eastern Time) online at the Warwick Hotel, 65 West 54th Street, New York, NY 10019, to:www.virtualshareholdermeeting.com/NLY2019, to consider and vote upon:►1.►2.►3.4. Ratify the appointment of Ernst & Young LLP as ourthe Company’s independent registered public accounting firm for 2016the year ending December 31, 2019..WeThe Company will also transact any other business as may properly come before our annual meetingthe Annual Meeting or any adjournmentpostponement or postponementadjournment thereof. Only our common stockholders of record at the close of business on March 29, 2016,25, 2019, the record date for the annual meeting,Annual Meeting, may vote at the annual meetingAnnual Meeting and any adjournmentspostponements or postponementsadjournments thereof.To view the Proxy Statement and other materials about the annual meeting, go to www.annalyannualmeeting.com.If you attend the annual meeting in person, you will need to present proof of your ownership of our common stock as of the record date, and valid government-issued photo identification.By Order of theThe Company’s Board of Directors
R. Nicholas SinghSecretaryApril 12, 2016Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 26, 2016. Our Proxy Statement and 2015 Annual Report to Stockholders are available at www.proxyvote.com.www.annalyannualmeeting.comIII
IVAnnaly Capital Management, Inc.► 2016 Proxy Statement>Proxy StatementThe Board of Directors (the “Board”) of Annaly Capital Management, Inc. (“Annaly,” the “Company,” “we,” “our” or “us”Board”) is soliciting proxies in connection with our 2016 annual meeting of stockholders (the “Annual Meeting”). We arethe Annual Meeting. The Company is sending the Notice of Internet Availability of Proxy Materials (“Notice”), or a printed copy of the proxy materials, as applicable, commencing on or about April 12, 2016.[__], 2019.>If you wish to view the webcast at a location provided by the Company, the Company’s Maryland counsel, Venable LLP, will air the webcast at its offices located at 750 E. Pratt Street, Suite 900, Baltimore, MD 21202. Please note that no members of management or the Board will be in attendance at this location. If you would like to view the Annual Meeting webcast at Venable LLP’s office, please follow the directions for doing so set forth in the “Questions and Answers about the Annual Meeting” section in this Proxy Statement.
Anthony C. Green
April [__], 2019Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on May 22, 2019. The Company’s Proxy Statement and 2018 Annual Report to Stockholders are available at www.proxyvote.com. Annaly Capital Management Inc. 2019 Proxy Statement 1 we encouragethe Company encourages you to read the entire proxy statementProxy Statement and our 2015the Company’s 2018 Annual Report on Form 10-K carefully before voting.2016 Annual Meeting of Stockholders2019 Annual Meeting of Stockholders Time andDate:
Thursday,Time
and Date:Wednesday, May 26, 201622, 2019 at 9:00 a.m. (Eastern Time)Place:The Warwick Hotel, 65 West 54th Street,
New York, NY 10019Place:www.virtualshareholdermeeting.com/NLY2019 
Record Date: Close of business on March 29, 201625, 2019
Voting: www.proxyvote.com; www.proxyvote.com; telephone at 1-800-690-6903; by completing and returning their proxy card; or in persononline at the Annual MeetingVoting MattersVoting Matters Board Vote
Recommendation Page
NumberProposal No. 1:
Election of DirectorsFOR each Director
nomineeFOReachDirector nominee114Proposal No. 2:
Approval, on an advisory basis, ofourof the Company’s executive compensationFOR 2041Proposal No. 3:
Approval of an amendment to the Company’s charter to increase the number of authorized shares of capital stock to 3,000,000,000 sharesFOR 46 Proposal No. 4:Ratification of the appointment ofErnstof Ernst & Young LLP for the year ending December 31, 2019FOR 48 25Participate in the Annual Meeting
vote by
www.proxyvote.comTime and DateThursday, May 26, 2016at 9:00 a.m. (Eastern Time)PlaceThe Warwick Hotel,65 West 54th Street,New York, NY 10019Record DateMarch 29, 2016VotingStockholders are entitledto vote by
1-800-690-6903
Internetwww.proxyvote.com 
TelephoneMail1-800-690-6903
Mail
completing and returning
their proxy card
In Person
at the Annual Meeting
www.annalyannualmeeting.com2 Annaly Capital Management Inc. 2019 Proxy Statement Informationwww.annalyannualmeeting.com www.annalyannualmeeting.comVProxy SummaryAnnaly at a GlanceAnnaly at a Glance►
New York Stock
Exchange (NYSE): NLY
(“NYSE”) Traded►Founded in 1997
►
Initial Public Offering
Largest mortgage REIT
in the world(1)►Diversified investment strategy►16.5% economic return (change in book value plus dividends paid) from the beginning of 2014 through the end of 2015►Share repurchase authorization of up to $1.0 billion of common shares through the end of 2016►605% total return since inception(including reinvestment of dividends) as of March 31, 2016►Paid out $13.7 billion in dividends since inception►Conservative leverage ratios relative to specified peers►Management agreement aligns interests of our manager and our stockholders►Our management team purchased nearly 1.9 million common shares since 2011We have been externally managedexternally-managed by Annaly Management Company LLC (our(the “Manager”) since July 2013. OurThe Manager is responsible for managing ourthe Company’s affairs pursuant to a management agreement. Our Manager pays allagreement and, as of December 31, 2018, directly employed 95% of the compensation, including benefits,individuals who provide services to our executive officers (who are employees of our Manager) and our Manager’s other employees.the Company. Although limitedcertain personnel (but none of our executive officers) are employed by our subsidiaries of the Company for regulatory or corporate efficiency reasons, all compensation and benefits paid to such personnel by our subsidiaries reduce, on a dollar-for-dollar basis, the management fee we pay to our Manager. Forfor ease of reference, throughout this proxy statement,Proxy Statement, the Named Executive Officers (“NEOs”) and the other employees of ourthe Manager, (including our executive officers) and ourtogether with employees of Annaly’s subsidiaries, are sometimes referred to as “our”Annaly’s employees.Recent Operating Achievements Performance Capital Raising Dividends
83%
Total Shareholder
Return since 2014Over 50%
of capital raised since the
beginning of 2016 was
sourced from avenues
besides follow-on common
equity offerings(2)
$1.6 billion
Common and preferred
dividends declared
in 2018Diversification Optionality Efficiency
of originations and purchases
across Annaly’s three credit
businesses in 2018(3)
Available investment options
is nearly 3x more than in 2013
Lower operating expense as a
percentage of equity than the
mREIT index in 2018(4)Consolidation Financing Human Capital
Acquisition of MTGE
Investment Corp., representing
Annaly’s third successful
transaction since 2013
of additional financing capacity
added since 2018 through
three new credit facilities and
upsizing of existing facilities(5)
of Operating Committee
and Managing Director
promotions since
2015 were womenAnnaly Capital Management Inc. 2019 Proxy Statement 3 Key AccomplishmentsTable of ContentsDespite challenging market conditions for mortgage real estate investment trusts ("REITs") during 2015, we performed strongly and achievedProxy Summarynumber of significant accomplishments that are discussed below.Transitioned LeadershipKevin G. Keyes was appointed Annaly’s Chief Executive Officer effective September 30, 2015. On the same date, Wellington J. Denahan, our former Chief Executive Officer, transitioned to the position of Executive Chairman. Ms. Denahan continues to serve as Chairmankey component of the Board and Jonathan D. Green continues to serve as our Lead Independent Director.Diversified Investment StrategyOver the last few years, we haveAnnaly strategy, which has four distinct investment groups. Since 2014, Annaly has diversified our investment strategyits business model by investing in credit assets, with complementary cash flowswhich complement the Company’s primary portfolio of fixed-rate investments. This strategy is designed to achieve superiorstable risk-adjusted returns over the long term. During 2015, we invested $1.3 billion by growing our commercial real estate business, launching our own residential credit platform and nearly tripling the size of our middle market lending portfolio. On a standalone basis of roughly $3 billion of equity capital, these three businesses would amount to one of the largest hybrid mortgage REITs in the world, and three times the size of the average market capitalization for the 40 other mortgage REITs in the industry. The majority of our credit assets tend to have shorter-term maturities and floating interest rates. We expect that combining these credit assets with our core agency strategy should lead to a smoother earnings profilebook value performance over various interest rate cycles. Givenand economic cycles by pairing shorter duration floating-rate credit loans and securities with the relatively low price correlation betweenCompany’s longer duration, fixed-rate agency portfolio.
agency-backed assets, we also expect that our diversified strategy will lead to lower bookpricing is attractive on a risk-adjusted, relative value volatility as markets fluctuate.basis.VINumber of Available Investment Options
4 Annaly Capital Management Inc. ► 2016 2019 Proxy Statement
of market cap growth
since the beginning of 2016
of common and preferred
dividends declared
since the beginning of 2016
total return to stockholders
since the beginning of 2016Growth & Outperformance Over Time 
Annaly Capital Management Inc. 2019 Proxy Statement 5 Our diversification strategy is reflected in the following allocation of our capital across four businesses – agency, commercial real estate, residential credit and middle market lending – as of December 31, 2015.
DividendsFrom our inception in 1997 through December 31, 2015, we have paid over $13 billion in dividends to our stockholders, as set forth in the table below. In 2015, we declared over $1.2 billion in dividends.
www.annalyannualmeeting.comVIIProxy SummaryforFor StockholdersIn August 2015, the Board authorized a $1 billion share repurchase program, which gives us another avenue to return capital to our stockholders alongside our quarterly dividend program.Returns to Stockholders in 2015$114.3 million24.4%Shares repurchasedEconomic return generated
by Annaly with its current
investment teams since 2014(1)$1.2 billion83%Common and preferredTotal shareholder return generatedstock dividends declaredby Annaly since 2014$1.32 billion869%Returns to stockholdersTotal shareholder return
since Annaly’s IPO(2)From January 1, 2016 through March 31, 2016, we have repurchased an additional $102.7 million of common stock and have $783 million remaining authorization under the share repurchase program.Total Common Stock Return Performancewe werethe Company was externally-managed, as more fully described in “Management Structure” below)“Management Structure” on page 34), we have performed well against what we consider to be our relevant benchmarks. As illustrated by the graph below, shares of ourthe Company’s common stock (including the reinvestment of dividends) have returned significant value to our stockholders over the long term relative to both our mortgage REITthe Company’s mREIT peers and other yield-focused investments.SinceTotal Shareholder Return since 2014 Annaly has generated a total return of 33.1% to our stockholders(3)
Graph reflects daily market data from December 31, 2013 through March 31, 2016. For the share performance graph required by the Securities and Exchange Commission (SEC)footnoted information, please refer to “Delivering Significant Value for Stockholders” in accordance with Item 201(c) of Regulation S-K for the five-year period ended December 31, 2015, please see page 42 of our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 26, 2016.
Endnotes section.Source: Bloomberg. mREITs represent the members of the Bloomberg mREIT (“BBREMTG”) Index; Utilities represent the members of the Russell 3000 Utility Index; MLPs represent the members of the Alerian MLP Index; Asset Managers represent the members of the S&P 500 Asset Management and Custody Bank Index; Banks represent the members of the KBW Bank Index; and S&P represents the members of the S&P 500 Index.VIII6Annaly Capital Management Inc. ► 2016 2019 Proxy StatementProxy SummaryEconomic Return PerformanceSince we are organized as a REIT and therefore must distribute at least 90% of our taxable income to our stockholders annually, we believe that economic return, comprised of dividends paidand changes in book value measured over a specified period, is an especially meaningful performance metric for the Company. Concerns over increases in interest rates led us to maintain this relatively conservative leverage over the period compared to our Agency mREIT peers. Our Agency mREIT Peers consist of American Capital Agency Corp. (“AGNC”), Hatteras Financial Corp. (“HTS”), CYS Investments, Inc. (“CYS”), Capstead Mortgage Corp. (“CMO”), Armour Residential REIT, Inc. (“ARR”), and Anworth Mortgage Asset Corp. (“ANH”) (collectively, the “Agency mREIT Peers”), and represent the agency mortgage REITs included in the BBREMTG Index as of March 31, 2016 with market capitalization above $200 million. From the beginning of 2014 through the end of 2015, we generated an economic return of 16.5% and operated at 30% less leverage than this peer group.From the beginningof 2014 throughthe end of 2015,we generated aneconomic return of16.5% and operatedat 30% less leveragethen our AgencymREIT PeersEngagementResults of 2018 Say-on-Pay Vote
Points of outreach to
investors for proxy
engagement since 2015
One-on-one meetings with
stockholders across the
globe since 2015
of votes cast supported
Annaly’s 2018 Say-on-Pay voteSince September 2015, we have had a renewed focus on developing and maintaining relationshipsThe Company is committed to ongoing engagement with both our retail and institutional stockholders. Asstockholders through a wide range of March 31, 2016, ourmediums, including: in-person meetings, conferences, phone calls and electronic communication. Following the results of Annaly’s 2018 advisory resolution on executive compensation (commonly known as a “Say-on-Pay” vote), which received strong support from over 94% of votes cast, the Company has continued its multi-pronged stockholder outreach has included six non-deal roadshows with institutional investors, encompassing eight cities and meetings with 42 different investors. Over the same period, we held an additional 37 one-on-one meetings with investorscampaign to gain and share valuable insightssolicit feedback on a varietynumber of topics,issues, including (i) the Manager’s executive compensation program and related disclosure, (ii) the structure, composition and refreshment of the Board, and (iii) the Company’s diversified investment strategyCorporate Responsibility and ourEnvironmental, Social and Governance (“ESG”) initiatives.2018–2019 Stockholder Engagement Efforts Outreach included
approximatelyOutreach included
approximatelyManagement hosted meetings
with investors representing
of top 50 institutional investors of institutional ownership of top 5 largest shareholders management structures. In addition, wedisclosures over the last few years. Annaly’s stockholders have enhanced our effortsbeen extremely instrumental to, personalize our interaction with retail investors, providing high-touch responsesand supportive of, these governance and disclosure enhancements and the Company looks forward to allrequests for information. Memberscontinuing to find innovative ways to engage over the course of our Board may participate in investor2019 and beyond.when appropriate. Stockholders are invited to communicate with the Board as described under “Communications with the Board” as described below.is complemented by related initiatives, including:Members ofthe Board mayparticipate ininvestor outreachwhen appropriate■ Analysis of market governance and compensation practices at peer companies ■ Advice from external advisors, including governance and compensation consultants, Board search firms and proxy solicitors ■ Attendance at investor conferences ■ Discussions with proxy advisory services and corporate governance research firms www.annalyannualmeeting.comAnnaly Capital Management Inc. 2019 Proxy Statement 7 IXWhat The
Company HeardWhat The Company Did
Board Structure
Composition and
Diversity
Refreshment Policy
Responsibility8 Annaly Capital Management Inc. 2019 Proxy Statement
its fee on Incremental
Stockholders’ Equity(2)
from 1.05% to 0.75%
29% lower than the industry
average of 1.47%(3)
savings since the Externalization
in July 2013(4)Proxy SummaryOur Manager and Our Management AgreementHighlights of our management agreement►■our executive officersthe NEOs are indirect owners and/or employees of ourthe Manager►■OurWith the exception of Mr. Keyes, each of the other NEOs receives compensation paid by the Manager. Mr. Keyes receives no compensation for his services as the Company’s Chairman, Chief Executive Officer (“CEO”) and President, although, as an indirect equityholder of the parent of the Manager, Mr. Keyes has an interest in the fees paid to the Manager■ The Manager is responsible for the compensation of its employees (including our executive officers) who provide services to the Company. We doNEOs (other than Mr. Keyes). Annaly does not pay any cash or equity compensation to our executive officers, doits NEOs, and does not provide pension benefits, perquisites or other personal benefits and have no employment agreements or arrangements to pay any cash severance upon their termination or a change in control of the Company►■OurThe Manager receives a flatuses the management fee equalfees paid by the Company to, 1.05% of our stockholders’ equity, which is used toamong other things, pay the compensation and benefits of its employees (including our executive officers).the NEOs. However, nothe Company does not allocate any specific portion of the management fee is allocatedfees to NEO compensation or otherwise determine such compensation or reimburse the Manager for the costs thereof■ For 2018, the Company’s payments to the compensation of our executive officers►For 2015,Manager included the management fee was approximately $150.3of $179.8 million■ In March 2019, the Manager and the Company amended the Management Agreement solely to reduce the management fee on Incremental Stockholders’ Equity. Pursuant to this amendment, which recognizes the efficiencies that have been gained with scale, the Company pays the Manager a monthly management fee equal to 1/12th of the sum of: (i) 1.05% of Base Stockholders’ Equity(5), and (ii) 0.75% of Incremental Stockholders’ Equity(2) OverNote: For footnoted information, please refer to “Corporate Responsibility & The Manager and the past several years, our Manager has made significant investments Management Agreement”
in our personnel corresponding to the diversification of our investment strategy into more people-intensive asset classes (including residential credit, commercial real estate and middle market lending assets), as well as to the enhancement of our corporate infrastructure. These investments include the build out of teams for our agency, residential credit, commercial real estate and middle market lending businesses, and significant hires in our risk, legal, accounting, capital markets, middle office, regulatory, licensing, modeling, project management, forecasting and information technology departments.Endnotes section.The costs of these personnel expansions and improvements have been paid by our Manager rather than by us. Unlike a number of other externally-managed REITs, we do not reimburse our Manager for any portion or subset of employment costs, all of which are borne by our Manager. An increase to these costs does not result in any increase to the management fee, which is a fixed percentage of our stockholders’ equity as described above.The independent members of our Board review the efforts of our Manager to ensure that it continues to invest in our personnel. The Board has concluded that the efforts of our Manager to developand enhanceour personnelhave resulted in the establishment of a robust and high quality management team having a full complement of human capital to drive our business performance. We believe our management team compares very favorably in terms of size, scope and experience with our mortgage REIT peers.For additional information about our Manager, our management agreement and executive compensation, see “Certain Relationships and Related Party Transactions,” “Our Management Structure” and “Compensation Discussion and Analysis.”X Annaly Capital Management Inc. ► 2016 2019 Proxy Statement9 Proxy SummaryRecent Enhancements to our Corporate Governance, Compensation and Management StructuresWe regularly review and update our practices related to our corporate governance, compensation and management structures to align the interests of our management team with those of our stockholders and to respond to changes in applicable laws, regulations, stock exchange requirements and best practices and the evolving needs of our business. Over the last two years, we have made a number of enhancements to these structures, which include the following:Year ofActionHow It WorksAdoptionAdopted a ClawbackPolicy for theManagement Fee►The Company will seek, and be entitled to receive, reimbursement from our Manager if the Board determines that a computation error (regardless of the reason for or amount of such error) resulted in the overpayment of a management fee to our Manager2016Enhanced StockOwnershipGuidelines for Directorsand Employees toSupport Our OwnershipCulture►Expanded application of stock ownership guidelines to more than 40% of our employees and Manager personnel (including our executive officers)2016►Increased stock ownership guidelines for our Chief Executive Officer►Increased stock ownership guidelines for our Independent Directors to five times the annual cash retainerFour-Year StockHolding PeriodRequirement►Requires our employees and Manager Personnel (including our executive officers) to hold for a period of four years the net after-tax shares of Company stock they receive through stock option exercises or vesting of equity incentive awards2016Adopted an Anti-Pledging Policy►Prohibits our employees and Manager Personnel (including our executive officers) from holding Company securities in a margin account or pledging Company securities as collateral for a loan2016►We also have in place an anti-hedging policy with respect to our equity securities, which is discussed on page 23Updated GoverningDocuments andCommittee Charters►Revised and updated the Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the charters of our four standing Board committees to reflect best practices2015 – 2016Created the Role ofLead IndependentDirector►Lead Independent Director serves as link between our management, the Board and our stockholders2015►Robust responsibilities, including the ability to retain outside consultants who report directly to the Boardwww.annalyannualmeeting.comXI ■ With respect to 2018,(1) the NEOs as a group received aggregate salaries of $3.0 million and aggregate performance-based incentive bonuses of $28.7 million from the Manager. These amounts collectively represent 16.8% of the aggregate management fees and reimbursements the Company paid to the Manager for 2018. On an aggregated basis, the NEOs received 9.5% of their total compensation in the form of base salaries and the remaining 90.5% in the form of performance-based incentive bonuses. ■ In determining the cash bonuses it paid to the NEOs for 2018, the Manager considered achievement of both rigorous Company performance metrics,(2) including core return on equity, core return on assets and operating expenses as a percentage of average equity and as percentage of average assets, along with group and individual performance objectives. 10 Annaly Capital Management Inc. 2019 Proxy Statement
not stand for re-election upon
the earlier of 12 years of
service or their 73rd birthday
annual election commencing
with the 2021 Annual Meeting
Directors(1) are women, which is
over 2x the average of S&P 500
companies
Annaly Capital Management Inc. 2019 Proxy Statement 11 XII12Annaly Capital Management Inc. ► 2016 2019 Proxy Statement>Corporate Governance at AnnalyAnnaly Strives for Best-in-Class Governance Practices 2013 Proposal 1 20142016 2017 2018 2019 Annaly Capital Management Inc. 2019 Proxy Statement 13 We have three ClassesDirectors.implementing a declassified Board structure. At the Annual Meeting, our stockholders will vote to elect three Class IIfour nominees to serve as Directors (Kevin G. Keyes, Thomas Hamilton, Kathy Hopinkah Hannan and Vicki Williams), whose one-year terms will expire at ourthe annual meeting of stockholders in 2019, subject to2020 and when their respective successors are duly elected and qualify. Directors elected at the electionannual meetings of stockholders in 2017 and qualification of their successors or to their earlier death, resignation or removal. The Class III and Class I Directors have one year and two years, respectively, remaining on their terms of office and2018 will not be voted upon at the Annual Meeting.Meeting and will serve out the remainder of their terms. All Directors will stand for annual election beginning with the annual meeting of stockholders in 2021. Thetable below provides summary information about each of our Directors.the Directors other than Messrs. Brady and Nordberg who have not been renominated as Directors in line with the Board refreshment policy adopted in October 2018. The Company is grateful to Messrs. Brady and Nordberg for their years of service on the Board.OUR BOARD OF DIRECTORS RECOMMENDS A VOTE
The Board has nominated and recommends a vote FOR KEVINeach of Kevin G. KEYES, KEVIN P. BRADY AND E. WAYNE NORDBERG AS DIRECTORS TO HOLD OFFICE UNTIL OUR ANNUAL MEETING OF STOCKHOLDERS IN 2019 AND UNTIL THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED AND QUALIFIED. THE PERSONS NAMED IN THE ENCLOSED PROXY WILL VOTE YOUR PROXY IN FAVOR OF THESE NOMINEES UNLESS YOU SPECIFY A CONTRARY CHOICE IN YOUR PROXY.Keyes, Thomas Hamilton, Kathy Hopinkah Hannan and Vicki Williams as Directors, with each to hold office until the 2020 Annual Meeting, and until their respective successors are duly elected and qualify. Unless you specify a contrary choice, the persons named in the enclosed proxy will vote in favor of these nominees. In the event that these nominees should become unavailable for election due to any presently unforeseen reason, the persons named in the proxy will have the right to use their discretion to vote for a substitute.Name Age Principal Occupation Independent Committees Director Nominees Standing for One-Year Terms Kevin G. Keyes 51 Chairman, Chief Executive Officerand President
Annaly Capital Management, Inc.No Thomas Hamilton 51 NamePresident & CEO
Construction Forms, Inc.AgePrincipal OccupationIndependentYes Audit CommitteesRiskCLASS II DIRECTORS (NOMINATED TO SERVE FOR THREE-YEAR TERMS EXPIRING IN 2019)Kathy Hopinkah Hannan57 Former National Managing Partner,
Global Lead Partner
KPMG LLPYes Audit
NCGKevin G. KeyesVicki Williams 4846Chief ExecutiveHuman Resources Officer
NBCUniversalNoYesAudit
Compensationand PresidentDirectors Whose Current Terms Expire in 2020 Francine J. Bovich Annaly Capital Management, Inc.67Kevin P. Brady60Chief Executive OfficerFormer Managing Director
Morgan Stanley Investment ManagementYes ► AuditNCG (Chair)
CRKatie Beirne Fallon ARMtech, LLC►NCG►RiskE. Wayne Nordberg7743ChairmanGlobal Head of Corporate Affairs
Hilton Worldwide Holdings Inc.Yes ►CR
NCG (Chair)Hollow Brook Wealth Management,►CompensationLLCCLASS III DIRECTORS (TERMS EXPIRE IN 2017)Francine J. Bovich64Former Managing DirectorJonathan D. Green*Yes►AuditMorgan Stanley Investment►NCGManagementJonathan D. Green*6972Former Vice Chairman
Rockefeller GroupYes ►CR (Chair)
Compensation
Risk (Chair)The Rockefeller Group►CompensationJohn H. Schaefer 6467Former President and Chief Operating Officer
Morgan Stanley Global Wealth ManagementYes ►Risk (Chair)
Audit
CompensationOperating Officer►CompensationMorgan Stanley Global Wealth►RiskManagementCLASS I DIRECTORS (TERMS EXPIRE IN 2018)Directors Whose Current Terms Expire in 2021Wellington J. Denahan 5255Former Executive Chairman
Annaly Capital Management, Inc.No CR
RiskMichael Haylon Annaly Capital Management, Inc.Michael Haylon5861Managing Director and Head of Conning North America
Conning, Inc.Yes ►Audit
RiskConning Asset Management►RiskDonnell A. Segalas 5861Chief Executive Officer and Managing Partner
Pinnacle Asset Management, L.P.Yes ►Compensation (Chair)
CR
NCG* Compensation14 Annaly Capital Management Inc. 2019 Proxy Statement Managing Partner(Chair)Pinnacle Asset Management, L.P.►NCG* Lead Independent Director. For more details, see page10.www.annalyannualmeeting.com1Corporate Governance at Annalyto ServeStanding for a Three-Year Term Expiring in 2019 (Class II Directors)One-Year TermsKevin G. Keyes Kevin G. KeyesDirector since
2012Director sinceNovember 2012Chairman of the Boardof Annaly since September 2015 and as its President since October 2012. Previously, Mr. Keyes served as Chief Strategy Officer and Head of Capital Markets of Annalyfrom September 2010 until October 2012. Prior to joining Annaly as a Managing Director in 2009, Mr. Keyes worked for 20years in senior Investment Banking and Capital Markets roles. From 2005-2009,2005 to 2009, Mr. Keyes served in senior management and business origination rolesin the Global Capital Markets and Banking Group at Bank of America Merrill Lynch. Prior to that, from 1997 to 2005 heworked at Credit Suisse First Boston from 1997 until 2005 in various Capital Markets Origination roles, and from 1990 to 1997 at Morgan Stanley Dean Witter from 1990 until 1997 in the Mergers and Acquisitions Group and Real Estate Investment Banking Group. Mr. Keyes is a member of the University of Notre Dame’s Campaign Cabinet, the President’s Circle, the Student-Athlete Advisory Council and the Jesse Harper Council, as part of the Rockne Athletics Fund. He is a member of the Wall Street Journal’s CEO Council and serves on the Board of Directors of the Rock and Roll Forever Foundation. Mr. Keyes holds a B.A. in Economics and a B.S. in Business Administration (ALPA Program) from the University of Notre Dame.The Board believes that Mr. Keyes is our Chief Executive Officer and brings to ourprovides the Board a deep understanding of issues that are important to the Company’s growth. Throughgrowth through his roleroles as our Chief Executive OfficerAnnaly’s Chairman, CEO and other senior management positions at the Company, Mr. KeyesPresident, and has demonstrated leadership qualities, management capability, business and industry knowledge and a long-term strategic perspective. In addition, Mr. Keyes’qualifications include over 20 years of experience inas an investment banking and as an equity capital markets professional.Thomas Hamilton
2019
Audit, RiskMr. Hamilton has served as the President, Chief Executive Officer and Owner of Construction Forms, Inc., an industrial manufacturing company, since 2013. Prior to his current position, Mr. Hamilton spent 24 years in a number of leadership positions in the financial industry. Most recently, Mr. Hamilton served as a Strategic Advisor to the Global Head of Fixed Income, Currencies and Commodities at Barclays Capital in New York. Mr. Hamilton’s prior roles at Barclays include serving as the Global Head of Securitized Product Trading and Banking, in which capacity he was responsible for the build out of the Barclays’ Global Securitized Product businesses, and as the Head of Municipal Trading and Investment Banking. Prior to Barclays, Mr. Hamilton held various Managing Director roles at Citigroup, Inc. and Salomon Brothers, Inc., where he began his career. Mr. Hamilton also serves as Chairman of the Board of Chondrial Therapeutics, Inc., a biotech company he started to cure a rare neurodegenerative disease called Friedreich’s Ataxia. He is also a Director of the Friedreich’s Ataxia Research Alliance, along with Co-Founder of his own charitable scientific effort, the CureFA Foundation. Mr. Hamilton received a B.S. in Finance from the University of Dayton. Director Qualification Highlights The Board believes that Mr. Hamilton’s qualifications include his expertise in fixed income, mortgage-related assets, strategies and markets and significant leadership experience. Annaly Capital Management Inc. 2019 Proxy Statement 15 Kathy Hopinkah Hannan, PhD, CPA Kevin P. BradyDirector since
2019Director sinceCommittees1997Committees
Audit, (Chair), NCG RiskMr. BradyDr. Hannan is a former Global Lead Partner, National Managing Partner and Vice Chairman of KPMG, LLP, the Chief Executive OfficerU.S. member firm of ARMtech, LLC, a venture capital firm that invests and incubates technology start-ups, which he founded in 2007. ARMtech’s current portfolio includes companies in the financial reporting and data spaces. Prior to ARMtech, Mr. Brady founded TaxStream, a software company that specialized in financial reporting,global audit, tax and internal controls for multi-national corporations. Mr. Bradyadvisory services firm KPMG International. Dr. Hannan has over 30 years of industry experience and held numerous leadership roles during her distinguished career with KPMG. From 2015 until her 2018 retirement, Dr. Hannan served as ChiefGlobal Lead Partner, Senior Advisor for KPMG’s Board Leadership Center and National Leader Total Impact Strategy. Dr. Hannan also served as the Midwest Area Managing Partner for KPMG’s Tax Services from 2004 to 2009. Subsequent to that role, from 2009 to 2015, Dr. Hannan served as the National Managing Partner of Diversity and Corporate Responsibility. While at KPMG, Dr. Hannan also founded the KPMG Women’s Advisory Board. In addition to her roles at KPMG, as a Native American Indian and member of the Ho-Chunk Nation Tribe, Dr. Hannan served on President George W. Bush’s National Advisory Council on Indian Education. Currently, Dr. Hannan serves as Chairman of the Board & National President for Girl Scouts of the USA, is a member of the Board of Trustees and Executive OfficerCommittee of TaxStreamthe Smithsonian National Museum of the American Indian and is a Trustee of the Committee for Economic Development in Washington D.C. Dr. Hannan received a Ph.D. in Leadership Studies from 2002 to 2008, when the company was sold to Thomson-Reuters. Mr. Brady previously worked for eight years at PricewaterhouseCoopers in New York City, where he consulted on M&A transactionsBenedictine University and international tax issues. Mr. Brady holds a B.A. from McGill University, an M.B.A. from New York University andLoras College. She is also a Certified Public Accountant (inactive). He was awarded a patent from the U.S. Patent and Trademark Office for the inventiongraduate of the TaxStream product.Chicago Management Institute at the University of Chicago, Booth School of Business and the Institute of Comparative Political & Economic Systems at Georgetown University. The Board believes that Mr. Brady’sDr. Hannan’s qualifications include hisher expertise in financial, tax and accounting matters as well as hisher significant experience managingin enterprise sustainability, corporate governance and organizational effectiveness.Vicki Williams
2018
Audit, CompensationMs. Williams has over 18 years of compensation and governance experience. Ms. Williams has served as Chief Human Resources Officer for NBCUniversal, a multinational media conglomerate, since July 2018, where she is responsible for the company’s global human resources function, including compensation, benefits, development and learning, talent acquisition, executive search, HR systems, and companies focusing on the financial accounting market.HR service center. Ms. Williams previously served as Senior Vice President, Compensation, Benefits and HRIS at NBCUniversal beginning in 2011. Prior to joining NBCUniversal, Ms. Williams was a Partner with Pay Governance LLC and a Principal with Towers Perrin (now Willis Towers Watson). Ms. Williams received a B.S. in Education with a concentration in mathematics education and an M.B.A. with a concentration in finance and quantitative statistics, each with honors from the University of Georgia.Director Qualification Highlights The Board believes that Ms. Williams’ qualifications include her broad human resources, executive compensation and governance experience, including serving as chief human resources officer at a multinational company and as an external compensation consultant. 16 Annaly Capital Management Inc. 2019 Proxy Statement 2Annaly Capital Management, Inc.► 2016 Proxy StatementCorporate Governance at AnnalyFrancine J. BovichE. Wayne NordbergDirector since
2014Director sinceCommitteesMay 2004Committees
NCG (Chair), CompensationCRMr. Nordberg has served as Chairman of Hollow Brook Wealth Management, LLC, an SEC-registered investment advisor which manages or advises $1.4 billion of investment assets, since 2008. From January 2003 to November 2008, Mr. Nordberg served as a senior director of Ingalls & Snyder LLC, a NYSE member and registered investment advisor. From 1998 to June 2002, Mr. Nordberg served as Vice Chairman of the board of KBW Asset Management, Inc., an affiliate of Keefe, Bruyette, & Woods, Inc., a registered investment advisor. From 1988 to 1998, he served in various capacities for Lord Abbett & Co., a mutual fund company, including partner and director of its family of funds. Mr. Nordberg received his B.A. from Lafayette College, where he is a trustee emeritus. He is a member of the Financial Analysts Federation and The New York Society of Security Analysts and is a Trustee of the Atlantic Salmon Federation, The American Museum of Fly Fishing and the National Wildlife Federation Endowment Fund. Mr. Nordberg is also a director of PetroQuest Energy, Inc. and Reaves Utility Income Fund, both NYSE-listed companies.Director Qualification HighlightsThe Board believes that Mr. Nordberg’s qualifications include his significant experience in serving at a senior executive level with a SEC-registered investment advisor, his experience as a director of an asset management company and his service as a board member of other public companies.Class III Directors (Terms Expire in 2017)Francine J. BovichDirector sinceMay 2014CommitteesAudit, NCG(US, non-US,(U.S., non-U.S., global, and emerging markets), taxable fixed income (US, non-US, global and emerging markets), municipal bonds, and cash management. From 1991 through 2005, Ms. Bovich served as the U.S. Representative to the United Nations Investment Committee, which advised a global portfolio of approximately $30 billion. Ms. Bovich is a member of Thethe Economic Club of New York and an emeritus trustee of Connecticut College and chair of the Investment Sub-Committee for its endowment. Ms. Bovich hasreceived a B.A. in Economics from Connecticut Collegeand ana M.B.A. in Finance from New York University.The Board believes that Ms. Bovich’s qualifications include her significant investment management experience and her experience serving as a trustee and board member. www.annalyannualmeeting.comKatie Beirne Fallon
2018
NCG, CR3Ms. Fallon has served as Global Head of Corporate Affairs for Hilton Worldwide Holdings Inc., a multinational hospitality company, since November 2016, where she is responsible for managing the company’s communications, government relations and corporate responsibility efforts. Prior to Hilton, from 2014 to 2016, Ms. Fallon was Senior Advisor and Director of Legislative Affairs for President Obama. Before becoming the President’s chief liaison to Capitol Hill, Ms. Fallon served from May 2013 to December 2013 as President Obama’s Deputy Communications Director at the White House where she devised and executed communications strategies for the President to promote his economic agenda across the country. From 2011 until May 2013, Ms. Fallon was the Staff Director of the Senate Democratic Policy and Communications Center in the U.S. Congress. Ms. Fallon’s prior roles in government and politics include Legislative Director to Senator Chuck Schumer (D-NY), Deputy Staff Director of the Joint Economic Committee and Policy Director at the Democratic Senatorial Campaign Committee. Ms. Fallon received a B.A. in Government and International Studies from the University of Notre Dame and as a Marshall Scholar received a M.A. in Conflict Regulation from Queen’s University Belfast, Northern Ireland and a M.Sc. in Comparative Politics from the London School of Economics.Corporate GovernanceDirector Qualification HighlightsThe Board believes that Ms. Fallon’s qualifications include her significant experience in serving at Annalya senior executive level with a multinational public company and her experience serving as a top leadership aide in the highest levels of the U.S. government. Annaly Capital Management Inc. 2019 Proxy Statement 17 Jonathan D. Green Jonathan D. GreenDirector since
1997Director sinceCommitteesJanuary 1997CommitteesRiskCR (Chair),
Compensation,
Risk
DirectorThethe Rockefeller Group, from January 2011 until December 2014. He joined Thethe Rockefeller Group in 1980 as Assistant Vice President and Real Estate Counsel. In 1983, he was appointed Vice President, Secretary and General Counsel, and in 1990 was elected Chief Corporate Officer. In 1995, he was named President and Chief Executive Officer of Rockefeller Group Development Corporation and Rockefeller Center Management Corporation, both subsidiaries of Thethe Rockefeller Group. In2002, Mr. Green was named President and Chief Executive Officer of Rockefeller Group International, Inc., becoming Vice Chairman in January 2009. He served as Vice Chairman until December 2010. In his role as Vice Chairman, Mr. Green was active in formulating the strategic planning for the company and its subsidiaries, which include Rockefeller Group Development Corporation, Rockefeller Group Investment Management, Rockefeller Group Technology Solutions, Inc. and Rockefeller Group Business Centers. Before joining Thethe Rockefeller Group, Mr. Green was associated with the New York City law firm of Thacher, Proffitt & Wood. He also serves on the board of trustees of the Wildlife Conservation Society. Mr. Green graduated from Lafayette College and the New York University School of Law.The Board believes that Mr. Green’s qualifications include his significant experience as a chief executive, his diverse and significant background in the real estate industry and his legal expertise. John H. Schaefer John H. SchaeferDirector since
2013Director sinceCommitteesMarch 2013Risk (Chair), Audit,CommitteesAudit, Compensation and Risk2005 and as2005. He was President and Chief Operating Officer of the Global Wealth Management division of Morgan Stanley.Stanley from 2000 to 2005. Mr. Schaefer retiredwas Executive Vice President and Chief Strategic and Administrative Officer of Morgan Stanley from 1998 to 2000. From 1997 to 1998, he was Managing Director and Head of Strategic Planning and Capital Management. Prior to the 1997 merger of Dean Witter, Discover and Morgan Stanley, Mr. Schaefer was Executive Vice President, Investment Banking and Head of Corporate Finance at Dean Witter, a position he had held since 1991. He began his investment banking career at E.F. Hutton & Company in February 2006 and from 2008 through 20121976. Mr. Schaefer served as a board member and chair of the audit committee of USI Holdings Corporation. Mr. Schaefer hasCorporation from 2008 through 2012. He received a B.B.A. in Accounting from the University of Notre Dame and ana M.B.A. from the Harvard Graduate School of Business.The Board believes that Mr. Schaefer’s qualifications include his broad financial services management experience, including management of strategic planning, capital management, human resources, internal audit and corporate communications, as well as his board and audit committee experience. 18 Annaly Capital Management Inc. 2019 Proxy Statement 4Annaly Capital Management, Inc.► 2016 Proxy StatementCorporate Governance at AnnalyClass I Directors (TermsWhose Current Terms Expire in 2018)2021Wellington J. Denahan Wellington J. DenahanDirector since
1997Director sinceCommittees
PR, Risk1997Chairman of the Boardsinceof Annaly (from November 20122012) and Executive Chairman of Annaly since(from September 2015.2015). Previously, Ms. Denahan served as Chief Executive Officer of Annaly from November 2012 to September 2015 and as Co-Chief Executive Officer of Annaly from October 2012 to November 2012. Ms. Denahan was elected in December 1996 to serve as Vice Chairman of the Board. Ms. Denahan was Annaly’s Chief Operating Officer from January 2006 to October 2012 and Chief Investment Officer from 2000 to November 2012. She was a co-founder of Annaly. Ms. Denahan hasreceived a B.A.B.S. in Finance from Florida State University.The Board believes that Ms. Denahan’s qualifications include her significant oversight experience related to fixed income trading operations through years of serving as ourAnnaly’s Chief Operating Officer and Chief Investment Officer, her industry experience and expertise in the mortgage-backed securities markets, and her operational expertise, including her service as ourAnnaly’s former Chief Executive Officer.Michael Haylon Michael HaylonDirector since
2008Director sinceCommitteesJune 2008Committees
Audit, RiskAsset Management Sales, Products and MarketingConning North America at Conning, Inc., a global provider of investment management solutions, services and research to the insurance industry, since December 2014.June 2018. Mr. Haylon has served as a Managing Director at Conning, Inc. since January 2012 and previously served as Managing DirectorHead of Asset Management Sales, Products and Marketing from December 2014 until June 2018 and as Head of Investment Products at Conning, Inc. from January 2012 until December 2014. From September 2010 to December 2011, Mr. Haylon served as Head of Investment Product Management at General Re – New England Asset Management. He was Chief Financial Officer of the Phoenix Companies, Inc. from 2004 until 2007, and Executive Vice President and Chief Investment Officer of the Phoenix Companies in 2002 and 2003. From 1995 until 2002, he held the position of Executive Vice President of Phoenix Investment Partners, Ltd., a NYSE-listed company, and President of Phoenix Investment Counsel, where he was responsible for the management and oversight of $25 billion in closed-end and open-end mutual funds, corporate pension funds and insurance company portfolios. From 1990 until 1994, he was Senior Vice President of Fixed-Income at Phoenix Home Life Insurance Company. From 1986 until 1990, he was Managing Director at Aetna Bond Investors where he was responsible for management of insurance company and pension fund portfolios. From 1980 until 1984, he was a Senior Financial Analyst at Travelers Insurance Companies. He began his career in 1979 in the commercial lending program at Philadelphia National Bank. Mr. Haylon has previously served on the boards of Aberdeen Asset Management and Phoenix Investment Partners. He hasMr. Haylon received a B.A. from Bowdoin College and a M.B.A. from the University of Connecticut.The Board believes that Mr. Haylon’s qualifications include his significant leadership and management experience from his years of management and oversight of large financial asset portfolios, his prior board experience with other companies and his expertise in financial matters. www.annalyannualmeeting.com5Table of ContentsDonnell A. SegalasCorporate Governance at AnnalyDonnell A. Segalas1997Director sinceCommitteesJanuary 1997Committees
Compensation (Chair),
NCG, CRishas served as the Chief Executive Officer and a Managing Partner of Pinnacle Asset Management L.P., a New York-based alternative asset management firm.firm, since 2003. Additionally, Mr. Segalas is a member of Pinnacle’s Investment Committee and sits on the boards of its offshore funds. Prior to joining Pinnacle, in 2003, Mr. Segalas was Executive Vice President and Chief Marketing Officer for AlternativeInvestment Products (AIP) at Phoenix Investment Partners. Mr. Segalas is a member of the Nantucket Historical Society. He received a B.A. from Denison University.The Board believes that Mr. Segalas’qualifications include his significant experience from his years of investing and managing private and public investment vehicles and his experience serving on investment and executive committees of other companies. Annaly Capital Management Inc. 2019 Proxy Statement 19 DIRECTOR
INDEPENDENCE
AND OVERSIGHTDIRECTOR
QUALIFICATIONSSTOCKHOLDER
RIGHTS AND
ENGAGEMENTCORPORATE
RESPONSIBILITYOurour Board members are Independent Directors. We haveThe Board has adopted the definition of “independent director” set forth in Section 303A of the NYSE rules and havehas affirmatively determined that each Director (other than Ms. Denahan and Mr. Keyes) has no material relationships with usthe Company (either directly or as partner, stockholder or officer of an organization that has a relationship with us)the Company) and is therefore independent under all applicable criteria for independence in accordance with the standards set forth in the NYSE rules and ourAnnaly’s Corporate Governance Guidelines.Four new, highly qualified
Independent Directors have
joined the Annaly Board since
the beginning of 201820 Annaly Capital Management Inc. 2019 Proxy Statement Nominating/Corporate Governance (“NCG”)NCG Committee is responsible for identifying and screening nominees for Director and for recommending to the Board candidates for nomination for election or re-election to the Board and to fill Board vacancies. The NCG Committee also seeks to maintain an ongoing list of potential Board candidates. Nominees may be suggested by Directors, members of management, stockholders or professional search firms. In evaluating a Director nomination, the NCG Committee may review materials provided by the nominator, a professional search firm or any other party.The NCG Committee seeks to
maintain an ongoing list of
potential Board candidatesdevelophave an understanding of the Company’s business and be willing to devote sufficient time and effort to carrying out their duties and responsibilities effectively.The NCG Committee seeks
to achieve a balance of
knowledge, experience and
capability on the BoardAlthough the NCG Committee does not have a formal diversity policy, it believes that diversity is an important factor in determining the composition of the Board. Additionally, theThe Company endeavors to have a Board representing diverse experiences at policy-making levelsbackgrounds and a wide range of professional experiences. The NCG Committee also takes into account other factors that promote principles of diversity, including diversity of a candidate’s perspective, background, gender, race, nationality, age and other demographics. The NCG Committee instructs any search firm it engages to include women and minority candidates in business, finance, government, education, law and technology, and in other areas that are relevantevery director candidate pool presented to the Company’s business and its status as a public company, as this contributes to our success and is in the best interests of our stockholders.Committee.Two new,highly qualifiedIndependentDirectorsThree women have
joined the
Annaly
Board oversince the lastthree years beginning of 20186Annaly Capital Management, Inc.► 2016 Proxy StatementCorporate Governance at AnnalyourAnthony C. Green, the Chief Corporate Officer, Chief Legal Officer and Secretary at ourthe Company’s principal executive offices. Following verification of the stockholder status of persons proposing candidates, recommendations are aggregated and considered by ourthe NCG Committee at a regularly scheduled or special meeting. If any materials are provided by a stockholder in connection with the nominationrecommendation of a Director candidate, such materials are forwarded to ourthe NCG Committee. Properly submitted recommendations by stockholders will receive the same consideration by the NCG Committee as other suggested nominees.Annaly Capital Management Inc. 2019 Proxy Statement 21 The Board’s Role and ResponsibilitiesWeCorporate Governance at AnnalyTenure of Continuing Directors(1) 
■ Directors who also serve as chief executive officers or hold equivalent positions at other companies should not serve on more than two other boards of public companies in addition to the Board; ■ Other Directors should not serve on more than four other boards of public companies in addition to the Board; and ■ A member of the Audit Committee should not serve on the audit committee of more than two other public companies. committedcurrently in compliance with this policy. Directors are required to maintaining a strong ethical culturenotify the Chairman of the Board and robust governance practices that benefit the long-term interestsChair of stockholders. Our corporate governance practices include:the NCG Committee in advance of accepting an invitation to serve on another public company board.22 Annaly Capital Management Inc. 2019 Proxy Statement FULL BOARD Board StructureRISK COMMITTEE►7 of 9 Directors are Independent►Lead Independent Director►Regular executive sessions of Independent Directors►Independent Board committees►2 women Directors (including the Executive Chairman) Director QualificationsAUDIT COMMITTEE►Annual Board and committee self-evaluations►Over-boarding policy limits the number of outside boards on which our Directors can serve►2 “audit committee financial experts”Stockholder Rights and Engagement►Majority vote standard for uncontested elections►Annual stockholder advisory vote on executive compensation►Active stockholder engagement programRecent Governance Enhancements►Clawback policy►Anti-pledging policy►Stock ownership guidelines for our Directors and employees►Four-year stock holding period requirement for employees Risk management begins with our Board, through the review and oversight of the risk management framework, and continues with executive management, through the ongoing formulation of risk management practices and related execution in managing risk. The Board exercises its oversight of risk management primarily through its Risk Committee and Audit Committee. The Risk Committee isresponsible for assisting the Board in its oversight of our risk governance structure, our risk management and risk assessment guidelines and policies, our risk tolerance, and our capital, liquidity, and funding. The Audit Committee assistsof our accounting, internal controls and financial reporting practices, including independent auditor selection, evaluation and review, and oversight of the internal audit function. At least annually, the full Board reviews our risk management program, which identifies and quantifies a broad spectrum of enterprise-wide risks and related action plans, with management. For additional information on the responsibilities of the Risk Committee and the Audit Committee, please see the “Board Committees” section of this proxy statement.The Audit andRisk Committeeshave primaryBoard oversight
of the Company’s accounting, internal controls and financial reporting practices, including appointing the independent auditor and reviewing its qualifications, performance and independence, and compliance with legal and regulatory requirementsframeworkwww.annalyannualmeeting.com7 activities. These management committees include the Operating Committee, Enterprise Risk Committee, the Asset and Liability Committee, the Investment Committee and the Financial Reporting and Disclosure CommitteeCorporate Governance at AnnalyRisk assessment and risk management are the responsibility of our management. A series of management committees have oversight or decision-making responsibilities for risk management activities. The management committees responsible for our risk management include the Operating Committee, Enterprise Risk Committee, the Asset and Liability Committee, the Investment Committee and the Financial Reporting and Disclosure Committee.the Compensation Committee.Mr. Keyes. For additional information on this review, please see the “Risks“Risks Related to Compensation Policies and Practices”Practices” section of this proxy statement.Proxy Statement. For additional information on the responsibilities of the Risk Committee and the Audit Committee, please see the “Board Committees” section of this Proxy Statement.As part of their risk oversight
responsibilities, the Audit
Committee and Risk Committee
held two joint meetings in 2018approvesoversees and maintains a succession plan for the Chief Executive OfficerCEO and other senior executives. Executive succession and talent development are a regular agenda item for the Board and, at least once per year, the Board has a fulsome discussion of talent at each business and functional leadership level across the Company. In carrying out this function, the Board endeavors to ensure that the Company’s management has the capabilities to cause the Company to operate in an efficient and business-like fashion in the event of a vacancy in senior management, whether anticipated or sudden.In orderThe Board’s oversight of succession planning and talent development is complemented by management’s commitment to provide sufficient timeattracting, developing and recruiting top talent with diverse perspectives and backgrounds. Since 2015, the Company has introduced ten unique learning and development programs for informed participation in their Board responsibilities:its employees, which are intended to foster community, employee skills and engagement and shared cultural values through professional development, career management and cross-departmental collaboration and networking.►Directors who also serve as chief executive officers or hold equivalent positions at other companies should not serve on more than two other boards of public companies in addition to the Company’s Board;23 ►Other Directors should not serve on more than four other boards of public companies in addition to the Company’s Board; and►A member of the Audit Committee should not serve on the audit committee of more than two other public companies.Directors are required to notify the ChairmanTable of the Board and the chair of the NCG Committee in advance of accepting an invitation to serve on another public company board.Contents
[Addressee]
1211 Avenue of the Americas
New York, NY 10036
Phone: 1-888-8 ANNALY
Facsimile: (212) 696-9809
Email:investor@annaly.comBoard.Board to the appropriate parties. Certain items such as business solicitation or advertisements;advertisements, product-related inquiries;inquiries, junk mail or mass mailings;mailings, resumes or other job-related inquiries;inquiries, spam and unduly hostile, threatening, potentially illegal or similarly unsuitable communications will not be forwarded.Stockholders maycommunicate withany■disclose the name of our Directors,
the related person and the basis on which the person is a related person, the material terms of the related person transaction, including the LeadIndepent Directorapproximate dollar value of the amount involved in the transaction, and all the material facts as to the related person’s direct or indirect interest in, or relationship to, the related person transaction;■ advise as to whether the related person transaction complies with the terms of agreements governing the Company's material outstanding indebtedness that limit or restrict the Company's ability to enter into a related person transaction; ■ advise as to whether the related person transaction will be required to be disclosed in the Company's filings under the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934, as amended (the “Exchange Act” and collectively with the Securities Act, the “Acts”), and related rules, and, to the extent such transaction is required to be disclosed, ensure that the related person transaction is disclosed in accordance with such Acts and related rules; and ■ advise as to whether the related person transaction constitutes a “personal loan” for purposes of Section 402 of the Sarbanes-Oxley Act of 2002. 824Annaly Capital Management Inc. ► 2016 2019 Proxy StatementCertain Relationships and Related Party TransactionsApproval of Related Party TransactionsEach of our Directors, Director nominees and executive officers is required to report all transactions with us in which they or their immediate family member had or will have a direct or indirect material interest with respect to us in an annual disclosure questionnaire and on an on-going basis. We review these annual questionnaires and any interim reports and, if we determine it to be necessary, discuss any reported transactions with the entire Board. Other than as discussed in this section, there were no reported transactions for 2015 and there is no transaction currently pending for 2016. We do not, however, have a formal written policy for approval or ratification of such transactions, and all such transactions are evaluated on a case-by-case basis. If we believe a transaction is significant to us and raises particular conflict of interest issues, we will discuss it with our legal counsel, and if necessary, we will form an independent Board committee which has the right to engage its own legal and financial counsel to evaluate, approve or ratify the transaction.We haveThe Company has entered into a management agreement (the “Management Agreement”) with AnnalyManagementthe Manager. Management of the CompanyLLC (our “Manager”). Our management is conducted by ourthe Manager through the authority delegated to it in the Management Agreement and pursuant to the policies established by ourAnnaly’s Board. The Independent Directors periodically review the Management Agreement with the assistance of separate legal and financial advisors, who are selected and retained by the Independent Directors. The Management Agreement was effective as of July 1, 2013, and was amended in November 2014 and then2013, amended and restated in April 2016 and August 2018 and amended most recently in March 2019, and may be further amended by agreement between usthe Manager and our Manager.the Company.Agreement provides for a two-yearAgreement’s current term endingends on December 31, 2016 with automatic2019 and will automatically renew for successive two-year renewalsterms unless at least two-thirds of ourthe Independent Directors or the holders of a majority of ourthe outstanding shares of the Company’s common stock in their sole discretion elect to terminate the agreement in their sole discretion and for any or no reason. At any time during the term or any renewal term, either party may deliver to the other partyreason upon 365 days prior written notice of its intention(such notice, a “Termination Notice”).no less than one yearit may elect to accelerate the Termination Date to a date that is between seven and 90 days after the date it delivers a Termination Notice (the “Notice Delivery Date”). If the Company does not elect to accelerate the Termination Date, then the Manager may elect to accelerate the Termination Date to the date that is 90 days after the Notice Delivery Date. If the Termination Date is accelerated (such date, the “Accelerated Termination Date”) by either the Company or the Manager, in addition to any amounts accrued for the period prior to its proposed termination date or, but onlythe Accelerated Termination Date, the Company shall pay the Manager an acceleration fee in an amount equal to the event ouraverage annual management fee earned by the Manager isduring the terminating party,24-month period immediately preceding such earlier date as determinedAccelerated Termination Date multiplied by us in our sole discretion. There is no termination fee for a terminationfraction with a numerator of 365 minus the Management Agreement by either us or our Manager.number of days from the Notice Delivery Date to the Accelerated Termination Date, and a denominator of 365.ourthe Manager without cause, for a period of one year following such termination, ourthe Manager will not manage, operate, join, control, participate in, or advise any person other than the Company without ourthe prior written consent manage any REIT which engages inof the managementRisk Committee of mortgage-backed securities in any geographical region in which we operate.the Board.PursuantPrior to the terms ofmost recent amendment to the Management Agreement we pay ourin March 2019, the Company had paid the Manager a flat monthly management fee equal to 1/12thof 1.05% of our stockholders’ equity, as defined in the Management Agreement, Stockholders’ Equity(1)for its management services. We incurred approximately $150.3 million in management fees under the Management AgreementPursuant to this arrangement, during the year ended December 31, 2015.Our Manager2018, the Company incurred $179.8 million in management fees and $9.2 million in permitted reimbursement payments under the Management Agreement. None of the reimbursement payments were attributable to compensation of the Company’s NEOs.OurIn March 2019, the Manager and the Company amended the Management Agreement for the sole purpose of reducing the monthly management fee on Incremental Stockholders’ Equity.(2)Pursuant to this amendment, which recognizes the efficiencies that have been gained with scale, the Company pays the Manager a monthly management fee for its management services equal to 1/12thof the sum of: (i) 1.05% of Base Stockholders’ Equity(3), and (ii) 0.75% of Incremental Stockholders’ Equity.(2)ourcertain members of senior management. For additional information about ourthe Manager, please see “Our Management Structure”“Management Structure”, “Compensation Paid by the Manager to the Named Executive Officers” and “Compensation“Compensation Discussion and Analysis.”Our managementIn 2019, the Manager reduced
its fee ofon Incremental
Stockholders’ Equity to
0.75% from 1.05% ofstockholders’ equitycompares favorablyto the industryaveragewww.annalyannualmeeting.com 9Annaly Capital Management Inc. 2019 Proxy Statement25 >Board Structure and ProcessesWe carefully consideredThe Board believes that whether to have the leadership structuresame person occupy the offices of the Board in 2015. While we consider the appropriateness of this structure regularly, the deliberation is never more critical than in the context of a leadership transition. Effective September 30, 2015, Ms. Denahan transitioned from the role of Chief Executive Officer to the newly-created position of Executive Chairman and Mr. Keyes assumed the role of Chief Executive Officer. Ms. Denahan continues to serve as Chairman of the Board and Mr. Green continuesCEO should be decided by the Board, from time to time, in its business judgment after considering relevant factors, including the specific needs of the business and what is in the best interests of the Company at that point in time. Under the Corporate Governance Guidelines, the Independent Directors will annually select an Independent Director to serve as our Lead Independent Director.We believe that our current leadership structure, which comprises a separateDirector when the CEO and Chairman of the Board roles are combined or if the Chairman is not otherwise independent. Currently, Mr. Keyes serves as Chairman, CEO and Chief Executive Officer, withPresident, while Mr. J. Green servingserves as Lead Independent Director, isDirector.serves the best interests of our stockholders. This structure allowsmanagement to benefit from Mr. Keyes to focus on his duties in managing theKeyes’ day-to-day operations of the Company, while benefitting from Ms. Denahan’s invaluable knowledge and expertise regardingfamiliarity with the Company’s business. The Lead Independent Director has the following responsibilities:OurThe Lead Independent DirectorIndependentDirector has
significant authority
and responsibilities►The Chairman of the BoardThe Lead Independent Director of the Board, including executive sessions of Independent Directors►the Chief Executive Officer►►►►►►►We believeThe Board believes that the Board’sits independent oversight function is further enhanced by ourits policy to hold regular executive sessions of the Independent Directors without management present and the fact that our four standing committees are comprised entirelya majority of Independent Directors.the Company’s Directors (and every member of the Audit Committee, Compensation Committee and NCG Committee) is independent.26 Annaly Capital Management Inc. 2019 Proxy Statement OurThe Corporate Governance Guidelines require that the Board have at least two regularly scheduled meetingsexecutive sessions of Independent Directors each year for our Independent Directors.year. These meetings,executive sessions, which are designed to promote unfettered discussions among ourthe Independent Directors, are presided over by ourthe Lead Independent Director.Director, or in his or her absence, the chair of the Compensation Committee. During 2015, our2018, the Independent Directors, without the participation of Board members who are members of management, held five meetings.seven executive sessions.Committee EvaluationsThe Lead Independent Directorcontinuing education is critical to the Board’s ability to fulfill its responsibilities in a dynamic and constantly evolving business environment. New Directors participate in a robust onboarding process, which includes extensive training materials and personal briefings by senior management on the Company’s strategic plans, financial statements, and key policies and practices. In addition, the Company encourages Directors to participate in external continuing director education programs, and the NCG Committee are responsibleCompany provides reimbursement for overseeing an annual self-evaluation process forrelated expenses. Continuing director education is also provided during Board meetings and as stand-alone information sessions outside of meetings. In line with the Board. The self-evaluation process seeksCompany’s commitment to identify specific areas, if any, that need improvement or strengtheningcontinuing board education, in order to increase2017, the effectivenessBoard became a Full Board Member of the Board as a whole10Annaly Capital Management, Inc.► 2016 Proxy StatementTableNACD, which gives Directors access to an extensive menu of ContentsBoard Structure and Processesits committees. Each standing committee of the Board evaluates its performance on an annual basis and reports to the Board on such evaluation.board practices.We haveThe Board has adopted a Code of Business Conduct and Ethics (the “Code of Conduct”), which sets forth the basic principles and guidelines for resolving various legal and ethical questions that may arise in the workplace and in the conduct of our business. This codeCode of Conduct is applicable to ourAnnaly’s Directors, executive officers and employees.employees, and is also a “code of ethics” as defined in Item 406(b) of Regulation S-K. The Company will make any legally required disclosures regarding amendments to, or waivers of, provisions of the Code of Conduct on the Company’s website.We haveThe Board has adopted Corporate Governance Guidelines which,that, in conjunction with the charters of ourthe Board committees, provide the framework for the governance of ourthe Company.Our Governing DocumentsOurthe Code of Business Conduct, Corporate Governance Guidelines and Ethics,Committee ChartersourAnnaly’s website (www.annaly.com)(www.annaly.com). WeThe Company will provide copies of these documents free of charge to any stockholder who sends a written request to Investor Relations, Annaly Capital Management, Inc., 1211 Avenue of the Americas, New York, NY 10036.Annaly Capital Management Inc. 2019 Proxy Statement 27
Corporate Responsibility
Committee in late 2017(1)fourfive standing committees: the Audit Committee, the Compensation Committee, the NCG Committee, and the Risk Committee. Each committee is governed by a written charter approved by the Board and is comprised entirely of Independent Directors, as required under the existing rules of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the NYSE. In addition, each member of the Audit Committee and the Compensation Committee meets the additional independence criteria applicable to directors serving on these committees under the NYSE listing rules.
Corporate Responsibility Committee.All Boardcommittees arecomposed entirelyof IndependentDirectorscurrent membership as of the date of this proxy statement of each Board committee and number of meetings of each committee held in 2015.2018.Director Audit
Committee Compensation
Committee NCG
Committee CR
Committee Risk
CommitteeFrancine J. Bovich 
• Kevin P. Brady(2) E• • Wellington J. Denahan • • Katie Beirne Fallon • • Jonathan D. Green* • • Thomas Hamilton(3) • • Kathy Hopinkah Hannan(4) • E • Michael Haylon • E • E. Wayne Nordberg(2) • • • John H. Schaefer • • Donnell A. Segalas • • Vicki Williams • • % of Independent Members: 100% 100% 100% 80% 80% 2018 Meetings: 9 3 3 2 4 • * Lead Independent Director Director Audit
Committee Compensation
Committee NCG
Committee Risk Committee Francine J. Bovich(1) M M Kevin P. Brady C M M Jonathan D. Green(2) M C Michael Haylon M M E. Wayne Nordberg M C John H. Schaefer M M M Donnell A. Segalas C M 2015 Meetings: 5 4 2 4 M = MemberC = Chairperson(1) Ms. Bovich was appointed toThe Board annually reviews the membership and chairmanship of each Board Committee as part of its broader Board and Committee refreshment and succession planning. This review, which is led by the NCG Committee, takes into account, among other factors, the needs of the Committees, the experience, availability and projected tenure of Directors and the desire to balance Committee continuity with fresh insights. For additional detail, see the “Board Effectiveness, Self-Evaluations and Refreshment” section of this Proxy Statement.March 2016.
Endnotes section.(2)Mr. Green serves as the Lead Independent Director. For more details, see page10.www.annalyannualmeeting.com28Annaly Capital Management Inc. 2019 Proxy Statement 11Board Structure and ProcessesAudit CommitteeCommitteeKey Responsibilities
Thomas Hamilton(2)
Kathy Hopinkah Hannan(3)
Michael Haylon
E. Wayne Nordberg(1)
John H. Schaefer
Vicki WilliamsAuditNumber of Meetings
in 2018:9►■Recommends to our BoardAppoints the engagement or termination of independent registered public accountantsaccounting firm and reviews its qualifications, performance and independence►■Reviews the plan and results of the auditing engagement with ourthe Chief Financial Officer and ourthe independent registered public accountantsaccounting firm►■Oversees internal audit activities►■Oversees the quality and integrity of our financial statements and financial reporting process►■Oversees the adequacy and effectiveness of internal control over financial reportingThe Board has determined that eachEach member of the committeeAudit Committee is financially literate and thatindependent of the Company and management under the applicable rules of the Exchange Act, and the listing standards of the NYSE. The Board has designated Messrs. Brady and Haylon are “auditand Dr. Hannan as audit committee financial experts”experts under applicable SEC rules.ofsee the committee, see the“Board“Board Oversight of Risk”Risk” and “Report“Report of the Audit Committee”Committee” sections of this proxy statement.Proxy Statement.
Jonathan D. Green
E. Wayne Nordberg(1)
John H. Schaefer
Vicki Williams
in 2018:3►■Evaluates the performance of ourthe Manager and the terms of the Management Agreement in light thereof►■Reviews the fees payable to ourthe Manager►■Administers the Company’s equity incentive plans and other equity compensation programs►■Reviews the form and amount of Director compensation►■Evaluates the performance of ourthe Company’s officersof the committee, see the“Compensation “Compensation of Directors”Directors” and “Compensation“Compensation Discussion and Analysis”Analysis” sections of this proxy statement.Proxy Statement.Annaly Capital Management Inc. 2019 Proxy Statement 29
Kevin P. Brady(1)
Katie Beirne Fallon
Kathy Hopinkah Hannan(2)
E. Wayne Nordberg(1)
Donnell A. Segalas
2018:3►■Develops and recommends criteria for considering potential Board candidates►■Identifies and screens individuals qualified to become Board members, and recommends to the Board candidates for nomination for election or re-election to the Board and to fill Board vacancies►■Develops and recommends to the Board a set of corporate governance guidelines and recommends modifications as appropriate►■Provides oversight of the evaluation of the Board and management►■Considers other corporate governance matters such as directorDirector retirement policies, management succession plans and potential conflicts of interest of Board members and senior management, and recommends changes as appropriateof the committee, see the “Director“Director Nomination Process,” “Director Criteria and Qualifications,” “Board Refreshment and Diversity” and “Stockholder Recommendation of Director Candidates” section of this proxy statement.Proxy Statement.Risk
Francine J. Bovich
Wellington J. Denahan
Katie Beirne Fallon
Donnell A. Segalas
in 2018:2For more information on the formation of the Corporate Responsibility Committee, see the “Corporate Responsibility” section of this Proxy Statement.
Kevin P. Brady(1)
Wellington J. Denahan
Jonathan D. Green
Thomas Hamilton(4)
Michael Haylon
in 2018:4►■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 liquidity, fundingrisk, compliance, regulatory and reputationallegal risk and such other risks as necessary to fulfill the committee’s duties and responsibilities►■risk tolerance,appetite, including risk toleranceappetite levels and capital targetsadequacy and limits►■capital, liquidity,practices and fundingpolicies related to cybersecurity (together with the Audit Committee)For more information on the Risk Committee’s responsibilities and activities, of the committee, see the “Board“Board Oversight of Risk”Risk” section of this proxy statement.Proxy Statement.
& Risk Committee” in Endnotes section.1230Annaly Capital Management Inc. ► 2016 2019 Proxy StatementBoard Structure and Processes2015, our2018, the Board held 14 meetings. Each DirectorAll Directors attended at least 75% of the aggregate number of meetings held by ourof the full Board and 75% of the aggregate number of meetings of each committeecommittees on which they served, during the Director served.period in which they served, in 2018.We expectThe Company expects each member of the Board to attend ourthe Annual Meeting. All of the Company’s then-Directors attended Annaly’s 2018 annual meeting of stockholders. All of ourstockholders (the “2018 Annual Meeting”). Dr. Hannan and Mr. Hamilton were elected as Directors attended our 2015 annual meeting of stockholders.effective February 13, 2019 and March 6, 2019, respectively, and therefore did not attend the 2018 Annual Meeting.We compensate our IndependentThe Company compensates the Non-Executive Directors. Any Director who is also an employee or owner of ourthe Manager does not receive compensation for serving on ourthe Board. OurThe Compensation Committee is responsible for reviewing, and recommending to the Board, the form and amount of compensation paid to our Independentthe Non-Executive Directors.our Independentthe Non-Executive Directors for service on the Board and its standing committees for 2015 is2018 are set forth below:Annual Compensation Element Amount Annual Cash Retainer $100,000 Deferred Stock Unit (“DSU”) Grant $135,000 in DSUs Lead Independent Director Retainer $ 10,00030,000Audit Committee Chair Retainer$15,000Compensation Committee ChairMember Retainer$ 10,0008,000 – all Board CommitteesNCG Committee Chair Retainer(1)$20,000 – Audit Committee $10,000 – all other Board Committees Risk1.Committee Chairs received Committee Chair Retainer$10,000Retainers in addition to, and not in lieu of, Committee Meeting Fees$1,500 per committee meetingMember Retainers.ourthe Company’s common stock. DSUs are granted on the date of the annual stockholder meeting and vest immediately. DSUs convert to shares of ourthe Company’s common stock one year after the date of grant unless the Director elects to defer the settlement of the DSUs to a later date. DSUs do not have voting rights. DSUs pay dividend equivalents in either cash or additional DSUs at the election of the Director. OurThe Independent Directors are also eligible to receive other stock-based awards under ourthe Company’s equity incentive plan.We reimburse ourThe Company reimburses the Directors for their reasonable out-of-pocket travel expenses incurred in connection with their attendance at full Board and committee meetings.www.annalyannualmeeting.com13Board Structure and Processeswethe Board increased the stock ownership guideline for ourthe Independent Directors to provide that each Independent Director should strive to own an amount of ourthe Company’s common stock equal to five times the annual cash retainer. Shares counting toward the guideline include shares that are owned outright, DSUs and any other shares held in deferral accounts. To facilitate achievement of the guideline, we havethe Board has adopted and implemented a “retention ratio” that requires Independent Directors to retain and hold 50% of the net profit shares from DSUs until the specified ownership level is achieved. Net profit shares are shares remaining after paymentAs of income taxes upon settlementDecember 31, 2018, all of the DSUs.Independent Directors had met or were on their way to meeting their stock ownership guideline.During 2016, weincreased theThe stock
ownership guideline
for Independent
Directors tois 5x
the annual cash retainerretainer, which iscurrently $100,000Annaly Capital Management Inc. 2019 Proxy Statement 31 No ConflictsTable of Interest forContents2015, our2018, the Compensation Committee retained an independent compensation consultant, Frederic W. Cook & Co., a nationally-recognized compensation consulting firm (“F. W. Cook”), to assist the Compensation Committee in its review of the compensation arrangements provided to our Independentthe Non-Executive Directors. The Compensation Committee considered F. W. Cook’s independence in light of SEC regulations and NYSE listing standards. The Compensation Committee discussed all relevant factors and concluded that the continued engagementno conflict of interest exists that would prevent F. W. Cook does not raise any conflicts of interest.from independently representing the Compensation Committee.usthe Company to our Independentthe Non-Executive Directors for the fiscal year ended December 31, 2015.2018.Name (1) Fees Earned or Paid in Cash Stock Awards(1) Total Fees Earned or
Paid in Cash
($)Stock
Awards(2)
($)Total
($)Francine J. Bovich $106,000 $135,000 $241,000 Francine J. Bovich 126,000 135,000 261,000 Kevin P. Brady $131,500 $135,000 $266,500 144,000 135,000 279,000 Jonathan D. Green $133,500 $135,000 $268,500 Michael Haylon $113,500 $135,000 $248,500 E. Wayne Nordberg $119,000 $135,000 $254,000 Donnell A. Segalas $119,000 $135,000 $254,000 Wellington J. Denahan 116,000 135,000 251,000 Katie Beirne Fallon 116,000 135,000 251,000 Jonathan D. Green(3) 182,000 135,000 317,000 Michael Haylon(3) 124,000 135,000 259,000 E. Wayne Nordberg(3) 132,000 135,000 267,000 John H. Schaefer $119,500 $135,000 $254,500 134,000 135,000 269,000 Donnell A. Segalas(3) 142,000 135,000 277,000 Vicki Williams 116,000 135,000 251,000 (1)1.Dr. Hannan and Mr. Hamilton were elected to the Board effective February 13, 2019 and March 6, 2019, respectively, and did not receive any compensation for the fiscal year ended Decembert 31, 2018. 2. The amounts in this column represent the aggregate grant date fair value of the DSU awards, computed in accordance with FASB ASC Topic 718 and based on the closing price of ourthe Company’s common stock on the date of grant. DSUs are vested at grant and accrue dividend equivalents as additional DSUs or cash at the election of the Director.3. The amount in the “Fees Earned or Paid in Cash ($)” column includes fees earned for service on a special committee of the Board established to evaluate changes to the terms of the Management Agreement and related agreements. The fees include a retainer in the amount of $8,000 for each special committee member and an additional retainer in the amount of $10,000 for the special committee chair Mr. J. Green. outstandingunexercised option awards at December 31, 20152018 of each of our Independentthe Non-Executive Directors. All such option awards have vested. Options are no longer granted as part of the Company’s Non-Executive Director compensation program.Name Name(1)Outstanding Unexercised
Option AwardsAwards at 12/31/1518Francine J. Bovich–Kevin P. Brady 45,00012,500 Jonathan D. Green 107,50050,000 Michael Haylon 77,50050,000 E. Wayne Nordberg 107,50050,000 Donnell A. Segalas 80,00037,5001. John H.Ms. Bovich, Ms. Denahan, Ms. Fallon, Mr. Schaefer– and Ms. Williams did not hold any unexercised option awards at December 31, 2018. Dr. Hannan and Mr. Hamilton were elected to the Board effective February 13, 2019 and March 6, 2019, respectively. 1432Annaly Capital Management Inc. ► 2016 2019 Proxy Statementourthe Company’s executive officers, all of whom are indirect owners and/or employees of ourthe Manager:Name Age Title Kevin G. Keyes 4851Chairman, Chief Executive Officer President and DirectorWellington J. Denahan52Chairman of the Board and Executive ChairmanPresidentGlenn A. Votek 5760Chief Financial Officer R. Nicholas SinghDavid L. Finkelstein5746Chief Investment Officer Timothy P. Coffey 45 Chief Credit Officer Anthony C. Green 44 Chief Corporate Officer, Chief Legal Officer and Secretary and Ms. Denahan is provided above under the heading “Election“Election of Directors.” Certain biographical information for Mr.Messrs. Votek, Finkelstein, Coffey and Mr. SinghGreen is set forth below.(FIDAC)a former wholly-owned subsidiary of the Company, from August 2013 until October 2015.2015 and as Annaly’s Chief Administrative Officer from May 2013 until August 2013. Mr. Votek joined Annaly in May 2013 from CIT Group where he was an Executive Vice President and Treasurer since 1999 and President of Consumer Finance since 2012. Prior to that, Mr. Votek worked at AT&T and its finance subsidiary from 1986 until 1999 in various financial management roles. Mr. Votek has a B.S. in Finance and Economics from the University of Arizona/Kean College and a M.B.A. in Finance from Rutgers University.R. Nicholas SinghDavid L. Finkelsteinishas served as Chief Investment Officer of Annaly since November 2016. Mr. Finkelstein previously served as Annaly’s Chief Investment Officer, Agency and RMBS beginning in February 2015 and as Annaly’s Head of Agency Trading beginning in August 2013. Prior to joining Annaly, Mr. Finkelstein served for four years as an Officer in the Markets Group of the Federal Reserve Bank of New York where he was the primary strategist and policy advisor for the MBS purchase program. Mr. Finkelstein has over 20 years of experience in fixed income investment. Prior to the Federal Reserve Bank of New York, Mr. Finkelstein held Agency MBS trading positions at Salomon Smith Barney, Citigroup Inc. and Barclays PLC. Mr. Finkelstein received his B.A. in Business Administration from the University of Washington and his M.B.A. from the University of Chicago, Booth School of Business. Mr. Finkelstein also holds the Chartered Financial Analyst®designation.of Annaly.since March 2017. Mr. Singh joined Annaly in February 2005. Mr. Singh alsoGreen previously served as Chief Legal Officer and Secretary of FIDACAnnaly’s Deputy General Counsel from 2009 until February 2005 until October 2015. From 2001 until he joined2017. Prior to joining Annaly, heMr. Green was a partner in the Corporate, Securities, Mergers & Acquisitions Group at the law firm of McKee NelsonK&L Gates LLP. Mr. SinghGreen has over 19 years of experience in corporate and securities law. Mr. Green holds a B.A. in Economics and Political Science from Carleton College, a M.A. from Columbiathe University of Pennsylvania and a J.D. and LL.M. in International and Comparative Law from American University.Cornell Law School.ourthe executive officers have purchased nearly 1.9approximately 1.5 million shares of ourthe Company’s common stock (including open market purchases and option exercises)dividend reinvestments) with an aggregate purchase price of over $22approximately $16.5 million as set forth in the table below.Executive Officer Shares
Purchased Purchase
Price(1)
No NEO has ever
sold shares of
the Company’s
common stockKevin G. Keyes 934,779 $ 10,560,000 Glenn A. Votek 104,846 $ 1,135,000 David L. Finkelstein 300,000 $ 3,371,000 Timothy P. Coffey 30,000 $ 304,000 Anthony C. Green 101,000 $ 1,085,000 TOTAL 1,470,624 $ 16,455,000 Executive Officer Shares
Purchased Purchase
PriceKevin G. Keyes 550,000 $ 6,313,500 Wellington J. Denahan 1,059,871 $ 12,311,251 R. Nicholas Singh 235,284 $ 2,897,730 Glenn A. Votek 50,000 $ 525,250 TOTAL 1,895,155 $ 22,047,731 None of ourexecutive officershas ever sold sharesof our commonstock1.Rounded to the nearest thousand. www.annalyannualmeeting.com 15Annaly Capital Management Inc. 2019 Proxy Statement33 Following our management externalization transaction (the“Externalization”), which was approvedThe Company has been externally-managed by our stockholders on May 23, 2013, we are externally managed by our Manager.the Manager since 2013. Pursuant to the terms of the Management Agreement, we pay ourthe Company pays the Manager a management fee and ourthe Manager pays all ofdetermines the compensation to our management personnel (including our executive officers)of its employees, including the NEOs other than Mr. Keyes(1). The Compensation Committee annually reviews the management fee and the performance of ourthe Manager, including the key accomplishmentsachievements discussed beginning on page 2.3. The independent members of the BoardIndependent Directors then consider the Compensation Committee’s recommendations when determining whether to renew or amend the terms of the Management Agreement. Based on the review and factors described in more detail below, including the independent members ofmanagement fee reduction discussed under “Recent Changes,” the Board have determinedIndependent Directors believe that the Management Agreement continues to be in the best interests of the Company and our stockholders.Company. For additional information, see “Certain“Certain Relationships and Related Party Transactions,” “Compensation Paid by the Manager to the Named Executive Officers” and “Compensation“Compensation Discussion and Analysis.”OurThe Management AgreementAgreement compares
favorably to the
management
agreements of ourexternally-managedthe Company’s externally-
managed peersWe believeThe Compensation Committee believes that the terms and conditions of the Management Agreement, including the recent reduction to the management fee, compare favorably to the terms and conditions that exist between ourAnnaly’s externally-managed mortgage REITmREIT peers and their respective managers. In particular, as illustrated by the table below(5), when compared to the median for the peer comparison, (i) the tiered management fee paid to ourthe Manager is lower as a percentage of stockholders’ equity and (ii) the term of the Management Agreement wasis of a shorter duration, and (iii) theduration.Mean Median Min Max Annaly Agency Residential REITs Base management fee(6) 1.28% 1.28% 1.20% 1.36% 1.05% Initial term in years 6.0 6.0 2.0 10.0 2.0 Incentive fee None None None None None Commercial REITs Base management fee 1.50% 1.50% 1.50% 1.50% 1.05% Initial term in years 2.8 3.0 2.0 3.0 2.0 Incentive fee(7) 20%
above
8% hurdle20%
above
8% hurdleNone 25%
above
8% hurdleNone Non-Agency Residential/Hybrid REITs Base management fee 1.49% 1.50% 1.41% 1.50% 1.05% Initial term in years 4.3 3.0 1.0 15.0 2.0 Incentive fee(8) N/A N/A ~15%
above
~12%
hurdle35%
above
12.5%
hurdleNone has no termination fee, which is expressedTerms” in the table below as a multiple of trailing average annual management fees.Endnotes section. Mean Median Min Max ANNALY Agency Residential REITs Base management fee(1) 1.13% 1.23% 0.72% 1.36% 1.05% Initial term in years 4.5 3.0 2.0 10.0 1.5 Termination fee multiple(2) 3.3x 3.0x 3.0x 4.0x None Commercial REITs Base management fee 1.50% 1.50% 1.50% 1.50% Initial term in years(3) 5.0 3.0 1.0 20.0 Termination fee multiple(3) 2.8x 3.0x 1.0x 4.0x Non-Agency Residential/Hybrid REITs Base management fee 1.50% 1.50% 1.50% 1.50% Initial term in years 2.8 3.0 1.0 3.0 Termination fee multiple(4) 3.0x 3.0x 1.0x 3.0x Source: Public filings as of year ended December 31, 2015. All base management fees are calculated as a percentage of stockholders’ equity and all termination fees are calculated as a multiple of the average annual base management fee during the prior 24-month period, except as otherwise specified below. Agency Residential REITs represents the Agency mREIT Peers, with the exception of CYS and CMO, which are internally-managed companies; Commercial REITs represents the externally-managed commercial mortgage REITs included in the BBREMTG Index as of March 31, 2016 with market capitalization above $200mm and includes Northstar Realty Finance Corp., Blackstone Mortgage Trust, Inc., Ares Commercial Real Estate Corp., Resource Capital Corp., Apollo Commercial Real Estate Finance, Inc., Starwood Property Trust, Inc. and Newcastle Investment Corp. (“NCT”); Non-Agency Residential/Hybrid REITs represents the externally-managed non-agency residential and hybrid mortgage REITs included in the BBREMTG Index as of March 31, 2016 with market capitalization above $200mm and includes New Residential Investment Corp. (“NRZ”), Western Asset Mortgage Capital Corp., American Capital Mortgage Investment Corp., Apollo Residential Mortgage, Inc., AG Mortgage Investment Trust, Inc., PennyMac Mortgage Investment Trust (“PMT”), Invesco Mortgage Capital Inc. and Two Harbors Investment Corp.(1)34For HTS and ARR, base management fees of 0.72% and 1.36%, respectively, are implied based on a sliding scale structure disclosed in their respective management agreements and Q4’15 balance sheets.(2)ARR’s termination fee is calculated using the prior 12-month period.(3)NCT’s termination fee is calculated using the prior 12-month period.(4)NRZ’s termination fee is calculated using the prior 12-month period. Pursuant to the terms of its management agreement, PMT’s termination fee is calculated as a multiple of the base management fee and a performance incentive fee. For purposes of this table, we have disregarded any impact from this performance incentive fee on PMT’s termination fee multiple.16Annaly Capital Management Inc. ► 2016 2019 Proxy StatementOur Management Structuremanagement teamManager to work towards the Company’s desired goals to the benefit of long-term stockholder interests. The Compensation Committee has determined that the use of a tiered management feeformulatedfee formulated as a percentage of stockholders’ equity Stockholders’ Equity(1)represents a responsible and prudent method of compensating the management team.Manager. In particular, in the context of a mortgage REITan mREIT that uses leverage as a key component of its business strategy, the Compensation Committee considersbelieves that providing for a contractually required payment structured as an “incentive fee” may misalign the goals of the management teamManager from those of the stockholders. For example, an “incentive fee” based on the achievement of return thresholds may encourage the management team to seek the targeted returns by employing an excessive amount of leverage that constitutes an unacceptable risk to the Company and its capital base.Contractually required“incentive fees” maymisalign the goals ofmanagement fromthose of stockholders– especially at amortgage REITwhere leverage is akey component ofbusiness strategystockholders’ equity, alongStockholders’ Equity (along with the stock ownership guidelines discussed on page 22, align35) aligns the management team to the goals of the Company. We believeCompany, and that focusing the managementfeemanagement fee on the preservation and growth of the Company’s book value incentivizes ourthe Manager to achieve long-term performance that protects our stockholders’ equity asStockholders’ Equity because realized losses decrease such equity and, ultimately, the management fee.ourthe Manager to earn a larger management fee, the stockholders’ equity of the CompanyStockholders’ Equity would need to increase. As a result, the growth of the stockholders’ equity is an alignment betweenStockholders’ Equity aligns the interests of our stockholders and the management team.Manager. Further, this alignment is stronger in the REIT industry than in other businesses. REIT regulations require usthe Company to pay at least 90% of ourits earnings to stockholders as dividends. As a result, unlike most companies, weAnnaly cannot grow ourits business and our book value by reinvesting ourits earnings. Rather, our growth in book value depends on sequential access to the capital markets. This places a unique market discipline on us since we are able to access the capital markets only ifCompany.The Compensation Committee
annually reviews the structure
and amount of the management
fee to determine whether it
appropriately incentivizes the
management teammarkets believe our performance warrants it.We also believe that ourManager and the Company reduced the monthly management fee on Incremental Stockholders’ Equity(2). The Compensation Committee believes that the introduction of a tiered management fee structure recognizes and accounts for the efficiencies that can be gained with scale.ourthe Company’s stockholders than if it werethe fee was based on total assets under management, which could potentially incentivize an external manager to excessively leverage assets under management in an attempt to increase short termshort-term incentive payouts.We believeThe Compensation Committee believes that the Externalization has materially reduced the Company’s compensation-related costs. When comparing the management fees weand related expenses the Company paid for the fiscal years ended December 31, 2013(3)2014, and 2015through December 31, 2018 against the estimated compensation costs (including tax costs) wethe Company would have paid for the same period if those costs remained what they were in 2012, we estimatemanagement estimates that the Externalization has resulted in total compensation savings, including tax savings, (calculated in accordance with GAAP) of approximately $100$300 million.The Company estimates that the
Externalization has resulted in total
compensation savings, including
tax savings, of approximately
$300 million
Continued Cost Savings Related to the Externalization” in Endnotes section.www.annalyannualmeeting.comAnnaly Capital Management Inc. 2019 Proxy Statement 1735Our Management StructureAs illustrated by the table below, the management fee for each of 2013(1), 2014 and 2015 is significantly lower than our 2012 compensation expenses (which is represented by the dashed blue line):
(1)Although our Manager commenced management of Annaly on July 1, 2013, our stockholders received the benefit of the compensation savings created by the Externalization for the entire 2013 calendar year pursuant to a pro forma adjustment to the 2013 management fee. We calculated a pro forma management fee, which was the management fee as if we were managed by our Manager from January 1, 2013 until July 1, 2013, and the actual amount of cash compensation paid to all of our employees from January 1, 2013 until July 1, 2013 reduced the amount of the management fee owed to our Manager.(2)Assumes compensation costs for each of 2013, 2014 and 2015 would have remained what they were in 2012 (the last full year prior to the Externalization).ourthe Manager’s performance and management fee against both our historical results and our mortgage REITthe Company’s mREIT peers based on a number of metrics, including those discussed above in the “Proxy Summary” and the expense ratios discussed below.“Proxy Summary”.Our Management Fee as a Percentage of Our Average Stockholders’ Equity(i) the management fee and (ii) ourCompany’s total operating expenses (including the management fee)fee and related expenses), as a percentage of ourboth average assets and average stockholders’ equity. The CompensationCommitteeCompensation Committee believes this ratio is an important indicatorthese ratios, which allow comparison of the Manager’s performance of our Manager as it measuresagainst the Company’s internally- and externally-managed mREIT peers, measure the extent to which we operatethe Manager operates in an economically efficient manner.As illustrated by the following table, as a percentage of average stockholders’ equity, the management fee for 2015 is lower than the Company’s pre-Externalization peak expense ratio.We annually reviewboth our performanceand the termsand conditionsOperating Expense as a Percentage ofour ManagementAgreement Average Assets(1)2012 2013 2014 2015 2016 2017 2018 Average 
0.19% 0.22% 0.24% 0.25% 0.25% 0.25% 0.26% 0.24% Internally-Managed
Peers0.54% 1.05% 0.87% 0.72% 0.37% 0.44% 0.46% 0.64% Externally-Managed
Peers0.67% 0.63% 0.75% 0.81% 0.74% 0.74% 0.88% 0.75% mREIT Index 0.62% 0.74% 0.77% 0.80% 0.60% 0.62% 0.63% 0.68% 18Operating Expense as a Percentage of Average Equity(1) Annaly Capital Management, Inc. ► 2016 Proxy StatementOur Management Structure
We believe this analysis indicates that our Manager continued to preserve our capital in an economically efficient manner in 2015.Peer Comparison of Operating Expenses as a Percentage of Average Stockholders’ EquityReviewing our annual total operating expenses as a percentage of average stockholders’ equity allows the Compensation Committee to compare the performance of our Manager to both our internally- and externally-managed mortgage REIT peers. 2012 2013 2014 2015 Average 
ANNALY 1.45 % 1.66 % 1.61 % 1.58 % 1.58 % Internally-Managed Peers 2.72 % 3.83 % 4.13 % 3.84 % 3.63 % Externally-Managed Peers 2.20 % 2.88 % 3.57 % 3.75 % 3.10 % Source: Company Filings, SNL and Bloomberg. Averages are market weighted based on market capitalization as of December 31st of each respective year.Note: Internally-Managed Peers and Externally-Managed Peers represent the respective internally- and externally-managed members of the BBREMTG Index with market capitalization above $200mm as of December 31st of each respective year. The average for each excludes Annaly and companies during years in which they became public or first listed. Operating Expense is defined as: (i) for Internally-Managed Peers, the sum of compensation & benefits, general & administrative expenses and other operating expenses, and (ii) for Externally-Managed Peers, the sum of net management fees, compensation & benefits (if any), general & administrative expenses and other operating expenses.2012 2013 2014 2015 2016 2017 2018 Average 1.45% 1.66% 1.61% 1.58% 1.65% 1.68% 1.85% 1.64% Internally-Managed
Peers2.71% 3.95% 3.92% 3.68% 2.14% 2.10% 2.36% 2.98% Externally-Managed
Peers2.38% 3.06% 3.55% 3.82% 4.36% 4.00% 4.54% 3.67% mREIT Index 2.33% 3.30% 3.62% 3.80% 3.53% 3.25% 3.29% 3.25% ourits internally- and externally-managed mortgage REITmREIT peers over the last fourseven fiscal years. In this regard, the Compensation Committee has viewed the Company’s performance as an indicator that, among other things, ourthe Manager has managed the Company in ana comparatively efficient manner with appropriately scaled operating costs (including the management fee).
Management Fee Considerations” in Endnotes section.We believe theCompany’sperformancedemonstratesthat our Managerhas managed theCompany efficiently36www.annalyannualmeeting.comAnnaly Capital Management Inc. 2019 Proxy Statement 19>Compensation Paid by the Manager to the Named Executive OfficersName Title Kevin G. Keyes Chairman, Chief Executive Officer and President Glenn A. Votek Chief Financial Officer David L. Finkelstein Chief Investment Officer Timothy P. Coffey Chief Credit Officer Anthony C. Green Chief Corporate Officer, Chief Legal Officer and Secretary ■ The portion of the management fee that is allocated to NEO compensation paid by the Manager; ■ Of this compensation, the breakdown of fixed vs. variable/incentive pay; and ■ The metrics the Manager uses to measure performance to determine the NEOs’ variable/incentive pay. ■ With the exception of Mr. Keyes(1), each of the other NEOs received a base salary and a performance-based incentive bonus for 2018. ■ With respect to 2018,(2) the NEOs as a group received aggregate salaries of $3.0 million and aggregate performance-based incentive bonuses of $28.7 million from the Manager. These amounts collectively represent 16.8% of the aggregate management fees and reimbursements the Company paid to the Manager for 2018. On an aggregated basis, the NEOs received 9.5% of their total compensation in the form of base salaries and the remaining 90.5% in the form of performance-based incentive bonuses. ■ In determining the cash bonuses it paid to the NEOs for 2018, the Manager considered achievement of both rigorous Company performance metrics(3), including core return on equity, core return on assets and operating expenses as a percentage of average equity and as a percentage of average assets, along with group and individual performance objectives. ■ The Manager considered a list of specified peer companies (set forth below under “Company Market Data”), together with advice from the Manager’s compensation consultants and counsel, to develop appropriate compensation packages for the NEOs. Annaly Capital Management Inc. 2019 Proxy Statement 37 The key principle of the Manager’s Compensation philosophy to pay for performance The Manager’s NEO compensation planning process incorporates key areas of evaluation including: ■ external market data ■ internal benchmarking ■ quantitative and qualitative assessments of Company, group and individual performance What the Manager Does ■ ■ ■ ■ ■ ■ What the Manager Does Not Do ■ ■ ■ ■ ■ 38 Annaly Capital Management Inc. 2019 Proxy Statement Compensation Element What It Does Key Measures
Incentive Bonus2018 NEO Fixed vs. Variable Pay Mix 
Annaly Capital Management Inc. 2019 Proxy Statement 39 The Manager considers both
industry- and company-
specific dynamics to identify
the peers with which the
Company competes for assets,
stockholders and talentAffiliated Managers Group, Inc. Eaton Vance Corp. Northern Trust Corporation AGNC Investment Corp. Franklin Resources, Inc. Raymond James Financial, Inc. Apollo Global Management, LLC Invesco Ltd. Starwood Property Trust, Inc. Ameriprise Financial, Inc. Jefferies Financial Group Inc. T. Rowe Price Group, Inc. Ares Capital Corporation KKR & Co. L.P. The Blackstone Group L.P. Ares Management Corp. Lazard Ltd The Carlyle Group L.P. ARMOUR Residential REIT, Inc. Legg Mason, Inc. Waddell & Reed Financial, Inc. E*TRADE Financial Corporation New Residential Investment Corp. 40 Annaly Capital Management Inc. 2019 Proxy Statement Proposal 2 02 Our Executive CompensationOurWe areThe Company is providing this non-binding advisory vote pursuant to Section 14A of the Exchange Act.“Our Management Structure”“Management Structure” and “Compensation Paid by the Manager to the Named Executive Officers” above and “Compensation“Compensation Discussion and Analysis”Analysis” below, we are externally managedthe Company is externally-managed by ourthe Manager pursuant to the Management Agreement between ourthe Manager and us. Ourthe Company. The Manager is responsible for paying all compensation expense associated with managing us and our subsidiaries. We pay ouramounts to the NEOs. The Company pays the Manager a management fee, and ourthe Manager uses a portion of the proceeds from the management fee to pay compensation to its officersthe NEOs other than Mr. Keyes (who does not receive any compensation for serving as the Company’s Chairman, CEO and personnel, including our executive officers. OurPresident, but has an interest in the management fee as an indirect equityholder of the Manager). However, the Company does not determine the compensation that the Manager pays to the NEOs, the Company does not allocate any specific portion of the management fee that the Company pays to the compensation of the NEOs, and the Company does not reimburse the Manager for the cost of such compensation. The Manager makes all decisions relating to the compensation of our officers and personnel, including our executive officers,the NEOs based on suchthe factors as ourthe Manager may determine are appropriate. Our Compensation Committee has no authoritydetermines to influence or determine how our Manager compensates our executive officers. Our Manager does not consult with or disclosebe appropriate, including both individual and Company performance, and subject to the Compensation Committeeterms of any determinations made regardingemployment agreement entered into between the compensation of our named executive officers, including how much such officers are paid.Manager and an individual NEO.OurThe Company is not party to any employment agreements entered into between the Manager and individual NEOs. However, the Company is party to a Severance and Noncompetition Agreement (the “CEO Severance Agreement”) with Mr. Keyes, which provides for cash severance to be paid by the Company to Mr. Keyes in certain termination events. For more information, see “CEO Severance Agreement” and “Potential Payments upon Termination or Change in Control” below.ourthe Company’s equity incentive plan, which is administered by the Compensation Committee. No equity awards were made to any of ourthe NEOs in 2015.2018. In 2015, we2018, the Company did not pay any compensation to ourthe NEOs.not binding on us, ournon-binding, the Board and Compensation Committee value the views of ourthe Company’s stockholders and will consider the voting results when making compensation decisions regarding ourthe CEO Severance Agreement and the Company’s equity incentive plans.The Board unanimously recommends a vote THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THIS RESOLUTION.FOR the Approval of this Resolution.Annaly Capital Management Inc. 2019 Proxy Statement 41 Over 94% of votes cast supported
the Company’s most recent
Say-on-Pay vote42 Annaly Capital Management Inc. 2019 Proxy Statement Position Number of
IndividualsAnnaly Stock Ownership
Guideline/CommitmentTimeframe to Meet
Guideline/CommitmentChief Executive Officer(1) 1 $15,000,000 July 2020 Other Operating Committee Members(2) 11 30% of Annual Total Compensation 5 years Managing Directors 26 20% of Annual Total Compensation 5 years Director-Level Employees 32 10% of Annual Total Compensation 5 years Total 70 proxy statement.Donnell A. Segalas (Chair) John H. Schaefer Jonathan D. Green E. Wayne NordbergProxy Statement.20Donnell A. Segalas (Chair) Jonathan D. Green E. Wayne Nordberg John H. Schaefer Vicki Williams Annaly Capital Management Inc. ► 2016 2019 Proxy Statement43 Executive CompensationThe Company did not pay any cash or equity compensation to the NEOs for 2018. The Company does not provide them with pension benefits, perquisites or other personal benefits.Type of Termination(1) Executive By Company
without CauseBy Executive
with Good ReasonCompany
Non-Renewal of
Severance AgreementKevin G. Keyes $30,000,000 $30,000,000 $30,000,000 1. 44 Annaly Capital Management Inc. 2019 Proxy Statement OurThe Compensation Committee is comprised solely of the following Independent Directors: Messrs. Segalas (Chair), Green, Nordberg and Schaefer and Nordberg.Ms. Williams. None of them is serving or has served as an officer or employee of usthe Company or any affiliate or has any other business relationship or affiliation with us,the Company, except his service as a Director, and there are noDirector. During 2018, none of the Company’s executive officers served on the compensation committee (or other committee serving an equivalent function) or another entity whose executive officers served on the Compensation Committee interlocks that are requiredor Board.be reported under the rulesManagement Agreement and, regulationsas of December 31, 2018, directly employed 95% of the Exchange Act.Our named executive officers (“NEOs”) for 2015 are: NameTitle Kevin G. KeyesChief Executive Officer (CEO), President and Director Wellington J. DenahanChairman of the Board and Executive Chairman (Former CEO) Glenn A. VotekChief Financial Officer (CFO)Compensation Discussion and AnalysisAs discussed above, our Manager pays all ofindividuals who provide services to the compensation, including benefits, to our executive officers (who areCompany. The remaining employees of our Manager) and our Manager’s other employees. Although limited personnel (but none of our executive officers) are employed by our subsidiaries of the Company for regulatory or corporate efficiency reasons, allreasons. At December 31, 2018, the Company’s measurement date for identifying the median employee, the Company’s subsidiaries had eight full-time employees (and no part-time employees). The Company chose total compensation and benefits paid to such personnel by our subsidiaries reduce, on a dollar-for-dollar basis,in accordance with the management fee we pay to our Manager.Accordingly, we did not pay any cash compensation to our executive officers, nor did we grant them any plan-based awards, for 2015. We do not provide our executive officers with pension benefits, perquisites or other personal benefits. We do not have any employment agreements with our executive officers and do not have arrangements to pay them any cash severance upon their termination or a change in controlrequirements of the Company. As a result, no compensation is includable in the Summary Compensation Table foras its consistently applied compensation measure to identify the NEOs for 2015.Pursuantmedian employee. The Company’s median employee compensation as calculated using the Summary Compensation Table requirements was $265,000 in 2018. The Company does not provide any compensation to the termsCEO. As a result, the CEO to median employee pay ratio required to be disclosed under Item 402(u) of the Management Agreement, we pay our Manager a monthly management fee equal to 1/12th of 1.05% of our stockholders’ equity, as defined in the Management Agreement, for its management services, which was approximately $150.3 million during the year ended December 31, 2015. No specific portion of the management fee is allocated to the compensation of our NEOs.Our Manager, which is a private company thatRegulation S-K is not subject to the disclosure requirements of the SEC, has sole discretion to determine the compensation it pays to its employees, including our executive officers. Our Compensation Committee has no authority to influence or determine how our Manager compensates its employees, some of whom are our executive officers. Our Manager does not consult with or disclose toapplicable.determinations made regarding the compensation of our executive officers, including how much such officers are paid. Rather, as discussed above, the Compensation Committee is responsible for annually reviewing the performance of, and fees paid to, our Manager under the Management Agreement and for making recommendations to the independent members of the Board. For additional information, please see “Certain Relationships and Related Party Transactions” and “Our Management Structure” above.decisions.We did not pay anycash compensation toour executive officers,nor did we grantthem any plan-basedawards, for 2015. Wedo not provide themwith pension benefits,perquisites or otherpersonal benefits.www.annalyannualmeeting.com 21Annaly Capital Management Inc. 2019 Proxy Statement45 Consideration of “Say-on-Pay” Voting ResultsAt our 2015 annual meeting of stockholders, we submitted a non-binding advisory vote on the fiscal year 2014 compensation of our NEOs (commonly known as a “Say-on-Pay” vote) for the consideration of our stockholders. The Compensation Committee reviewed the results of this Say-on-Pay vote, which received support from approximately 94% of the votes cast.As discussed above, in 2015, we paid our Manager a management fee, and the Manager paid all of the compensation of our NEOs. Although our NEOs are eligible to receive equity awards pursuant to our equity incentive plan administered by the Compensation Committee, no such awards were granted to any of our NEOs in 2015.The Compensation Committee and the rest of our Board will continue to consider the outcome of future Say-on-Pay votes, as well as stockholder feedback received throughout the year, when making compensation decisions regarding any plan-based awards under our equity incentive plan. Stockholders are invited to express their views to the Compensation Committee as described under “Communications with the Board.”Executive Compensation PoliciesClawback for the Management FeePursuant to the 2016 amendment and restatement of the management agreement, the Company will seek, and be entitled to receive, reimbursement from our Manager if the Board determines that a computation error (regardless of the reason for or amount of such error) resulted in the overpayment of a management fee to our Manager.Stock Ownership Guidelines for Certain EmployeesTo align the interests of the employees of our Manager with those of our stockholders, the Board has instituted expanded stock ownership guidelines for certain employees and Manager personnel, including our NEOs. In 2016, our Board approved revising our existing stock ownership guidelines to require stock ownership as follows:Position Number of
Individuals Required Ownership of Annaly Stock Timeframe to
Meet GuidelineChief Executive Officer 1 $10,000,000 3 years Executive Chairman 1 Maintain current holdings(1) N/A Chief Legal Officer 1 $4,500,000 July 1, 2016 Other Operating
Committee Members7 30% of Annual Total Compensation 5 years Managing Directors 20 20% of Annual Total Compensation 5 years Director-Level Employees 33 10% of Annual Total Compensation 5 years Total 63 (1)03Ms. Denahan held 1,673,134our common stock, 7,000,000 shares of 7.625% Series C Cumulative Redeemable Preferred Stock, 18,400,000 shares of 7.50% Series D Cumulative Redeemable Preferred Stock, 28,800,000 shares of 6.95% Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, 17,000,000 shares of 6.50% Series G Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, and 2,200,000 shares of 8.125% Series H Cumulative Redeemable Preferred Stock, issued and outstanding.March 31, 2016.redemption of such shares of stock, we commit to allocating all 1,000,000,000 shares as common stock, and will not reallocate any such shares as preferred stock.These stock ownership guidelines apply to more than 40% of our employees and Manager personnel. As of March 31, 2016, all such individuals either met or, within the applicable period, are expected to meet the stock ownership guidelines.In 2016, we adopteda clawback policy,expansive stockownership guidelinesand a four-yearstock holding periodrequirement4622Annaly Capital Management Inc. ► 2016 2019 Proxy StatementStock Holding PeriodUnder a policy adopted byPurpose and BackgroundCompensation Committee in 2016, our employees and Manager personnel (including our executive officers) are requiredability to hold for a period of four years the net after-taxissue additional shares of capital stock, we seek to increase the number of shares we are currently authorized to issue for general corporate purposes from 2,000,000,000 shares to 3,000,000,000 shares. As of March 25, 2019, the Company had 1,516,371,679 shares of capital stock they receive throughissued and outstanding, leaving 483,628,321 shares of capital stock option exercises available for future issuances, of which approximately 389,022,880 shares are reserved for future issuance, including shares reserved for future issuance under our Dividend Reinvestment and Share Purchase Plan and upon a conversion of our preferred stock pursuant to the terms thereof. The Board believes that the availability of additional shares is essential for the Company to successfully pursue its business objectives. Approval of an amendment to the Company’s charter increasing the authorized number of shares will provide the Company with valuable flexibility to take advantage of opportunities to raise additional capital for general corporate purposes, investment activity, mergers and acquisitions, and/or vestingstock dividends or splits. Although the Company’s charter permits the Board to classify and reclassify any unissued shares of equity incentive awards.capital stock by setting or changing in any one or more respects the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of such shares of stock, the Company commits to allocating all 1,000,000,000 shares as common stock, and will not reallocate any such shares as preferred stock. The Company currently does not have any acquisitions or other major transactions planned that would require an increase to the Company’s authorized share capital, and the Board is not proposing the increase with the intent of using the newly-authorized shares as an anti-takeover device.Prohibition on Hedging Company SecuritiesPotential EffectWeFuture issuances of common stock or securities convertible into common stock could have a policy prohibitingdilutive effect on the earnings per share, book value per share, voting power and percentage interest of holdings of current stockholders. In addition, the availability of additional shares of common stock for issuance could, under certain circumstances, discourage or make more difficult efforts to obtain control of the Company, although that is not the intention of this proposal.employees and Manager personnel (including our executive officers)common stock entitled to vote. Abstentions will have the same effect as votes against this proposal. This proposal is considered a “routine” matter that brokers may vote on without instruction from engaging in any hedging transactionsbeneficial owners. As a result, a broker non-vote cannot occur with respect to our equity securities held by them, which includesthis proposal. For more information on the purchase of any financial instrument (including forward contractsvoting requirements, see the “Questions and zero cost collars) designed to hedge or offset any decreaseAnswers about the Annual Meeting” section in the market value of our equity securities.this Proxy Statement.Prohibition on Pledging Company SecuritiesConclusionIn 2016, we adopted a policy prohibiting our employees and Manager personnel (including our executive officers) from holding Company securities in a margin account or pledging Company securities as collateral for a loan.Risks Related to Compensation Policies and PracticesIn 2015, theThe Board reviewed its risk assessment of the Company’s compensation policies and practices applicableconsiders this amendment to the Company’s equity incentive plans withcharter advisable to provide flexibility for future capital needs, including general corporate purposes, investment activity, mergers and acquisitions, and/or stock dividends or splits. Approval of this amendment by the Compensation Committee. Following this annual review,stockholders at the Compensation Committee determined that these compensation policiesAnnual Meeting may avoid the expensive procedure of calling and practices do not create risks that are reasonably likely to haveholding a material adverse effect on us.In 2016, we adopteda policy prohibiting thepledging of Companysecurities. We alsohave an anti-hedgingpolicy in place.Summary Compensation TableThe table below sets forth the total compensation we paid to our NEOs with respect to the years ended December 31, 2015, December 31, 2014 and December 31, 2013.All Other Name and Principal Position(1) Year Salary($) Compensation($) Total($) Kevin G. Keyes
Chief Executive Officer and President2015 – – – 2014 – – – 2013 375,000 3,448 378,448 Glenn A. Votek
Chief Financial Officer2015 – – – 2014 – – – 2013 91,346 48 91,394 Wellington J. Denahan
Executive Chairman and
former Chief Executive Officer2015 – – – 2014 – – – 2013 1,500,000 5,148 1,505,148 (1)Amounts for 2013 reflect compensation that we paid to our NEOs prior to the time we became externally managed by our Manager. See “Compensation Discussion and Analysis.”Grantsspecial meeting of Plan-Based AwardsWe did not grant our NEOs any plan based awards in 2015.stockholders for such a purpose at a later date.www.annalyannualmeeting.comAnnaly Capital Management Inc. 2019 Proxy Statement 2347Executive CompensationOutstanding Equity Awards at Fiscal Year-EndThe following table provides information about Ms. Denahan’s outstanding equity awards at December 31, 2015. Neither Mr. Keyes nor Mr. Votek had outstanding equity awards at December 31, 2015. Number of Equity Incentive Plan Securities Awards: Number of Underlying Number of Securities Securities Underlying Unexercised Underlying Unexercised Option Option Options Unexercised Options Unearned Exercise Expiration Name Exercisable(#)(1) Unexercisable(#) Options(#) Price($) Date Wellington J. Denahan 150,000 – – 15.70 5/17/17 200,000 – – 16.46 5/8/18 200,000 – – 15.61 9/19/18 (1)All options listed above vested beginning on the first anniversary of date of grant at a rate of 25% per year over the first four years of the ten-year option term.Options Exercised and Stock VestedNo options were exercised and no stock vested for our NEOs during 2015.Pension Benefits and Nonqualified Deferred CompensationWe do not provide our NEOs any benefits pursuant to defined benefit plans and nonqualified deferred compensation plans.Potential Payments upon Termination or Change in ControlWe are not responsible for any amounts payable or any additional vesting of outstanding equity awards for any termination of service by any of our NEOs. No amounts would have been payable by us to any of our NEOs upon a change in control as of December 31, 2015.24Annaly Capital Management, Inc. ► 2016 Proxy StatementThe Audit Committee is responsible for the appointment, compensation, retention and oversight of the independent auditors ourAnnaly’s audited financial statements with management and with Ernst & Young, ourthe Company’s independent auditorsauditor for 2015.Statement on Auditing Standards No. 61, as amended.The Audit Committee has received from Ernst & Youngapplicable standards adopted by the written statements required by Public Company Accounting Oversight Board, (PCAOB) Rule No. 3526, “Communications with Audit Committees Concerning Independence,” and has discussedincluding matters concerning Ernst & Young’s independenceindependence. Ernst & Young has also provided to the Audit Committee the written disclosures and letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communications with the Audit Committee concerning independence. The Audit Committee also discussed with Ernst & Young.Young their independence from the Company and management, and considered whether non-audit services provided by Ernst & Young to the Company are compatible with maintaining Ernst & Young’s independence.ourthe Board, and ourthe Board has approved, that the audited financial statements be included in ourthe Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for filing2018 filed with the SEC.The Audit Committeeis responsible forthe appointment,compensation,retention andoversight of ourindependent auditorsKevin P. Brady (Chair)Michael Haylon E. Wayne Nordberg John H. Schaefer Vicki Williams The foregoing report has been furnished by the Audit Committee:Kevin P. Brady (Chair) Francine J. Bovich Michael Haylon John H. Schaeferwww.annalyannualmeeting.com48Annaly Capital Management Inc. 2019 Proxy Statement 25Audit Committee Matters20152018 and 20142017 by E&YEY for each of the following categories of services are set forth below:Service Category 2015 2014(1) 2018 2017 Audit (1)$ 2,129,350 $ 2,081,800 $ 2,708,050 $ 2,569,311 Audit-Related (2)127,500 75,000 62,000 61,000 Tax (3) 238,310 96,070 509,800 316,700 All Other (4)– – 134,000 – Total $ 2,495,160 $ 2,252,870 $ 3,413,850 $ 2,947,011 (1)1.For 2014, $232,300 that was included in “Audit-Related”Audit fees primarily relate to integrated audits of the Company’s annual consolidated financial statements and $23,000 that was included in “All Other” fees previously disclosed in our 2015 proxy statement have been reclassified to “Audit” fees. Also for 2014, $75,000 that was included in “All Other” fees has been reclassified to “Audit-Related” fees. In addition, “Audit” fees for 2014 have been revised to include additional fees billed by E&Yinternal control over financial reporting under Sarbanes-Oxley Section 404, reviews of the Company’s quarterly consolidated financial statements, audits of the Company’s subsidiaries’ financial statements and comfort letters and consents related to our 2014 audit.SEC registration statements.2. Audit-Related fees are primarily for assurance and related services that are traditionally performed by the independent registered public accounting firm and include due diligence and accounting consultations. 3. Tax fees are primarily for preparation of tax returns and compliance services and tax consultations. 4. All Other fees are for those services not described in one of the other categories. Audit fees primarily relate to integrated audits of our annual consolidated financial statements and internal control over financial reporting under Sarbanes-Oxley Section 404, reviews of our quarterly consolidated financial statements, audits of our subsidiaries’ financial statements and comfort letters and consents related to SEC registration statements.Audit-Related fees are primarily for assurance and related services that are traditionally performed by the independent registered public accounting firm and include due diligence and accounting consultations.Tax fees are primarily for preparation of tax returns and compliance services and tax consultations.All Other fees are for those services not described in one of the other categories.ourthe independent registered public accounting firm. The Audit Committee retained E&YEY to provide certain non-audit services in 2015.2018, all of which were pre-approved by the Audit Committee. Specifically, the Audit Committee pre-approved the use of E&YEY for the following categories of non-audit services:►■SEC filings, including comfort letters, consents and comment letters►►■review, including the issuanceagreed upon procedures in connection with financing arrangements of a comfort letter, relating to commercial asset securitizations►■We understandIn addition to the non-audit services described above, the Audit Committee also pre-approved certain audit services, including comfort letters and consents related to SEC registration statements and review of SEC comment letters.E&YEY to maintain objectivity and independence as the auditor of ourits financial statements and our internal control over financial reporting. TheIn accordance with SEC rules, the Audit Committee requires the lead E&YEY partner assigned to ourAnnaly’s audit to be rotated at least every five years, and we expect that the Audit Committee and its chair will beis involved in selecting each new lead audit partner. OurThe Audit Committee approved the hiring of E&YEY to provide all of the services detailed above prior to such independent registered public accounting firm’s engagement. None of the services related to theAudit-Related Fees described above was approved by the Audit Committee pursuant to a waiver of pre-approval provisions set forth in applicable rules of the SEC.The Audit Committee
requires the lead
audit partner to be
rotated every five
years and will be
is involved in selecting
each new lead audit
partner26Annaly Capital Management Inc. ► 2016 2019 Proxy Statement49 29, 201625, 2019 relating to the beneficial ownership, as defined in SEC rules, of ourthe Company’s common stock by (i) each NEO, (ii) each Director and nominee for Director, (iii) all of our executive officers and Directors as a group, and (iv) all persons that we knowthe Company knows beneficially own more than 5% of ourits outstanding common stock. Under SEC rules, a person is deemed to be a “beneficial owner” or a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security.ourthe Company’s common stock as shown below is drawn from statements filed with the SEC pursuant to Section 13(d) or 13(g) of the Exchange Act.Amount and Nature of Beneficial Owner(1) Beneficial Ownership(2) Percent of Class(3)
Nature of
Beneficial
Ownership(2)Percent of
Class(3)Kevin G. Keyes 609,080 * 984,779 * Glenn A. Votek 104,846 * David L. Finkelstein 300,000 * Timothy P. Coffey 38,000 * Anthony C. Green 101,000 * Francine J. Bovich 98,240 * Kevin P. Brady(4) 252,502 * Wellington J. Denahan 2,223,134 * 1,811,272 * Glenn A. Votek 53,059 * Kevin P. Brady(4) 228,810 * Katie Beirne Fallon 12,858 * Jonathan D. Green 179,643 * 198,379 * Thomas Hamilton(5),(6) 250,000 * Kathy Hopinkah Hannan(6) - * Michael Haylon 118,893 * 152,629 * Donnell A. Segalas 194,060 * E. Wayne Nordberg(5) 196,143 * E. Wayne Nordberg(7) 214,879 * John H. Schaefer 75,171 * 126,474 * Francine J. Bovich 28,548 * All executive officers and Directors as a group (11 people) 4,375,640 * BlackRock, Inc.(6) 73,835,633 8.0% The Vanguard Group, Inc.(7) 63,028,900 6.8% Donnell A. Segalas(8) 241,052 * Vicki Williams 12,858 * All executive officers and Directors as a group (17 people) 4,899,768 * BlackRock, Inc.(9) 120,128,838 9.1% The Vanguard Group, Inc.(10) 119,048,402 9.1% * Represents beneficial ownership of less than one percent of the common stock. (1)1.The business address of each Director and NEO is c/o Annaly Capital Management, Inc., 1211 Avenue of the Americas, New York, NY 10036. To the best of ourthe Company’s knowledge, each stockholder listed has sole voting and investment power with respect to the shares beneficially owned by the stockholder.(2)2.For purposes of this table, “beneficial ownership” is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person, or such group of persons, has the right to acquire within 60 days of the date of determination. In light of the nature of vested options, we haveThe Company has also included shares of common stock underlying vested options. The shares of common stock underlying vested options included in the above table are as follows: Wellington J. Denahan 550,000 shares; Kevin P. Brady 45,00012,500 shares; Jonathan D. Green 92,50050,000 shares; Michael Haylon 77,500 shares; Donnell A. Segalas 80,00050,000 shares; E. Wayne Nordberg 92,50050,000 shares; and all executive officers and Directors as a group (11 persons) 1,083,500Donnell A. Segalas 37,500 shares. In addition, we haveThe DSUs included DSUs in the above table which are as follows: Francine J. Bovich 84,740 DSUs; Kevin P. Brady 37,91094,102 DSUs; Wellington J. Denahan 12,858 DSUs; Katie Beirne Fallon 12,858 DSUs; Jonathan D. Green 41,393102,629 DSUs; Michael Haylon 41,393102,629 DSUs; E. Wayne Nordberg 102,629 DSUs; John H. Schaefer 48,980 DSUs; Donnell A. Segalas 37,910 DSUs; E. Wayne Nordberg 41,393 DSUs; John H. Schaefer 27,29394,102 DSUs; and Francine J. Bovich 28,548Vicki Williams 12,858 DSUs.(3)3.For purposes of computing the percentage of outstanding shares of common stock held by each person or group of persons named above, any shares which such person or group of persons has the right to acquire within 60 days, including vested options and DSUs, are deemed to be outstanding for the purpose of computing the percentage of outstanding shares of the class owned by such person or group of persons, but are not deemed to be outstanding for the purpose of computing the percentage of outstanding shares owned by any other person or group of persons. (4)4.Includes: (i) 48,750 shares owned by the Kevin P. Brady Family Trust, (ii) 42,500 shares owned by Mr. Brady’s wife, and (iii) 1,500 shares owned by Mr. Brady’s daughter, and (iv) 9,000 shares owned by Mr. Brady’s mother.daughters. Mr. Brady disclaims beneficial ownership of these 101,75092,750 shares.(5)5.Includes: (i) 100,000 shares owned by Cure FA Foundation, Inc., and (ii) 50,000 shares owned by the 2012 Hamilton Family Trust. 6. Dr. Hannan and Mr. Hamilton were appointed to the Board effective February 13, 2019 and March 6, 2019, respectively. 50 Annaly Capital Management Inc. 2019 Proxy Statement 7. the Olivia Nordberg Trust and (ii) 9,000 shares owned by Mr. Nordberg’s spouse.(6)8.9. 10022,10055, as a parent holding company or control person of certain named funds (“BlackRock”), filed a Schedule 13G/A on February 10, 20164, 2019 reporting, as of December 31, 2015,2018, beneficially owning 73,835,633120,128,838 shares of common stock with the sole power to vote or to direct the vote of 66,970,019110,212,604 shares of common stock the shared power to vote or to direct the vote of zero shares of common stock,and the sole power to dispose or to direct the disposition of 73,835,633 shares of common stock and the shared power to dispose or to direct the disposition of zero120,128,838 shares of common stock. This information is based solely on information contained in the Schedule 13G/A filed by Blackrock.(7)10.12, 201611, 2019 reporting, as of December 31, 2015,2018, beneficially owning 63,028,900119,048,402 shares of common stock with the sole power to vote or to direct the vote of 940,554893,469 shares of common stock, the shared power to vote or to direct the vote of zero665,240 shares of common stock, the sole power to dispose or to direct the disposition of 62,033,919117,558,870 shares of common stock and the shared power to dispose or to direct the disposition of 994,9811,489,532 shares of common stock. This information is based solely on information contained in the Schedule 13G/A filed by Vanguard.www.annalyannualmeeting.com27Stock Ownership InformationWe believeThe Company believes that based solely on ourits review of the reports filed during the fiscal year ended December 31, 20152018, and on the written representations of those filing reports, all filing requirements under Section 16(a) of the Exchange Act, as amended, applicableforms required to ourbe filed by Annaly’s executive officers, Directorsdirectors and beneficial owners of more than ten percent of ourits common stock were complied withfiled on a timely basis except thatand in compliance with Section 16(a) of the StatementsExchange Act, with the exception of Changes in Beneficial Ownership of Securitiesone transaction reported on a Form 4 were not timely filed to report the acquisition of DSUs on May 21, 2015 by each of our Independent Directors (and, in the case of Mr. Brady only, the conversion of previously granted DSUs into common shares and the acquisition of such common shares by Mr. Brady on May 22, 2015) and were5 filed on June 2, 2015. The Company files the required reportsJanuary 19, 2019, on behalf of its executive officers and Directors.David Finkelstein, which was filed late due to an administrative error.28Annaly Capital Management Inc. ► 2016 2019 Proxy Statement51 AccessWhere You Can Find More InformationOnAdditionally, on written request, wethe Company will provide without charge to each record or beneficial holder of ourthe Company’s common stock as of the close of business on March 29, 201625, 2019 (the “Record Date”) a copy of our annual reportthe Company’s Annual Report on Form 10-K for the year ended December 31, 2015,2018, as filed with the SEC. You should address your request to Investor Relations, Annaly Capital Management, Inc., 1211 Avenue of the Americas, New York, NY10036 or email your request to us at investor@annaly.com.You may also access such report on our website,www.annaly.com, under “Investors- SEC Filings.”presentpropose a proposalmatter for consideration at our 2017 annual meeting of stockholdersthe Company’s 2020 Annual Meeting and have the proposal included in the proxy statement and form of proxy for such meeting must, in addition to complying with the applicable laws and regulations governing submissions of such proposals (Rule 14a-8 of the Exchange Act), submit the proposal in writing to us no later than December 13, 2016.11, 2019, in order to be timely.ourthe Company’s current Amended and Restated Bylaws ("Bylaws"(“Bylaws”), any stockholder intending to nominate a Director or present a proposal at an annual meeting of our stockholders that is not intended to be included in the proxy statementProxy Statement for such annual meeting must notify us in writingprovide written notification not lesslater than 5:00 p.m. Eastern Time on the date that is 120 days prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting nor moreearlier than 150 days prior to the first anniversary of the date of the proxy statementProxy Statement for the preceding year’s annual meeting. Accordingly, any stockholder who intends to submit such a nomination or such a proposal at our 2017 annual meeting of stockholdersthe 2020 Annual Meeting must notify us in writingprovide written notification of such proposal by December 13, 2016,11, 2019, but in no event earlier than November 13, 2016.11, 2019.ourthe Company’s Bylaws.proxy statement,Proxy Statement, the Board does not know of any matter that will be presented for consideration at the Annual Meeting other than as described in this proxy statement.Proxy Statement.aboutAbout the Annual MeetingQ: Q A: A Thursday, May 26, 201622, 2019, at 9:00 a.m. (Eastern Time) online at www.virtualshareholdermeeting.com/NLY2019. If you plan to attend the Warwick Hotel, 65 West 54th Street, New York, NY 10019.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.52 Annaly Capital Management Inc. 2019 Proxy Statement Q: Q A Q A Q A: A 29, 2016)25, 2019) are entitled to vote at the Annual Meeting.Q: Q A Q A: A SinceAt the close of business, on the Record Date there were 924,853,1331,442,971,679 outstanding shares of the Company’s common stock, each entitled to one vote per share, as of the Record Date, we will need at least 462,426,567 votes present in person or by proxy at the Annual Meeting for a quorum to exist. If a quorum is not present at the Annual Meeting, we expect that the Annual Meeting will be adjourned to solicit additional proxies.www.annalyannualmeeting.com29Other InformationQ:What are the voting requirements that apply to the proposals discussed in this proxy statement?A:VoteDiscretionary VotingProposalRequiredAllowed?(1)Election of DirectorsMajorityNo(2)Advisory approval of our executive compensationMajorityNo(3)Ratification of the appointment of Ernst & YoungMajorityYes“Majority” means (a) with regard to an uncontested election of Directors, the affirmative vote of a majority of all the votes cast on the election of each Director; provided, however, that in a contested election of Directors where the number of nominees exceeds the number of Directors to be elected, the Directors shall be elected by a plurality of the votes cast; and (b) with regard to the advisory approval of our executive compensation and the ratification of the appointment of Ernst & Young, a majority of the votes cast at the Annual Meeting.“Discretionary voting” occurs when a bank, broker, or other holder of record does not receive voting instructions from the beneficial owner and votes those shares in its discretion on any proposal as to which the rules of the NYSE permit such bank, broker, or other holder of record to vote. When banks, brokers, and other holders of record are not permitted under the NYSE rules to vote the beneficial owner’s shares on a proposal, and there is at least one other proposal on which discretionary voting is allowed, the affected shares are referred to as broker “non-votes.”Q:What is the effect of abstentions and broker “non-votes”?A:broker “non-votes”“broker non-votes” will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum. If a quorum is not present at the Annual Meeting, the Company expects that the Annual Meeting will be adjourned to solicit additional proxies. Q A Proposal Vote
RequiredDiscretionary
Voting Allowed?Board
Recommendation(1) Election of Directors listed herein Majority No FOR (2) Advisory approval of executive compensation Majority No FOR (3) Amendment to our charter Majority Yes FOR (4) Ratification of the appointment of Ernst & Young Majority Yes FOR Annaly Capital Management Inc. 2019 Proxy Statement 53 Q A and brokerwill have no effect on Proposal 1, Proposal 2, or Proposal 4. Abstentions will have the same effect as a vote against Proposal 3.any of the proposals submitted at the Annual Meeting.Proposal 1 or Proposal 2. As they are routine matters and discretionary voting is allowed, “broker non-votes” are not applicable to Proposal 3 or Proposal 4.Q: Q A: A (1)Directors;each Director nominee listed herein;(2)ourthe Company’s executive compensation; andcompensation as described in this Proxy Statement;(3)ourthe Company’s independent registered public accounting firm.firm for the year ending December 31, 2019.appointauthorize as proxies may exercise their proxy and vote your shares for one or more postponements or adjournments of the Annual Meeting, including postponements or adjournments to permit further solicitations of proxies. Q We do not expect that any matter other than the proposals described above will be brought before the Annual Meeting. If, however, other matters are properly presented at the Annual Meeting, the Company officers appointed as proxies will vote in accordance with the recommendation of our Board.Q:What do I do if I want to change my vote? A: A votedexercised by filing with us a duly executed revocation of proxy, by submitting a duly executed proxy to us with a later date, using the phone or online voting procedures, or by appearing atparticipating in the Annual Meeting via live webcast and voting in person.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. AttendanceVirtual attendance at the Annual Meeting without voting online will not itself revoke a proxy.30 Q Annaly Capital Management, Inc. ► 2016 Proxy StatementOther InformationQ:How will voting on any other business be conducted? A: A threefour proposals described in this proxy statement, we knowProxy Statement, the Company knows of no other business to be considered at the Annual Meeting. If any other matters are properly presented at the meeting, your signed proxy card authorizes Kevin G. Keyes, ourChairman, Chief Executive Officer and President, and R. Nicholas Singh, ourAnthony C. Green, Chief Corporate Officer, Chief Legal Officer and Secretary, or either of them acting alone, with full power of substitution in each, to vote on those matters according toin their best judgment.discretion.Q: Q A: A Broadridge Financial Solutions, Inc.,American Election Services, LLC, the independent Inspectorinspector of Elections,elections, will count the votes.54 Annaly Capital Management Inc. 2019 Proxy Statement Q: Q WhoHow can attendI participate in the Annual Meeting?A: A although seating is limited. If your shares are held through a brokeronline at www.virtualshareholdermeeting.com/NLY2019. You will be able to ask questions during the meeting. An audio broadcast of the Annual Meeting will also be available to stockholders by telephone toll-free at 1-877-328-2502. Please note that listening to the audio broadcast will not be deemed to be attending the Annual Meeting, and you would likecannot vote from such audio broadcast. If you plan to attend please either (1) write us at Investor Relations, Annaly Capital Management, Inc., 1211 Avenue of the Americas, New York, NY 10036Annual Meeting online or email us at investor@annaly.com, or (2) bring a copy of your brokerage account statement or an omnibus proxy (which you can get from your broker)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. If you wish to view the webcast at a location provided by the Company, the Company’s Maryland counsel, Venable LLP, will air the webcast at its offices located at 750 E. Pratt Street, Suite 900, Baltimore, MD 21202. Please note that no members of management or the Board will be in attendance at this location. If you wish to view the Annual Meeting.Meeting via webcast at Venable LLP’s office, please complete the Reservation Request Form found at the end of this Proxy Statement. In addition, you must bring a valid, government-issued photo identification, such as a driver’s license or a passport. Ifpassport to Venable LLP’s offices. Q A plan to attendcan access by visiting www.proxyvote.com. Through use of the pre-meeting forum, stockholders can submit questions in advance of the Annual Meeting please checkand view copies of the box on yourCompany’s proxy card when you return your proxy or follow the instructions on your proxy cardmaterials. The Company will respond to vote and confirm your attendance by telephone or Internet. In addition, if you are a record holder of common stock, your name is subject to verification against the list of our record holders on the Record Date prior to being admitted to the Annual Meeting. If you are not a record holder but hold shares in street name, that is, with a broker, dealer, bank or other financial institution that serves as your nominee, you should be prepared to provide proof of beneficial ownership on the Record Date, or similar evidence of ownership. If you do not comply with the procedures outlined above, you will not be admitted to the Annual Meeting.Security measures will be in placemany inquiries at the Annual Meeting to help ensure the safety of attendees. Metal detectors similar to those used in airports may be located at the entrance to the meeting room and briefcases, handbags and packages may be inspected. No cameras or recording devices of any kind, or signs, placards, banners or similar materials, may be brought into the Annual Meeting. Anyone who refuses to comply with these requirements will not be admitted.as time allows.Q: Q How do I inspectWhy is the list of stockholders of record?A:A complete list of our common stockholders of record entitled to vote atCompany holding the Annual Meeting will be availableonline? A inspection during the 10 business days2018 Annual Meeting, which enabled increased attendance and participation from locations around the world, reduced costs for both the Company and its stockholders and reflected the Company’s commitment to environmentally-friendly practices. The Company is excited to one again embrace the virtual meeting format for the 2019 Annual Meeting. Q at our executive offices during ordinary business hours for proper purposes.on May 22, 2019? A Q: Q A Q wethe Company solicit proxies for the Annual Meeting?A: A our Directors, executive officers and employees, who will not be specially compensated, may solicit proxies from our stockholders by telephone, facsimile or other electronic means or in person. Also, the Company will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for any reasonable expenses in forwarding proxy materials to beneficial owners.Annaly Capital Management Inc. 2019 Proxy Statement 55 We haveInnisfree M&A Incorporated,Georgeson Inc., a proxy solicitation firm, to assist usit in the solicitation of proxies in connection with the Annual Meeting. WeThe Company will pay InnisfreeGeorgeson a fee of $15,000 for its services. In addition, wethe Company may pay InnisfreeGeorgeson additional fees depending on the extent of additional services requested by usthe Company and will reimburse InnisfreeGeorgeson for expenses InnisfreeGeorgeson incurs in connection with its engagement by us.the Company. In addition to the fees paid to Innisfree, weGeorgeson, the Company will pay all other costs of soliciting proxies.www.annalyannualmeeting.com 31Other Information Q Q:A: A "Householding"proxy statementProxy Statement and annual report from a company, bank, broker or other intermediary,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. We engageThe Company engages in this practice as it reduces our printing and postage costs. However, if a stockholder of record residing at such an address wishes to receive a separate annual reportAnnual Report or proxy statement,Proxy Statement, he, she or sheit may request it orally or inby writing by contacting us atto Annaly Capital Management, Inc., 1211 Avenue of the Americas, New York, NY 10036, Attention: Investor Relations, by emailing us at investor@annaly.com, or by calling us at 212-696-0100, and wethe Company will promptly deliver the requested annual reportAnnual Report or proxy statement.Proxy Statement. If a stockholder of record residing at such an address wishes to receive a separate annual reportAnnual Report or proxy statementProxy Statement in the future, he, she or sheit may contact usthe Company in the same manner. If you are an eligible stockholder of record receiving multiple copies of our annual reportthe Company’s Annual Report and proxy statement,Proxy Statement, you can request householding by contacting usthe 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.Q: Q A: A ourthe Company’s Bylaws permit the chairman of the meeting to postpone or adjourn the Annual Meeting, without notice other than an announcement.announcement at the Annual Meeting. Additionally, the Board is permitted to postpone the meeting to a date not more than 120 days after the record date for the Annual Meeting without setting a new record date, provided, that the Company must announce the date, time and place to which the meeting is postponed not less than ten days prior to the date of such postponed meeting.Q: Q A: A proxy statementProxy Statement or the proxy card, you should contact:Annaly Capital Management, Inc.1211 Avenue of the AmericasNew York, NY 10036Phone: 1-888-8 ANNALYFacsimile: (212) 696-9809Email: investor@annaly.comAttention: Investor RelationsOur principal executive offices are located at the address above.Where You Can Find More InformationWe file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information that we file with the SEC at the SEC’s public reference room at Public Reference Room, 100 F Street, N.E., Washington, D.C. 20549.Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. These SEC filings are also available to the public from commercial document retrieval services and at the Internet worldwide web site maintained by the SEC at http://www.sec.gov. Reports, proxy statements and other information concerning us may also be inspected at the offices of the NYSE, which is located at 20 Broad Street, New York, NY10005.Our website is www.annaly.com. We make available on this website under “Investors - SEC Filings,” free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the SEC.32
1211 Avenue of the Americas
New York, NY 10036
Phone: 1-888-8 ANNALY ► 2016Facsimile: (212) 696-9809
Email: investor@annaly.com
Attention: Investor Relations56 Annaly Capital Management Inc. 2019 Proxy Statement 1. Represents originated or purchased whole loans, commercial mortgage-backed securities and equity assets across the credit investment groups from December 31, 2013 to December 31, 2018. 2. $6.5bn of capital includes: (1) $816mm raised through a common equity offering in July 2017; (2) $720mm raised through a preferred equity offering in July 2017; (3) $857mm raised through a common equity offering in October 2017; (4) $425mm raised through a preferred equity offering in January 2018; (5) $877mm raised through a common equity offering in September 2018; (6) $840mm raised through a common equity offering in January 2019; (7) $251mm raised through the Company’s at-the-market sales program for its common stock, which was entered into in January 2018, net of sales agent commissions and other offering expenses; (8) $975mm of equity issued as partial merger consideration and $288mm of preferred equity assumed in connection with the Hatteras Financial acquisition in April 2016; and (9) $456mm of equity issued as partial merger consideration and $55mm of preferred equity assumed in connection with the MTGE Investment Corp. acquisition in September 2018. These amounts exclude any applicable underwriting discounts and other estimated offering expenses, unless otherwise noted. The July 2017, September 2018 and January 2019 common equity offerings include the underwriters’ full exercise of their overallotment option to purchase additional shares of stock. The July 2017 preferred offering and October 2017 common offering include the underwriters’ partial exercise of their overallotment option to purchase additional shares of preferred and common stock, respectively. 3. $2.4bn of additional borrowing capacity includes $1.5bn in residential whole loan securitizations ($1.1bn closed in 2018 and $394mm closed subsequent to year end in January 2019) and $900mm in additional credit financing capacity ($700mm closed in 2018 and $200mm closed subsequent to year end in January 2019). 4. Represents total shareholder return for the period beginning December 31, 2013 to January 31, 2019. 5. Represents LTM pre-tax margin calculated as pre-tax income divided by total revenue or total gross interest income for each company. Companies with negative pre-tax margins are excluded from the calculation. 6. “Continuing Directors” represent the eleven members of the Board following the 2019 Annual Meeting (assuming all nominees are elected). 7. Employee composition statistics as of December 31, 2018. Annaly is externally managed by Annaly Management Company, LLC (the “Manager”). As of December 31, 2018, the Manager had 162 employees and Annaly’s subsidiaries collectively had 8 employees. For ease of reference, throughout this Annual Report, the employees of the Manager, together with employees of Annaly’s subsidiaries, are referred to as Annaly’s employees. 8. Survey results based on annual internal surveys conducted by Perceptyx from 2015 through 2018. 9. Represents Financial Activities industry sector, which consists of Finance and Insurance and Real Estate and Rental and Leasing sectors as of December 31, 2018. 1. Represents market capitalization as of January 31, 2019. 2. Represents: (1) $720mm raised through a preferred equity offering in July 2017; (2) $425mm raised through a preferred equity offering in January 2018; (3) $251mm raised through the Company’s at-the-market sales program for its common stock, which was entered into in January 2018, net of sales agent commissions and other offering expenses; (4) $975mm of equity issued as partial merger consideration and $288mm of preferred equity assumed in connection with the Hatteras Financial acquisition in April 2016; and (5) $456mm of equity issued as partial merger consideration and $55mm of preferred equity assumed in connection with the MTGE Investment Corp. acquisition in September 2018. These amounts exclude any applicable underwriting discounts and other estimated offering expenses, unless otherwise noted. The July 2017 preferred offering includes the underwriters’ partial exercise of their overallotment option to purchase additional shares of preferred and common stock, respectively. 3. Includes unfunded commitments of $161mm. 4. Represents the percentage difference of Annaly’s operating expense as a percentage of average equity vs. the BBREMTG for 2018. Operating expense is defined as: (i) for internally-managed BBREMTG members, the sum of compensation & benefits, general & administrative expenses and other operating expenses less any one-time or transaction related expenses, and (ii) for externally-managed BBREMTG members, the sum of net management fees, compensation & benefits (if any), general & administrative expenses and other operating expenses less any one-time or transaction related expenses. 5. Includes $200mm credit facility closed in January 2019. Note: Market data as of January 31, 2019. Financial data as of December 31, 2018. 1. Agency assets include to be announced (“TBA”) purchase contracts (market value) and mortgage servicing rights (“MSRs”). Residential Credit and Commercial Real Estate assets exclude securitized debt of consolidated variable interest entities (“VIEs”). 2. Represents the capital allocation for each of the four investment groups and is calculated as the difference between assets and related financing. Includes TBA purchase contracts, excludes non-portfolio related activity and varies from total stockholders’ equity. Annaly Capital Management Inc. 2019 Proxy Statement 57 3. Sector rank compares Annaly dedicated capital in each of its four investment groups as of December 31, 2018 (adjusted for P/B as of January 31, 2019) to the market capitalization of the companies in each respective comparative sector as of January 31, 2019. Comparative sectors used for Agency, Commercial Real Estate and Residential Credit ranking are their respective sector within the BBREMTG Index as of January 31, 2019. Comparative sector used for Middle Market Lending ranking is the S&P BDC Index as of January 31, 2019. 4. Levered return assumptions are for illustrative purposes only and attempt to represent current market asset returns and financing terms for prospective investments of the same, or of a substantially similar, nature in each respective group. 1. Total return is shown for period of December 31, 2015 through January 31, 2019. 2. The third quarter 2018 common stock dividend is represented as the aggregate $0.30 common stock dividend comprised of (i) the $0.22174 short period dividend paid on September 6, 2018 in connection with the MTGE acquisition and (ii) the $0.07826 remaining dividend paid on September 28, 2018. 3. Line represents the lower bound of the target Federal Funds range. 1. Economic return is shown for period of December 31, 2013 to December 31, 2018 and represents change in book value plus dividends declared over prior period book value. 2. Includes reinvestment of dividends. 3. Source: Bloomberg. mREITs represent BBREMTG Index. Equity REITs represent the RMZ Index. S&P represents the S&P 500 index. Utilities represent the Russell 3000 Utilities Index. Select Financials represents an average of companies in the S5FINL Index with dividend yields greater than 50 basis points higher than the S&P 500 dividend yield as of January 31, 2019. Consumer Staples represents the S5CONS Index. MLPs represent the Alerian MLP Index. Note: Total shareholder return shown for period of December 31, 2013 to January 31, 2019. 1. “Continuing Directors” represent the eleven members of the Board following the 2019 Annual Meeting (assuming all nominees are elected). 1. The Corporate Responsibility Committee was initially created as the Public Responsibility Committee in late 2017. 2. “Incremental Stockholders’ Equity” represents the Company’s stockholders’ equity (as defined in the Management Agreement, “Stockholders’ Equity”) in excess of $17.28bn. 3. The “industry average” reflects the average management fee of all externally-managed companies (excluding Annaly) included in the BBREMTG Index as of December 31, 2018. For additional information, including assumptions, about this calculation, please see “Management Agreement Terms” on page 34. 4. For additional information, including assumptions, about this calculation, please see “Continued Cost Savings Related to the Externalization” on page 35. 5. “Base Stockholders’ Equity” represents Stockholders’ Equity of $17.28bn. 1. Aggregated bonus amounts for 2018 reflect payments made to NEOs in January 2019 based on 2018 performance. 2. The core performance metrics referred to herein exclude the premium amortization adjustment, which represents the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to the Company’s Agency mortgage-backed securities. 1. “Continuing Directors” represent the eleven members of the Board following the 2019 Annual Meeting (assuming all nominees are elected). 2. Directors have self-identified as bringing diversity to the Board by way of gender, race, ethnicity, national origin or other characteristics. 1. The Corporate Responsibility Committee was initially created as the Public Responsibility Committee in late 2017. 2. “Incremental Stockholders’ Equity” represents Stockholders’ Equity in excess of $17.28bn. 58 Annaly Capital Management Inc. 2019 Proxy Statement 1. “Continuing Directors” represent the eleven members of the Board following the 2019 Annual Meeting (assuming all nominees are elected). 2. The Corporate Responsibility Committee was initially created as the Public Responsibility Committee in late 2017. 1. “Continuing Directors” represent the eleven members of the Board following the 2019 Annual Meeting (assuming all nominees are elected). 1. As defined in the Management Agreement. 2. “Incremental Stockholders’ Equity” represents Stockholders’ Equity in excess of $17.28bn. 3. “Base Stockholders’ Equity” represents Stockholders’ Equity of $17.28bn. 1. The Corporate Responsibility Committee was initially created as the Public Responsibility Committee in late 2017. 2. Messrs. Brady and Nordberg have not been renominated as Directors and will step down from the Board following the Annual Meeting in line with the Board refreshment policy adopted in October 2018. 3. Mr. Hamilton was elected to the Board, and appointed to the Audit Committee and the Risk Committee effective March 6, 2019. 4. Dr. Hannan was elected to the Board, and appointed to the Audit Committee and the NCG Committee effective February 13, 2019. 1. Messrs. Brady and Nordberg have not been renominated as Directors and will step down from the Board following the Annual Meeting in line with the Board refreshment policy adopted in October 2018. 2. Mr. Hamilton was elected as a Director and appointed as a member of the Audit Committee and the Risk Committee effective March 6, 2019. 3. Dr. Hannan was elected as a Director and appointed as a member of the Audit Committee and NCG Committee effective February 13, 2019. 1. Messrs. Brady and Nordberg have not been renominated as Directors and will step down from the Board following the Annual Meeting in line with the Board refreshment policy adopted in October 2018. 2. Dr. Hannan was elected as a Director and appointed as a member of the Audit Committee and NCG Committee effective February 13, 2019. 3. The Corporate Responsibility Committee was initially created as the Public Responsibility Committee in late 2017. 4. Mr. Hamilton was elected as a Director and appointed as a member of the Audit Committee and the Risk Committee effective March 6, 2019. 1. Mr. Keyes does not receive any compensation for serving as the Company’s Chairman, CEO and President, but has an interest in the management fee as an indirect equityholder of the Manager. 2. As defined in the Management Agreement. 3. “Incremental Stockholders’ Equity” represents Stockholders’ Equity in excess of $17.28bn. 4. “Base Stockholders’ Equity” represents Stockholders’ Equity of $17.28bn. 5. Source: Public filings as of year ended December 31, 2018. All base management fees are calculated as a percentage of stockholders’ equity, except as otherwise specified below. Agency Residential REITs represent the externally-managed agency mortgage REITs included in the BBREMTG Index as of December 31, 2018 and includes Anworth Mortgage Asset Corporation (“ANH”) and ARMOUR Residential REIT, Inc. (“ARR”). Commercial REITs represent the externally-managed commercial mortgage REITs included in the BBREMTG Index as of December 31, 2018 and includes Blackstone Mortgage Trust, Inc. (“BXMT”), Ares Commercial Real Estate Corp. (“ACRE”), Exantas Capital Corp. (“XAN”), Apollo Commercial Real Estate Finance, Inc. (“ARI”), Starwood Property Trust (“STWD”) and Ready Capital Corp. (“RC”). Non-Agency Residential / Hybrid REITs represents the externally- managed non-agency residential and hybrid mortgage REITs included in the BBREMTG Index as of December 31, 2018 and includes New Residential Investment Corp. (“NRZ”), Two Harbors Investment Corp. (“TWO”), Invesco Mortgage Capital, Inc. (“IVR”), PennyMac Mortgage Investment Trust (“PMT”), AG Mortgage Investment Trust, Inc. (“MITT”), Orchid Island Capital, Inc. (“ORC”), Western Asset Mortgage (“WMC”), Great Ajax Corp (“AJX”), Cherry Hill Mortgage Investment Corp. (“CHMI”), Ellington Residential Mortgage REIT (“EARN”), and Hunt Companies Finance Trust (“HCFT”). 6. For ARR, base management fee is calculated as 1.50% of gross equity raised up to $1.0bn plus 0.75% of gross equity raised in excess of $1.0bn. Annaly Capital Management Inc. 2019 Proxy Statement 59 7. Of the six Commercial REITs, five have incentive fees in addition to their base management fees. STWD and XAN have incentive fees of 20% above an 8% hurdle. BXMT has an incentive fee of 20% above a 7% hurdle. XAN has an incentive fee of 25% above an 8% hurdle. RC has an incentive fee of 15% above an 8% hurdle. For purposes of this table, the calculation of the mean includes only the five Commercial REITs that have incentive fees. 8. Of the 11 Non-Agency Residential/Hybrid REITs, three have incentive fees in addition to their base management fees. NRZ has an incentive fee of 25% above a 10% hurdle. PMT has an incentive fee with a sliding scale beginning above 8%. AJX has an incentive fee of 20% above an 8% hurdle. For purposes of this table, the calculation of the mean includes only the three Non-Agency Residential/Hybrid REITs that have incentive fees. 1. As defined in the Management Agreement. 2. “Incremental Stockholders’ Equity” represents Stockholders’ Equity in excess of $17.28bn. 3. Although the Manager commenced management of Annaly on July 1, 2013, the Company’s stockholders received the benefit of the compensation savings created by the Externalization for the entire 2013 calendar year pursuant to a pro forma adjustment to the 2013 management fee. The Manager calculated a pro forma management fee, which was the management fee as if the Company was managed by the Manager from January 1, 2013 until July 1, 2013, and the actual amount of cash compensation paid to all of Annaly’s employees from January 1, 2013 until July 1, 2013 reduced the amount of the management fee owed to the Manager. 1. Source: Company Filings, SNL and Bloomberg. Averages are market weighted based on market capitalization as of Dec. 31st of each respective year. Note: Internally-Managed Peers and Externally-Managed Peers represent the respective internally- and externally-managed members of the BBREMTG Index as of December 31st of each respective year. The average for each excludes Annaly and companies during years in which they became public or first listed. Operating Expense is defined as: (i) for Internally-Managed Peers, the sum of compensation & benefits, general & administrative expenses and other operating expenses less any one-time or transaction related expenses, and (ii) for Externally-Managed Peers and Annaly, the sum of net management fees, compensation & benefits (if any), general & administrative expenses and other operating expenses less any one-time or transaction related expenses. Annaly’s 2016 operating expenses exclude costs of $49mm related to the Company’s acquisition of Hatteras Financial Corp and Annaly’s 2018 operating expenses exclude costs of $60mm related to the Company’s acquisition of MTGE Investment Corp. 1. Mr. Keyes does not receive any compensation for serving as the Company’s Chairman, CEO and President, but has an interest in the management fee as an indirect equityholder of the Manager. 2. Aggregated bonus amounts for 2018 reflect payments made to NEOs in January 2019 based on 2018 performance. 3. The core performance metrics referred to herein exclude the premium amortization adjustment, which represents the cumulative impact on prior periods, but not the current period, of quarter-over-quarter changes in estimated long-term prepayment speeds related to the Company’s Agency mortgage-backed securities. 1. “Base Stockholders’ Equity” represents Stockholders’ Equity of $17.28bn. 2. “Incremental Stockholders’ Equity” represents Stockholders’ Equity in excess of $17.28bn. 1. In July 2017, Mr. Keyes voluntarily committed to increase his stock ownership position beyond his Board-approved ownership guideline of $10mm. Mr. Keyes has pledged to meet his enhanced $15mm commitment solely through additional open market purchases of the Company’s common stock. 2. In July 2017, other members of senior management (including each of the other NEOs) voluntarily committed to increase their stock ownership beyond the guideline of 30% of annual total compensation adopted by the Board. Like Mr. Keyes, these officers have agreed to achieve their increased stock ownership commitments by July 2020 solely through open market purchases of the Company’s common stock. 60 Annaly Capital Management Inc. 2019 Proxy Statement 
RESERVATION REQUEST FORMYour name and address: Number of Shares of NLY Common Stock You Hold: Registered Stockholder: (Name of Your Bank, Broker or Other Nominee) 
ANNALY CAPITAL MANAGEMENT, INC.1211 AVE. OF THE AMERICASNEW YORK, NY 10036ATTN: GLENN A. VOTEKTHIS IS NOT A PROXY CARDVOTE BY INTERNET - www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.Annaly Capital Management Inc. 2019 Proxy Statement61 ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALSIf you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
1211 AVENUE OF THE AMERICAS
NEW YORK, NY 10036
ATTN: GLENN A. VOTEK
Before The Meeting - Go towww.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E68909-P18327 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLYDETACH AND RETURN THIS PORTION ONLY The Board of Directors recommends you vote FOR the following: 1. Election of DirectorsDirectors.Nominees: For Against Abstain NomineesForAgainstAbstain1a1a. Kevin G. Keyes ⬜⬜⬜☐ ☐ ☐ 1b. Thomas Hamilton
1b Kevin P. Brady☐⬜☐⬜⬜☐1c. Kathy Hopinkah Hannan ☐ ☐ ☐ 1d. Vicki Williams ☐ ☐ ☐ 1c E. Wayne Nordberg⬜⬜⬜The Board of Directors recommends you vote FOR proposals 2 and 3:ForAgainstAbstain2.Advisory approval ofFor address changes and/or comments, please check this box and write them on the company's executive compensation.back where indicated.⬜⬜⬜☐3.Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2016.⬜⬜⬜NOTE: Such other business as may properly come before the meeting or any adjournment thereof.YesNoPlease indicate if you plan to attend this meeting⬜⬜ The Board of Directors recommends you vote FOR proposal 2: For Against Abstain 2. Advisory approval of the company's executive compensation. ☐ ☐ ☐ The Board of Directors recommends you vote FOR proposal 3: 3. Approval of an amendment of our charter to increase the number of authorized shares of capital stock to 3,000,000,000 shares. ☐ ☐ ☐ The Board of Directors recommends you vote FOR proposal 4: 4. Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2019. ☐ ☐ ☐ NOTE:Voting items may include such other business as may properly come before the meeting or any adjournment thereof. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 
Annaly Capital Management, Inc.1211 Avenue of the Americas,New York, NY 10036
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The 2015 ANNUAL REPORT TO STOCKHOLDERS and 2016 NOTICE & PROXY STATEMENT are available at www.proxyvote.com
Annual Meeting of StockholdersMay 26, 2016This proxy is solicited by the Board of DirectorsRevoking all prior proxies, the undersigned hereby appoints Kevin G. Keyes and R. Nicholas Singh, and each of them, proxies, with full power of substitution, to appear on behalf1211 Avenue of the undersigned and to vote all sharesAmericas
New York, NY 10036Common Stock, par value $.01 per share, of Annaly Capital Management, Inc. (the “Company”) that the undersigned is entitled to vote atProxy Materials for the Annual Meeting of Stockholders of the Company to be heldMeeting:
The 2018 ANNUAL REPORT TO STOCKHOLDERS and 2019 NOTICE & PROXY STATEMENT are available at the Warwick Hotel, 65 West 54th Street, New York, New York 10019, commencing at 9:00 a.m., New York time, on Thursday, May 26, 2016, and at any adjournment thereof, as fully and effectively as the undersigned could do if personally present and voting, hereby approving, ratifying and confirming all that said attorneys and agents or their substitutes may lawfully do in place of the undersigned as indicated below.The Shares represented by this proxy when properly executed, will be voted as directed.If no directions are given, this proxy will be voted in accordance with the Board of Directors' recommendations as listed on the reverse side of this card and at their discretion on any other matter that may properly come before the meeting.www.proxyvote.com.Continued and to be signed on reverse sideE68910-P18327
Annual Meeting of Stockholders
May 22, 2019
This proxy is solicited by the Board of Directors(If you noted any address change and/or comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side