Table of Contents12 Proxy Summary Annaly Capital Management Inc. 2019 Proxy Statement Governance Highlights Table of Contents We 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 stockholder feedback, changes in applicable laws, regulations and stock exchange requirements, and the evolving needs of our business. Our current best practices are highlighted below: Corporate Governance at Annaly Director Independence and Oversight Director Qualifications Stockholder Rights and Engagement Good Governance / Corporate Citizenship >7 of 9 Directors are Independent >Lead Independent Director >Regular executive sessions of Independent Directors >Independent Board committees >Board oversees a succession plan for the CEO and other senior executives >Annual Board and committee self-evaluations >Annual assessment of all Directors to ensure continued match of their skills against the Company’s needs >Over-boarding policy limits the number of outside boards on which our Directors can serve >2 “audit committee financial experts” >Majority vote standard for uncontested elections >Annual stockholder advisory vote on executive compensation >No restrictions on stockholders’ ability to amend the Company’s by-laws >Active stockholder engagement program >Clawback policy with manager >Anti-hedging and pledging policies >Director and employee stock ownership guidelines >Four-year stock holding period requirement for employees >Corporate sustainability initiatives >Whistleblower procedures and hotline for auditing and accounting concerns XII      Annaly Capital Management Inc. 2017 Proxy Statement Table of ContentsAnnaly Strives for Best-in-Class Governance Practices Proxy Summary Board Composition and Refreshment 2013 ■Annaly’s proposal to be externally managed received 83% support from stockholders ■Added new Independent Director (John H. Schaefer) ■Established Risk Committee 2014 ■Enhanced financial disclosure, including additional financial metrics ■Added new Independent Director (Francine J. Bovich) 2015 ■Robust Lead Independent Director role created ■Initiated detailed succession planning process with Board ■Introduced annual employee engagement survey ■Kevin Keyes appointed as CEO ■Launched extensive investor outreach 2016 ■Adopted broad-based stock ownership guidelines for employees ■Increased Directors stock ownership guidelines ■Adopted clawback policy for external manager ■Adopted anti-pledging policy for employees ■Adopted four-year stock holding period 2017 ■Established new Corporate Responsibility Committee(1) ■Rotated Board Committee chairs and members ■Launched initial social impact investing joint venture ■Included Board skills matrix in proxy statement ■Joined Council of Institutional Investors (CII) ■Launched Women's Interactive Network ■Designated second Audit Committee financial expert ■Joined National Association of Corporate Directors (NACD) ■NEOs voluntarily committed to increase stock ownership positions ■Hosted inaugural Investor Day 2018 ■Added two new Independent Directors (Katie Beirne Fallon and Vicki Williams) ■Introduced virtual meeting format for Annual Meeting ■Adopted enhanced Board evaluation process, including individual directors assessments and periodic use of external facilitator ■Amended bylaws to declassify Board beginning with the 2019 Annual Meeting with full Board standing for annual election commencing with the 2021 Annual Meeting ■Created new executive role to lead the Company’s Corporate Responsibility and ESG initiatives ■Enhanced compensation and other disclosure in proxy statement ■Recognized in the 2018 Bloomberg Gender-Equality Index ■Instructed Board search firm to present equal representation in the slate of potential director candidates, including women and minority candidates ■Adopted policy requiring that Independent Directors may not stand for re-election following the earlier of their 12thanniversary of Board service or 73rdbirthday 2019 ■Announced second social impact investing joint venture ■Added extensive disclosure on the Company’s Corporate Responsibility and ESG efforts to Annaly’s corporate website ■The Nominating/Corporate Governance Committee (the “NCG Committee”)Manager reduced its management fee on Incremental Stockholders’ Equity(2)  from 1.05% to 0.75% ■Added two new Independent Directors (Kathy Hopinkah Hannan and Thomas Hamilton) ■Recognized in the 2019 Bloomberg Gender-Equality Index Note: For footnoted information, please refer to “Corporate Governance at Annaly” in Endnotes section. Annaly Capital Management Inc. 2019 Proxy Statement 13 Table of Contents Corporate Governance at Annaly PROPOSAL 01 Election of Directors Consistent with its commitment to strong corporate governance practices, the Board seeksis in the process of implementing a declassified Board structure. At the Annual Meeting, stockholders will vote to achieve a balanceelect four nominees to serve as Directors (Kevin G. Keyes, Thomas Hamilton, Kathy Hopinkah Hannan and Vicki Williams), whose one-year terms will expire at the annual meeting of knowledge, experiencestockholders in 2020 and capability onwhen their respective successors are duly elected and qualify. Directors elected at the Board. Newer directors offer fresh ideasannual meetings of stockholders in 2017 and perspectives, while deeply experienced directors bring extensive knowledge of our complex operations. On an annual basis,2018 will not be voted upon at the NCG Committee evaluates its overall composition, including director tenure,Annual Meeting and rigorously evaluates all directors to ensure a continued matchwill serve out the remainder of their skill sets againstterms. All Directors will stand for annual election beginning with the needsannual meeting of the Company.stockholders in 2021. The table below summarizes key qualifications, skills,provides summary information about each of the Directors other than Messrs. Brady and attributes most relevantNordberg who have not been renominated as Directors in line with the Board refreshment policy adopted in October 2018. The Company is grateful to our Directors’Messrs. Brady and Nordberg for their years of service on ourthe Board. For additional information about individual Director’s qualifications The Board has nominated and experience, please seerecommends a vote FOR each of Kevin G. Keyes, Thomas Hamilton, Kathy Hopinkah Hannan and Vicki Williams as Directors, with each to hold office until the Director biographies beginning on page3. Skill / experience No. of Directors Total Audit committee financial expert 2 Complex and regulated industries 8 Compliance 5 Corporate governance 8 Ethics and social responsibility oversight 4 Finance and accounting experience 8 Financial services 8 Government, public policy and regulatory affairs 4 Industry knowledge 9 Information technology 3 Legal expertise 4 Mergers & acquisitions 6 Operations 9 Other public company board experience 3 Private company board experience 5 Public company CEO 2 Risk management 9 Strategy development and implementation 7 www.annalyannualmeeting.com      XIII2020 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. Table of Contents Table of Contents Table of Contents Corporate Governance at Annaly 2 Proposal 1: Election of Directors 2 Nominees to Serve for a Three-Year Term Expiring in 2020 (Class III Directors) 3 Class I Directors (Terms Expire in 2018) 4 Class II Directors (Terms Expire in 2019) 6 Independence of Our Directors 7 Director Nomination Process 7 Stockholder Recommendation of Director Candidates 8 The Board’s Role and Responsibilities 8 Board Oversight of Risk 8 Management Succession Planning 9 Board Commitment and Over-Boarding Policy 9 Communications with the Board 9 Certain Relationships and Related Party Transactions 10 Board Structure and Processes 11 Board Leadership Structure 11 Executive Sessions of Independent Directors 11 Board and Committee Evaluations 12 Board Composition and Refreshment 12 Governing Documents 12 Board Committees 12 Director Attendance 14 Compensation of Directors 15 Our Management 17 Stock Purchases by Executive Officers since 2011 18 Our Management Structure 19 Overview 19 Management Agreement Terms 19 Structure and Amount of the Management Fee 20 Continued Cost Savings Related to the Externalization 20 Annual Review of Manager Performance and Management Fee Considerations 21 Compensation Paid by Our Manager to Our Named Executive Officers 23 Overview 23 Changes for 2017 23 Executive Compensation 25 Proposal 2: Advisory Approval of Our Executive Compensation 25 Named Executive Officers 26 Compensation Discussion and Analysis 26 Executive Compensation Policies 27 Executive Compensation Tables 28 Compensation Committee Report 29 Compensation Committee Interlocks and Insider Participation 29 Proposal 3: Advisory Vote on the Frequency of Future Advisory Votes to Approve our Executive Compensation 29 Audit Committee Matters 30 Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm 30 Report of the Audit Committee 30 Relationship with Independent Registered Public Accounting Firm 31 Stock Ownership Information 32 Security Ownership of Certain Beneficial Owners and Management 32 Section 16(a) Beneficial Ownership Reporting Compliance 33 Other Information 33 Access to Form 10-K 33 Stockholder Proposals 33 Other Matters 33 Questions and Answers about the Annual Meeting 34 Where You Can Find More Information 37 www.annalyannualmeeting.com      1 Table of Contents Corporate Governance at Annaly Election of Directors We have three Classes of Directors. At the Annual Meeting, our stockholders will vote to elect three Class III Directors from the nominees named herein, whose terms will expire at our annual meeting of stockholders in 2020, subject to the election and qualification of their successors or to their earlier death, resignation or removal. The Class I and Class II Directors have one year and two years, respectively, remaining on their terms of office and will not be voted upon at the Annual Meeting. The table below provides summary information about each of our Directors. OUR BOARD OF DIRECTORS HAS NOMINATED AND RECOMMENDS A VOTE FOR FRANCINE J. BOVICH, JONATHAN D. GREEN AND JOHN H. SCHAEFER AS DIRECTORS TO HOLD OFFICE UNTIL OUR ANNUAL MEETING OF STOCKHOLDERS IN 2020 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.    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 President & CEO Construction Forms, Inc. Yes Audit Risk Kathy Hopinkah Hannan 57 Former National Managing Partner, Global Lead Partner KPMG LLP Yes Audit NCG Vicki Williams 46 Chief Human Resources Officer NBCUniversal Yes Audit Compensation Directors Whose Current Terms Expire in 2020 Francine J. Bovich 67 Former Managing Director Morgan Stanley Investment Management Yes NCG (Chair) CR Katie Beirne Fallon 43 Global Head of Corporate Affairs Hilton Worldwide Holdings Inc. Yes CR NCG Jonathan D. Green* 72 Former Vice Chairman Rockefeller Group Yes CR (Chair) Compensation Risk John H. Schaefer 67 Former President and Chief Operating Officer Morgan Stanley Global Wealth Management Yes Risk (Chair) Audit Compensation Directors Whose Current Terms Expire in 2021 Wellington J. Denahan 55 Former Executive Chairman Annaly Capital Management, Inc. No CR Risk Michael Haylon 61 Managing Director and Head of Conning North America Conning, Inc. Yes Audit Risk Donnell A. Segalas 61 Chief Executive Officer and Managing Partner Pinnacle Asset Management, L.P. Yes Compensation (Chair) CR Name Age Principal Occupation Independent Committees CLASS III DIRECTORS (NOMINATED TO SERVE FOR THREE-YEAR TERMS EXPIRING IN 2020) Francine J. Bovich 65 Former Managing Director Yes >  Audit Morgan Stanley Investment Management >NCG Jonathan D. Green* 70 Former Vice Chairman Yes >  Risk (Chair) * Lead Independent Director. For more details, see page 26. The Rockefeller Group 14 Annaly Capital Management Inc. 2019 Proxy Statement                          >  Compensation John H. Schaefer 65 Former President and Yes >  Audit Chief Operating Officer >  Compensation                          Morgan Stanley Global Wealth Management >  Risk CLASS I DIRECTORS (TERMS EXPIRE IN 2018) Wellington J. Denahan 53 Executive Chairman No Annaly Capital Management, Inc. Michael Haylon 59 Managing Director Yes >  Audit Conning, Inc. >  Risk Donnell A. Segalas 59 Chief Executive Officer and Yes >  Compensation Managing Partner     (Chair) Pinnacle Asset Management, L.P. >  NCG CLASS II DIRECTORS (TERMS EXPIRE IN 2019) Kevin G. Keyes 49 Chief Executive Officer and President No Annaly Capital Management, Inc. Kevin P. Brady 61 Chief Executive Officer Yes >  Audit (Chair) ARMtech, LLC >  NCG >  Risk E. Wayne Nordberg 78 Chairman Yes >  NCG (Chair) Hollow Brook Wealth Management, LLC >  Compensation * Lead Independent Director. For more details, see page11. Table of Contents Corporate Governance at Annaly Director Nominees Standing for One-Year Terms Kevin G. Keyes Director since 2012 Chairman of the Board Mr. Keyes serves as Annaly’s Chairman, Chief Executive Officer and President. Mr. Keyes has served as Chairman since January 2018, Chief Executive Officer since September 2015 and President since October 2012. Previously, Mr. Keyes served as Chief Strategy Officer and Head of Capital Markets of Annaly from September 2010 until October 2012. Prior to joining Annaly as a Managing Director in 2009, Mr. Keyes worked for 20 years in senior Investment Banking and Capital Markets roles. From 2005 to 2009, Mr. Keyes served in senior management and business origination roles in the Global Capital Markets and Banking Group at Bank of America Merrill Lynch. Prior to that, from 1997 to 2005 he worked at Credit Suisse First Boston in various Capital Markets Origination roles, and from 1990 to 1997 at Morgan Stanley Dean Witter 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. Director Qualification Highlights The Board believes that Mr. Keyes provides the Board a deep understanding of issues that are important to the Company’s growth through his roles as Annaly’s Chairman, CEO and President, 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 as an investment banking and equity capital markets professional. Thomas Hamilton Director since 2019 Committees Audit, Risk Mr. 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 2      Annaly Capital Management Inc. 2017 Proxy Statement Table of Contents Corporate Governance at Annaly Kathy Hopinkah Hannan, PhD, CPA Director since 2019 Committees Audit, NCG Dr. Hannan is a former Global Lead Partner, National Managing Partner and Vice Chairman of KPMG, LLP, the U.S. member firm of the global audit, tax and advisory 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 Global 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 Committee of the 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 Benedictine University and a B.A. from Loras College. She is also a graduate of the Chicago Management Institute at the University of Chicago, Booth School of Business and the Institute of Comparative Political & Economic Systems at Georgetown University. Director Qualification Highlights The Board believes that Dr. Hannan’s qualifications include her expertise in financial, tax and accounting matters as well as her significant experience in enterprise sustainability, corporate governance and organizational effectiveness. Vicki Williams TableDirector since 2018 Committees Audit, Compensation Ms. Williams has over 18 years of Contentscompensation 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 the 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 Corporate Governance 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 Nominees to Serve for a Three-Year Term Expiring in 2020 (Class III Directors) Table of Contents Corporate Governance at Annaly Directors Whose Current Terms Expire in 2020 Francine J. Bovich Director since Francine J. Bovich Director since May 2014 Committees Audit, NCG 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 (US, non-US,2014 Committees NCG (Chair), CR 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 (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 the Economic Club of New York and an emeritus trustee of Connecticut College and chair of the Investment Sub-Committee for its endowment. Ms. Bovich has a B.A. in Economics from Connecticut College and an emeritus trustee of Connecticut College and chair of the Investment Sub-Committee for its endowment. Ms. Bovich received a B.A. in Economics from Connecticut College and a M.B.A. in Finance from New York University. Director Qualification Highlights The Board believes that Ms. Bovich’s qualifications include her significant investment management experience and her experience serving as a trustee and board member. Katie Beirne Fallon Director since 2018 Committees NCG, CR Ms. 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. Director Qualification Highlights The Board believes that Ms. Fallon’s qualifications include her significant experience in serving at a 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                          Director Qualification Highlights Table of Contents Corporate Governance at Annaly The Board believes that Ms. Bovich’s qualifications include her significant investment management experience and her experience serving as a trustee and board member. Jonathan D. Green Director since 1997 Committees CR (Chair), Compensation, Risk Lead Independent Director Jonathan D. Green Director since January 1997 Committees Risk (Chair), Compensation Lead Independent Director 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 the Rockefeller Group, from January 2011 until December 2014. He joined the 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 the Rockefeller Group. In 2002, 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 the 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. Director Qualification Highlights 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 Director since 2013 Committees Risk (Chair), Audit, Compensation 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 2005. He was President and Chief Operating Officer of the Global Wealth Management division of Morgan Stanley from 2000 to 2005. Mr. Schaefer was 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 1976. Mr. Schaefer served as a board member and chair of the audit committee of USI Holdings Corporation from 2008 through 2012. He received a B.B.A. in Accounting from the University of Notre Dame and a M.B.A. from the Harvard Graduate School of Business. Director Qualification Highlights 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                          Director Qualification Highlights 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. www.annalyannualmeeting.com      3 Table of Contents Corporate Governance at Annaly Directors Whose Current Terms Expire in 2021 Wellington J. Denahan Director since 1997 Committees PR, Risk 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 of Annaly (from November 2012) and Executive Chairman of Annaly (from September 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 Annaly’s Chief Operating Officer from January 2006 to October 2012 and Chief Investment Officer from 2000 to November 2012. Ms. Denahan received a B.S. in Finance from Florida State University. Director Qualification Highlights The Board believes that Ms. Denahan’s qualifications include her significant oversight experience related to fixed income trading operations through years of serving as Annaly’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 Annaly’s former Chief Executive Officer. Michael Haylon TableDirector since 2008 Committees Audit, Risk Mr. Haylon has served as Managing Director and Head of ContentsConning North America at Conning, Inc., a global provider of investment management solutions, services and research to the insurance industry, since June 2018. Mr. Haylon has served as a Managing Director at Conning, Inc. since January 2012 and previously served as Head of Asset Management Sales, Products and Marketing from December 2014 until June 2018 and as Head of Investment Products 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. Mr. Haylon received a B.A. from Bowdoin College and a M.B.A. from the University of Connecticut. Director Qualification Highlights 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. Donnell A. Segalas Director since 1997 Corporate Governance Committees Compensation (Chair), NCG, CR Mr. Segalas has served as the Chief Executive Officer and a Managing Partner of Pinnacle Asset Management L.P., a New York-based alternative asset management 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, Mr. Segalas was Executive Vice President and Chief Marketing Officer for Alternative Investment Products at Phoenix Investment Partners. Mr. Segalas is a member of the Nantucket Historical Society. He received a B.A. from Denison University. Director Qualification Highlights 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 John H. Schaefer Director since March 2013 Committees Audit, Compensation and Risk 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 2005 and as President and Chief Operating Officer of the Global Wealth Management division of Morgan Stanley. Mr. Schaefer retired in February 2006 and from 2008 through 2012 served as a board member and chair of the audit committee of USI Holdings Corporation. Mr. Schaefer has a B.B.A. in Accounting from the University of Notre Dame and an M.B.A. from the Harvard Graduate School of Business. Director Qualification Highlights 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. Class I Directors (Terms Expire in 2018) Wellington J. Denahan Director since 1997 Chairman of the Board Ms. Denahan has served as Chairman of the Board since November 2012 and Executive Chairman of Annaly since September 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 has a B.S. in Finance from Florida State University. Director Qualification Highlights The Board believes that Ms. Denahan’s qualifications include her significant oversight experience related to fixed income trading operations through years of serving as our 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 our former Chief Executive Officer. 4      Annaly Capital Management Inc. 2017 Proxy Statement Table of Contents Corporate Governance at Annaly The Board’s Role and Responsibilities Corporate Governance at Annaly The Company is committed to maintaining a strong ethical culture and robust governance practices that benefit the long-term interests of stockholders, which include: DIRECTOR INDEPENDENCE AND OVERSIGHT ■Board refreshment policy triggered upon earlier of 12 years of service or 73rd birthday ■9 of 11 Continuing Directors(1) are Independent ■Robust Lead Independent Director role ■Regular executive sessions of Independent Directors ■Independent key Board committees ■Board oversees a succession plan for the CEO and other senior executives Michael Haylon Director since June 2008 Committees Audit, Risk   Mr. Haylon has served as Managing Director and Head of Asset Management Sales, Products and Marketing at Conning, Inc., a global provider of investment management solutions, services and research to the insurance industry, since December 2014. Mr. Haylon previously served as Managing Director and 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 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 has a B.A. from Bowdoin College and a M.B.A. from the University of Connecticut. Director Qualification Highlights 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. DIRECTOR Donnell A. Segalas Director since January 1997 Committees Compensation (Chair), NCG Mr. Segalas is the Chief Executive Officer and a Managing Partner of Pinnacle Asset Management L.P., a New York-based alternative asset management firm. 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 for Alternative Investment Products (AIP) at Phoenix Investment Partners. Mr. Segalas is a member of the Nantucket Historical Society. He received a B.A. from Denison University. QUALIFICATIONS ■45% of Continuing Directors(1) are women ■45% of Continuing Directors(1) have tenure of less than 5 years ■Annual Board, committee and individual Director self-evaluations with periodic use of an external facilitator ■Comprehensive Board refreshment and succession planning process ■Over-boarding policy limits the number of outside Boards on which Directors can serve ■Multiple audit committee financial experts Director Qualification Highlights 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. www.annalyannualmeeting.com  5 Table of ContentsSTOCKHOLDER RIGHTS AND ENGAGEMENT Corporate Governance at Annaly Class II Directors (Terms Expire in 2019) Kevin G. Keyes Director since November 2012 Mr. Keyes has served as Chief Executive Officer of Annaly since September 2015 and as its President since October 2012. Previously, Mr. Keyes served as Annaly’s Chief Strategy Officer and Head of Capital Markets from September 2010 until October 2012. Prior to joining Annaly as a Managing Director in 2009, Mr. Keyes worked for 20 years in senior investment banking and capital markets roles. From 2005 to 2009, Mr. Keyes served in senior management and business origination roles in the Global Capital Markets and Banking Group at Bank of America Merrill Lynch. Prior to that, he worked at Credit Suisse First Boston from 1997 until 2005 in various capital markets origination roles and Morgan Stanley Dean Witter from 1990 until 1997 in the Mergers and Acquisitions Group and Real Estate Investment Banking Group. Mr. Keyes holds a B.A. in Economics and a B.S. in Business Administration (ALPA Program) from the University of Notre Dame. Director Qualification Highlights Mr. Keyes is our Chief Executive Officer and brings to our Board a deep understanding of issues that are important to the Company’s growth. Through his role as our Chief Executive Officer and other senior management positions at the Company, Mr. Keyes 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 as an investment banking and equity capital markets professional. Kevin P. Brady Director since 1997 Committees Audit (Chair), NCG, Risk Mr. Brady is the Chief Executive Officer 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, tax and internal controls for multinational corporations. Mr. Brady served as Chief Executive Officer of TaxStream 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 transactions and international tax issues. Mr. Brady holds a B.A. from McGill University, an M.B.A. from New York University and is a Certified Public Accountant (inactive). He was awarded a patent from the U.S. Patent and Trademark Office for the invention of the TaxStream product. Director Qualification Highlights The Board believes that Mr. Brady’s qualifications include his expertise in financial and accounting matters as well as his significant experience managing systems and companies focusing on the financial accounting market. 6      Annaly Capital Management Inc. 2017 Proxy Statement ■Amended bylaws to declassify the Board over a three-year period Table of Contents■ Corporate Governance at Annaly E. Wayne Nordberg Director since May 2004 Committees NCG (Chair), Compensation Mr. Nordberg has served as Chairman of Hollow Brook Wealth Management, LLC, a SEC-registered investment advisor that 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, an 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 as 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 Highlights The 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. Independence of Our Directors Our Corporate Governance Guidelines and NYSE rules require that at leastMajority vote standard for uncontested elections ■Annual stockholder advisory vote on executive compensation ■Stockholders may amend the bylaws by a majority of our votes entitled to be cast ■Virtual meeting format enables participation from global stockholder base ■Stockholders can submit questions for the Annual Meeting through an interactive pre-meeting forum CORPORATE RESPONSIBILITY ■Director and employee stock ownership guidelines ■Board members are Independent Directors. We have adopted the definition of “independent director” set forthcreated Corporate Responsibility Committee in Section 303A2017(2) ■Announced second joint venture dedicated to supporting community development in 2019 ■Member of the NYSE rules2019 Bloomberg Gender-Equality Index ■Created executive role to lead the Company’s Corporate Responsibility initiatives ■Added extensive disclosure on Corporate Responsibility and have affirmatively determined that each Director (other than Ms. Denahan and Mr. Keyes) has no material relationships with usESG efforts to corporate website Independence of Directors Annaly’s Corporate Governance Guidelines and NYSE rules require that at least a majority of Board members are Independent Directors. The Board has adopted the definition of “independent director” set forth in Section 303A of the NYSE rules and has affirmatively determined that each Director (other than Ms. Denahan and Mr. Keyes) has no material relationships with the Company (either directly or as partner, stockholder or officer of an organization that has a relationship with the Company) and is therefore independent under all applicable criteria for independence in accordance with the standards set forth in the NYSE rules and Annaly’s Corporate Governance Guidelines. Four new, highly qualified Independent Directors have joined the Annaly Board since the beginning of an organization that has a relationship with us) and is therefore independent in accordance with the standards set forth in the NYSE rules and our Corporate Governance Guidelines. Director Nomination Process2018 Note: For footnoted information, please refer to “The Board’s Role and Responsibilities” in Endnotes section. 20 Annaly Capital Management Inc. 2019 Proxy Statement The Nominating/Corporate Governance (“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. 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 other party. Table of Contents Corporate Governance at Annaly Director Nomination Process The 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 candidates 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 have 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 Board Consideration of Board Diversity The Company endeavors to have a Board representing diverse backgrounds 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 every director candidate pool presented to the Committee. Three women have joined the Annaly Board since the beginning of 2018 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 Anthony C. Green, the Chief Corporate Officer, Chief Legal Officer and Secretary at the Company’s principal executive offices. Following verification of the stockholder status of persons proposing candidates, recommendations are aggregated and considered by the NCG Committee at a regularly scheduled or special meeting. If any materials are provided by a stockholder in connection with the recommendation of a Director candidate, such materials are forwarded to the 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 Table of Contents Corporate Governance at Annaly Board Effectiveness, Self-Evaluations and Refreshment Tenure of Continuing Directors(1) 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: ■ 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 considers a wide range ■ A member of factors when assessing potential Director nominees, including a candidate’s background, skills, expertise, diversity, accessibility and availability tothe Audit Committee should not 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 interestsaudit committee 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 have an understanding of the Company’s business and be willing to devote sufficient time and effort to carrying out their duties and responsibilities effectively. Although 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, the Company endeavors to have a Board representing diverse experiences at policy-making levels in business, finance, government, education, law and technology, and inmore than two other areas that are relevant 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.companies. All Directors are currently in compliance with this policy. Directors are required to notify the Chairman of the Board and the Chair of the NCG Committee in advance of accepting an invitation to serve on another public company board. Note: For footnoted information, please refer to “Board Effectiveness, Self-Evaluations and Refreshment” in Endnotes section. Two new, highly qualified Independent Directors have joined the Annaly Board over the last few years 22 Annaly Capital Management Inc. 2019 Proxy Statement www.annalyannualmeeting.com                         7 Table of Contents Corporate Governance at Annaly Stockholder Recommendation of Director Candidates Table of Contents Corporate Governance at Annaly Stockholders who wish the NCG Committee to consider their recommendations for Director candidates should submit their recommendations in writing to our Secretary at our principal executive offices. Following verification of the stockholder status of persons proposing candidates, recommendations are aggregated and considered by our NCG Committee at a regularly scheduled or special meeting. If any materials are provided by a stockholder in connection with the nomination of a Director candidate, such materials are forwarded to our NCG Committee. Properly submitted recommendations by stockholders will receive the same consideration by the NCG Committee as other suggested nominees. The Board’s Role and Responsibilities We are committed to maintaining a strong ethical culture and robust governance practices that benefit the long-term interests of stockholders. Our corporate governance practices include: Board Structure Director Qualifications Stockholder Rights and Engagement Recent Governance Enhancements >7 of 9 Directors are Independent >Lead Independent Director >Regular executive sessions of Independent Directors >Independent Board committees >2 Directors are women (including the Executive Chairman) >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” >Annual assessment of all Directors to ensure continued match of their skills against the Company’s needs >Majority vote standard for uncontested elections >Annual stockholder advisory vote on executive compensation >No restrictions on stockholders’ ability to amend the Company’s by-laws >Active stockholder engagement program >Clawback policy with manager >Anti-pledging policy >Stock ownership guidelines for our Directors and employees >Four-year stock holding period requirement for employees >Corporate sustainability initiatives Board Oversight of Risk FULL BOARD Full Board Risk management begins with our Risk management begins with the Board, through review and oversight of our 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 our risk management program, which identifies and quantifies a broad spectrum of enterprise-wide risks and related action plans, with management. Risk Committee The Risk Committee assists 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. Audit Committee The Audit Committee assists the Board in its oversight of the quality and integrity of our accounting, internal controls and financial reporting practices, including independent auditor selection, evaluation and review, and oversight of internal audit. Management Risk 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. These management committees include the Operating Committee, Enterprise Risk Committee, the Asset and Liability Committee, the Investment Committee, the Validation Committee and the Financial Reporting and Disclosure Committee. 8      Annaly Capital Management Inc. 2017 Proxy Statement Table of Contents Corporate Governance at Annaly In addition to the risk oversight processes outlined above, the Board reviews its risk assessment of the Company’s compensation policiesrisk management framework, and continues with executive management, through ongoing formulation of risk management practices applicable to the Company’s equity incentive plans with the Compensation Committee. For additional information on this review, please see the “Risks Related to Compensation Policies and Practices” sectionrelated execution in managing risk. The Board exercises its oversight of this proxy statement. For additional information on the responsibilities of therisk management primarily through its Risk Committee and Audit Committee. At least annually, the Audit Committee, please seefull Board reviews with management the “Board Committees” sectionCompany’s risk management program, which identifies and quantifies a broad spectrum of this proxy statement.enterprise-wide risks, including cyber and technology-related risks, and related action plans The Audit and Risk Committees have primary Board oversight of the Company’s risk management framework Management Succession Planning RISK COMMITTEE AUDIT COMMITTEE TheAssists the Board overseesin its oversight of the Company’s risk governance structure, risk management and maintains a succession planrisk 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 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 requirements 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 activities. These management committees include the Chief Executive OfficerOperating Committee, Enterprise Risk Committee, the Asset and Liability Committee, the Investment Committee and the Financial Reporting and Disclosure Committee In addition to the risk oversight processes outlined above, the Board reviews its risk assessment of the Company’s compensation policies and practices applicable to the Company’s equity incentive plans and the Company’s Severance and Noncompetition Agreement (the “CEO Severance Agreement”) with Mr. Keyes. For additional information on this review, please see the “Risks Related to Compensation Policies and Practices” section of this 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 2018 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 oversees and maintains a succession plan for the CEO 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. Board Commitment and Over-Boarding Policy The Board’s oversight of succession planning and talent development is complemented by management’s commitment to attracting, developing and recruiting top talent with diverse perspectives and backgrounds. Since 2015, the Company has introduced ten unique learning and development programs for 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. In order to provide sufficient time for informed participation in their Board responsibilities: > 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;  > 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.  All of our Directors are currently in compliance with this policy. Directors are required to notify the Chairman of the Board and the chair of the NCG Committee in advance of accepting an invitation to serve on another public company board. Communications with the Board 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. 2019 Proxy Statement 23 Table of Contents Corporate Governance at Annaly Communications with the Board 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. [Addressee] 1211 Avenue of the Americas New York, NY 10036 Phone: 1-888-8 ANNALY Facsimile: (212) 696-9809 Email: investor@annaly.com The Legal Department reviews all communications to the Directors and forwards those communications related to the duties and responsibilities of the Board to the appropriate parties. Certain items such as business solicitation or advertisements, product-related inquiries, junk mail or mass mailings, resumes or other job-related inquiries, spam and unduly hostile, threatening, potentially illegal or similarly unsuitable communications will not be forwarded. Certain Relationships and Related Party Transactions 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: ■ disclose the name of the Americas New York, NY 10036 Phone: 1-888-8 ANNALY Facsimile: (212) 696-9809 Email: investor@annaly.com The Legal Department reviews communicationsrelated person and the basis on which the person is a related person, the material terms of the related person transaction, including the approximate dollar value of the amount involved in the transaction, and all the material facts as to the Directors and forwards those communications related to the duties and responsibilities of the Board. Certain items such as business solicitation or advertisements, product-related inquiries, junk mail or mass mailings, resumes or other job-related inquiries, spam and unduly hostile, threatening, potentially illegal or similarly unsuitable communications will not be forwarded. Stockholders may communicate with any of our Directors, including the Lead Independent Director www.annalyannualmeeting.com      9 Table of Contents Corporate Governance at Annaly Certain Relationships and Related Party Transactions Approval of Related Party Transactions Each of our Directors, Director nominees and executive officers is required to report all transactions with us in which they or an immediate family member had or will have aperson’s 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 2016 and there is no transaction currently pending for 2017. 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 could be a related party transaction or could raise particular conflict of interest issues, we will discuss it with our legal counsel, and if necessary, we will form an independent Board committee that has the right to engage its own legal and financial counsel to evaluate, approve or ratify the transaction. Management Agreement We have entered into a management agreement (the “Management Agreement”) with our Manager. Our management is conducted by our Manager through the authority delegated to it in the Management Agreement and pursuantrelationship to, the policies established by our Board. The Management Agreement was effectiverelated person transaction; ■ advise as of July 1, 2013 and was amended in November 2014 and then amended and restated in April 2016, and may be further amended by agreement between our Manager and us. The Management Agreement’s current term ends on December 31, 2018 and will automatically renew for successive two-year terms unless at least two-thirds of our Independent Directors orto whether the holders of a majority of our outstanding shares of common stock 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 party prior written notice of its intention to terminate the Management Agreement no less than one year prior to its proposed termination date or, but only in the event our Manager is the terminating party, such earlier date as determined by us in our sole discretion. There is no termination fee for a termination of the Management Agreement by either our Manager or us. The Management Agreement provides that during its term and, in the event of termination of the Management Agreement by our Manager without cause, for a period of one year following such termination, our Manager will not, without our prior written consent, manage any REIT which engages in the management of mortgage-backed securities in any geographical region in which we operate. Pursuant torelated person transaction complies with the terms of agreements governing the Management Agreement, we pay our ManagerCompany's material outstanding indebtedness that limit or restrict the Company's ability to enter into a monthly management fee equalrelated person transaction; ■ advise as to 1/12th of 1.05% of our stockholders’ equity, as definedwhether the related person transaction will be required to be disclosed in the Management Agreement, for its management services. We incurred approximately $152 million in management feesCompany's filings under the Management Agreement during the year ended December 31, 2016. Our Manager Our Manager is a Delaware limited liability company and is indirectly owned by certain membersSecurities Act of our senior management. For additional information about our Manager, please see “Our Management Structure”, “Compensation Paid by our Manager to our Named Executive Officers” and “Compensation Discussion and Analysis.” Our management fee of 1.05% of stockholders’ equity (as defined in our Management Agreement ) compares favorably to the industry average  10      Annaly Capital Management Inc. 2017 Proxy Statement Table of Contents Board Structure and Processes Board Leadership Structure The Board believes that whether to have the same person occupy the offices of Chairman of the Board and Chief Executive Officer 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’s stockholders. Currently, Ms. Denahan serves1933, as the Executive Chairman and Chairman of the Board, while Mr. Keyes serve as the Chief Executive Officer and a Director. As Ms. Denahan and Mr. Keyes are both considered executive officers of the Company, the Board has designated Mr. Green to serve as the Lead Independent Director. We believe that our current leadership structure is effective and serves the best interests of our stockholders by providing for a robust independent leadership position on the Board. This structure allows Mr. Keyes to focus on his duties in managing the day-to-day operations of the Company, while benefitting from Ms. Denahan’s invaluable knowledge and expertise regarding the Company’s business. The Lead Independent Director has the following responsibilities: Our Lead Independent Director has significant authority and responsibilities  > Presides at all meetings of the Board in the absence ofamended (the “Securities Act”) or at the request of the Chairman of the Board, including executive sessions of Independent Directors > Facilitates communication between the Independent Directors and the Chairman of the Board and the Chief Executive Officer > Advises on the selection of committee chairs > Approves the quality, quantity and timeliness of information sent to the Board > Approves Board meeting agendas > Approves Board meeting schedules to assure there is sufficient time for discussion of all agenda items > Has authority to call meetings of the Independent Directors > Authorizes the retention of outside advisors and consultants who report directly to the Board > If requested by stockholders, ensures that he is available, when appropriate, for consultation and direct communication with major stockholders We believe that the Board’s independent oversight function is further enhanced by our policy to hold regular executive sessions of the Independent Directors without management present and the fact that a majority of our Directors (and every member of our four standing Board committees) is independent. Executive Sessions of Independent Directors Our Corporate Governance Guidelines require that the Board have at least two regularly scheduled meetings each year for our Independent Directors. These meetings, which are designed to promote unfettered discussions among our Independent Directors, are presided over by our Lead Independent Director. During 2016, our Independent Directors, without the participation of Board members who are members of management, held 5 meetings. www.annalyannualmeeting.com      11 Table of Contents Board Structure and Processes Board and Committee Evaluations The Lead Independent Director and the NCG Committee are 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 committees. Each standing committee of the Board evaluates its performance on an annual basis and reports to the Board on such evaluation. Board Composition and Refreshment 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 our complex operations. On an annual basis, the NCG Committee evaluates its overall composition, including director tenure, and rigorously evaluates all directors to ensure a continued match of their skill sets against the needs of the Company. Governing Documents Code of Business Conduct and Ethics We have adopted a Code of Business Conduct and Ethics, 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 code is applicable to our Directors, executive officers and employees. Corporate Governance Guidelines We have adopted Corporate Governance Guidelines that, in conjunction with the charters of our Board committees, provide the framework for the governance of our Company. Where You Can Find Our Governing Documents Our Code of Business Conduct and Ethics, Corporate Governance Guidelines, Compensation Committee Charter, Audit Committee Charter, NCG Committee Charter and Risk Committee Charter are available on our website (www.annaly.com). We 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. Board Committees The Board has four 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 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. 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. 24 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Corporate Governance at Annaly Management Agreement The Company has entered into a management agreement (the “Management Agreement”) with the Manager. Management of the Company is conducted by the Manager through the authority delegated to it in the Management Agreement and pursuant to the policies established by Annaly’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, amended in November 2013, amended and restated in April 2016 and August 2018 and amended most recently in March 2019, and may be further amended by agreement between the Manager and the Company. The Management Agreement’s current term ends on December 31, 2019 and will automatically renew for successive two-year terms unless at least two-thirds of the Independent Directors or the holders of a majority of the outstanding shares of the Company’s common stock in their sole discretion elect to terminate the agreement for any or no reason upon 365 days prior written notice (such notice, a “Termination Notice”). If the Company elects to terminate the Management Agreement, it 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 the Accelerated Termination Date, the Company shall pay the Manager an acceleration fee in an amount equal to the average annual management fee earned by the Manager during the 24-month period immediately preceding such Accelerated Termination Date multiplied by a fraction with a numerator of 365 minus the number of days from the Notice Delivery Date to the Accelerated Termination Date, and a denominator of 365. The Management Agreement provides that during its term and, in the event of termination of the Management Agreement by the Manager without cause, for a period of one year following such termination, the Manager will not manage, operate, join, control, participate in, or advise any person other than the Company without the prior written consent of the Risk Committee of the Board. Prior to the most recent amendment to the Management Agreement in March 2019, the Company had paid the Manager a flat monthly management fee equal to 1/12thof 1.05% of Stockholders’ Equity(1)for its management services. Pursuant to this arrangement, 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. 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.(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) The Manager The Manager is a Delaware limited liability company and is indirectly owned by certain members of senior management. For additional information about the Manager, please see “Management Structure”, “Compensation Paid by the Manager to the Named Executive Officers” and “Compensation Discussion and Analysis.” In 2019, the Manager reduced its fee on Incremental Stockholders’ Equity to 0.75% from 1.05% Note: For footnoted information, please refer to “Management Agreement” in Endnotes section. Annaly Capital Management Inc. 2019 Proxy Statement 25 Table of Contents Board Structure and Processes Board Leadership Structure The Board believes that whether to have the same person occupy the offices of Chairman of the Board and CEO 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 Lead Independent Director 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 President, while Mr. J. Green serves as Lead Independent Director. The Board believes that the current leadership structure provides effective independent oversight of management, while allowing both the Board and management to benefit from Mr. Keyes’ day-to-day familiarity with the Company’s business. The Lead Independent Director has significant authority and responsibilities The Chairman of the Board The Lead Independent Director ■Presides at full meetings of the Board and the NYSE. In addition,Annual Meeting of Stockholders ■Meets with the Lead Independent Director to receive feedback from executive sessions of Independent Directors ■Communicates with all Directors on key issues and concerns outside of Board meetings ■Advises on the selection of committee chairs ■Draws on his knowledge of the Company’s business, operations, industry and competitive developments in setting Board agendas ■Consults with the Lead Independent Director to ensure that Board agendas and information empower the Board to fulfill its responsibilities ■Has authority to call special meetings of the Board if necessary and otherwise updates Directors between meetings through one-on-one or group phone calls ■Authorizes the retention of advisors and consultants who report to management ■Presents the Company’s message and strategy to stockholders, employees and regulators ■Presides at all meetings of the Board in the absence of or at the request of the Chairman, including executive sessions of Independent Directors ■Facilitates communication between the Independent Directors and the Chairman of the Board and CEO ■Advises on the selection of committee chairs ■Approves the quality, quantity and timeliness of information sent to the Board ■Approves Board meeting agendas ■Approves Board meeting schedules to assure there is sufficient time for discussion of all agenda items ■Has authority to call meetings of the Independent Directors ■Authorizes the retention of outside advisors and consultants who report directly to the Board ■If requested by stockholders, ensures that he is available, when appropriate, for consultation and direct communication with major stockholders The Board believes that its independent oversight function is further enhanced by its policy to hold regular executive sessions of the Independent Directors without management present and the fact that a majority of 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 Table of Contents Board Structure and Processes Executive Sessions of Independent Directors The Corporate Governance Guidelines require that the Board have at least two regularly scheduled executive sessions of Independent Directors each year. These executive sessions, which are designed to promote unfettered discussions among the Independent Directors, are presided over by the Lead Independent Director, or in his or her absence, the chair of the Compensation Committee. During 2018, the Independent Directors, without the participation of Board members who are members of management, held seven executive sessions. Director Orientation and Continuing Education The Board believes that Director orientation and continuing 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 Company provides reimbursement for related expenses. Continuing director education is also provided during Board meetings and as stand-alone information sessions outside of meetings. In line with the Company’s commitment to continuing board education, in 2017, the Board became a Full Board Member of the NACD, which gives Directors access to an extensive menu of board education programs, along with research on governance trends and board practices. Governing Documents Code of Business Conduct and Ethics The 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 business. This Code of Conduct is applicable to Annaly’s Directors, executive officers and 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. Corporate Governance Guidelines The Board has adopted Corporate Governance Guidelines that, in conjunction with the charters of the Board committees, provide the framework for governance of the Company. 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 and Committee Charters 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 Annaly’s website (www.annaly.com). The 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 Table of Contents Board Structure and Processes Board Committees The Board created the new Corporate Responsibility Committee in late 2017(1) The Board has five standing committees: the Audit Committee, the Compensation Committee, the NCG Committee, the Risk Committee and the Corporate Responsibility Committee. The table below shows the membership as of the date of this proxy statement of each Board committee and number of meetings of each committee held in 2018. Director     Audit Committee     Compensation Committee     NCG Committee     CR Committee     Risk Committee Francine 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 • Member Chairperson E Financial Expert * Lead Independent Director Committee Membership Determinations The 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. Note: For footnoted information, please refer to “Board Committees” in Endnotes section. 28 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Board Structure and Processes Audit Committee Committee Members: Kevin P. Brady(Chair)(1) Thomas Hamilton(2) Kathy Hopinkah Hannan(3) Michael Haylon E. Wayne Nordberg(1) John H. Schaefer Vicki Williams Number of Meetings in 2018:9 Key Responsibilities: ■Appoints the independent registered public accounting firm and reviews its qualifications, performance and independence ■Reviews the plan and results of the auditing engagement with the Chief Financial Officer and the independent registered public accounting firm ■Oversees internal audit activities ■Oversees the quality and integrity of financial statements and financial reporting process ■Oversees the adequacy and effectiveness of internal control over financial reporting ■Reviews and pre-approves the audit and permitted non-audit services and proposed fees of the independent registered public accounting firm ■Prepares the report of the Audit Committee required by the rules of the SEC to be included in the Proxy Statement ■Together with the Risk Committee, jointly oversees practices and policies related to cybersecurity Each member of the Audit Committee is financially literate and independent of the Company and management under  the applicable rules of the Exchange Act, and the Compensation Committee meetslisting standards of the additional independence criteriaNYSE. The Board has designated Messrs. Brady and Haylon and Dr. Hannan as audit committee financial experts under applicable to directors servingSEC rules. For more information on these committees under the NYSE listing rules.Audit Committee’s responsibilities and activities, see the “Board Oversight of Risk” and “Report of the Audit Committee” sections of this Proxy Statement. All Board committees are composed entirely of Independent Directors  12      Annaly Capital Management Inc. 2017 Proxy Statement TableCompensation Committee Committee Members: Donnell A. Segalas(Chair) Jonathan D. Green E. Wayne Nordberg(1) John H. Schaefer Vicki Williams Number of ContentsMeetings in 2018:3 Board Structure and Processes The table below shows the current membership of each Board committee and number of meetings of each committee held in 2016. Director Audit Committee Compensation Committee NCG Committee Risk Committee Francine J. Bovich M   M   Kevin P. Brady C   M M Jonathan D. Green(1)   M   C Michael Haylon M     M E. Wayne Nordberg   M C   John H. Schaefer M M   M Donnell A. Segalas   C M   2016 Meetings: 4 4 3 4 M = Member            C = Chairperson (1)      Mr. Green serves as the Lead Independent Director. For more details, see page11. Committee Key Responsibilities Audit >   Recommends to our Board the engagement or termination of independent registered public accountants > Reviews the plan and results of the auditing engagement with our Chief Financial Officer and our independent registered public accountants > 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 reporting The Board has determined that each Audit Committee member is financially literate, and that Messrs. Brady and Haylon are “audit committee financial experts” under applicable SEC rules. For more information on the Audit Committee’s responsibilities and activities, see the “Board Oversight of Risk” and “Report of the Audit Committee” sections of this proxy statement. Compensation >   Key Responsibilities: ■Evaluates the performance of our Manager and the terms of the Management Agreement > Reviews the fees payable to our 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 our officers For more information on the Compensation Committee’s responsibilities and activities, see the “Compensation of Directors” and “Compensation Discussion and Analysis” sections of this proxy statement. www.annalyannualmeeting.com      13 Table of Contents Board Structure and Processes NCG >   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 director retirement policies, management succession plans and potential conflicts of interest of Board members and senior management, and recommends changes as appropriate For more information on the NCG Committee’s responsibilities and activities, see the “Director Nomination Process” section of this proxy statement. Risk Assists the Board in its oversight of the Company’s: >   risk governance structure > risk management and risk assessment guidelines and policies regarding market, credit, operational, liquidity, funding and reputational risk and such other risks as necessary to fulfill the committee’s duties and responsibilities > risk tolerance, including risk tolerance levels and capital targets and limits > capital, liquidity, and funding For more information on the Risk Committee’s responsibilities and activities, see the “Board Oversight of Risk” section of this proxy statement. Director Attendance During 2016, our Board held 15 meetings. Each Director attended at least 75% of the aggregate number of meetings held by our BoardManager and each committee on which the Director served. We expect each memberterms of the Board to attend our annual meeting of stockholders. All of our Directors attended our 2016 annual meeting of stockholders (the “2016 Annual Meeting”). 14      Annaly Capital Management Inc. 2017 Proxy Statement Management Agreement Table of Contents■ Board Structure and Processes Compensation of Directors We compensate our Independent Directors. Any Director who is also an employee or owner of our Manager does not receive compensation for serving on our Board. Our Compensation Committee is responsible for reviewing, and recommendingReviews the fees payable to the Board,Manager ■Administers the Company’s equity incentive plans and other equity compensation programs ■Reviews the form and amount of Director compensation paid ■Evaluates the performance of the Company’s officers ■Reviews and discusses with management the Compensation Discussion and Analysis and related disclosures as required by the SEC ■Prepares the report of the Compensation Committee required by the rules of the SEC to our Independent Directors.be included in the Proxy Statement Each member of the Compensation Committee is independent of the Company and management under the listing standards of the NYSE. The compensation elements paidFor more information on the Compensation Committee’s responsibilities and activities, see the “Compensation of Directors” and “Compensation Discussion and Analysis” sections of this Proxy Statement. Note: For footnoted information, please refer to “Audit Committee & Compensation Committee” in Endnotes section. Annaly Capital Management Inc. 2019 Proxy Statement 29 Table of Contents Board Structure and Processes NCG Committee Committee Members: Francine J. Bovich(Chair) Kevin P. Brady(1) Katie Beirne Fallon Kathy Hopinkah Hannan(2) E. Wayne Nordberg(1) Donnell A. Segalas Number of Meetings in 2018:3 Key Responsibilities: ■Develops and recommends criteria for considering potential Board candidates ■Identifies and screens individuals qualified to our Independent Directorsbecome Board members, and recommends to the Board candidates for service onnomination for election or re-election to the Board and its committees for 2016 isto fill Board vacancies ■Develops and recommends to the Board a 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        $30,000 Committee Member Retainer $8,000 – Audit Committee $7,000 – Compensation Committee $7,000 – Risk Committee $5,000 –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 Director retirement policies, management succession plans and potential conflicts of interest of Board members and senior management, and recommends changes as appropriate 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, see the “Director Nomination Process,” “Director Criteria and Qualifications,” “Board Refreshment and Diversity” and “Stockholder Recommendation of Director Candidates” section of this Proxy Statement. Corporate Responsibility Committee(3) Committee Members: Jonathan D. Green(Chair) Francine J. Bovich Wellington J. Denahan Katie Beirne Fallon Donnell A. Segalas Number of Meetings in 2018:2 Key Responsibilities: Assists the Board in its oversight of the Company’s items of corporate responsibility, including: ■corporate philanthropy ■social impact investments ■sustainability initiatives ■corporate culture and reputation ■public policy initiatives For more information on the formation of the Corporate Responsibility Committee, see the “Corporate Responsibility” section of this Proxy Statement. Risk Committee Committee Members: John H. Schaefer(Chair) Kevin P. Brady(1) Wellington J. Denahan Jonathan D. Green Thomas Hamilton(4) Michael Haylon Number of Meetings in 2018:4 Key Responsibilities: Assists the Board in its oversight of the Company’s: ■risk governance structure ■risk management and risk assessment guidelines and policies regarding capital, liquidity and funding risk, investment/market risk, credit risk, counterparty risk, operational risk, compliance, regulatory and legal risk and such other risks as necessary to fulfill the committee’s duties and responsibilities ■risk appetite, including risk appetite levels and capital adequacy and limits ■practices and policies related to cybersecurity (together with the Audit Committee) For more information on the Risk Committee’s responsibilities and activities, see the “Board Oversight of Risk” section of this Proxy Statement. Note: For footnoted information, please refer to “NCG Committee, Corporate Responsibility Committee & Risk Committee” in Endnotes section. 30 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Board Structure and Processes Director Attendance During 2018, the Board held 14 meetings. All Directors attended at least 75% of the aggregate number of meetings of the full Board and the committees on which they served, during the period in which they served, in 2018. The Company expects each member of the Board to attend the Annual Meeting. All of the Company’s then-Directors attended Annaly’s 2018 annual meeting of stockholders (the “2018 Annual Meeting”). Dr. Hannan and Mr. Hamilton were elected as Directors effective February 13, 2019 and March 6, 2019, respectively, and therefore did not attend the 2018 Annual Meeting. Compensation of Directors The Company compensates the Non-Executive Directors. Any Director who is also an employee or owner of the Manager does not receive compensation for serving on the Board. The Compensation Committee is responsible for reviewing, and recommending to the Board, the form and amount of compensation paid to the Non-Executive Directors. The annual compensation elements paid to the Non-Executive Directors for service on the Board and its standing committees for 2018 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 $30,000 Committee Member Retainer $8,000 – all Board Committees Committee Chair Retainer(1) $20,000 – Audit Committee $10,000 – Compensation Committee $10,000 – Risk Committee $10,000 – NCG Committee $10,000 – all other Board Committees ____________________ 1. (1)     Committee Chairs received Committee Chair Retainers in addition to, and not in lieu of, Committee Member Retainers. Each DSU is equivalent in valueaddition to, one shareand not in lieu of, ourCommittee Member Retainers. Each DSU is equivalent in value to one share of the Company’s common stock. DSUs are granted on the date of the annual stockholder meeting and vest immediately. DSUs convert to shares of the 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. The Independent Directors are also eligible to receive other stock-based awards under the Company’s equity incentive plan. The Company reimburses the date of the annual stockholder meeting and vest immediately. DSUs convert to shares of our 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. Our Independent Directors are also eligible to receive other stock-based awards under our equity incentive plan. We reimburse our Directors for their reasonable out-of-pocket travel expenses incurred in connection with their attendance at full Board and committee meetings. Director Stock Ownership Guideline In 2016, we Director Stock Ownership Guideline In 2016, the Board increased the stock ownership guideline for the Independent Directors to provide that each Independent Director should strive to own an amount of the 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, the 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. As of December 31, 2018, all of the Independent Directors had met or were on their way to meeting their stock ownership guideline. The stock ownership guideline for our Independent Directors to provide that each Independent Director should strive to own an amount of our common stock equal to five times is 5x 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 have 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. As of March retainer Annaly Capital Management Inc. 2019 Proxy Statement 31 2017, all of our Independent Directors have met or are on track to meet their stock ownership guideline. In 2016, we increased the stock ownership guideline for Independent Directors to 5x the annual cash retainer, which is currently $100,000  Role of Compensation Consultant During 2016, our Compensation Committee retained Frederic W. Cook & Co., a nationally-recognized compensation consulting firm (“F. W. Cook”), to assist the Compensation Committee in its review of the compensation arrangements provided to our Independent Directors. The Compensation Committee considered F. W. Cook’s independence in light of SEC regulations and NYSE listing standards. The Compensation Committee discussed all relevant factors, including the services F. W. Cook provided to our Manager discussed under “Compensation Paid by our Manager to our Named Executive Officers” below, and concluded that the continued engagement of F. W. Cook does not raise any conflicts of interest. www.annalyannualmeeting.com                         15 Table of Contents Board Structure and Processes Director Compensation Table of Contents Board Structure and Processes Role of the Independent Compensation Consultant During 2018, the Compensation Committee retained an independent compensation consultant, Frederic W. Cook & Co. (“F. W. Cook”), to assist the Compensation Committee in its review of the compensation provided to the Non-Executive Directors. The Compensation Committee considered F. W. Cook’s independence in light of SEC regulations and NYSE listing standards. The Compensation Committee discussed all relevant factors and concluded that no conflict of interest exists that would prevent F. W. Cook from independently representing the Compensation Committee. Director Compensation The table below summarizes the compensation paid by the Company to the Non-Executive Directors for the fiscal year ended December 31, 2018. Name(1) Fees Earned or Paid in Cash ($) Stock Awards(2) ($) Total ($) Francine J. Bovich     126,000     135,000     261,000 Kevin P. Brady 144,000 135,000 279,000 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 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. 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 paid by us to our Independent Directors for the fiscal year ended DecemberDecembert 31, 2016. Name Fees Earned or Paid in Cash Stock Awards(1) Total Francine J. Bovich $113,000 $135,000 $248,000 Kevin P. Brady $140,000 $135,000 $275,000 Jonathan D. Green $154,000 $135,000 $289,000 Michael Haylon $115,000 $135,000 $250,000 E. Wayne Nordberg $122,000 $135,000 $257,000 John H. Schaefer $122,000 $135,000 $257,000 Donnell A. Segalas $122,000 $135,000 $257,000 (1) The amounts in this column represent the aggregate grant date fair value of the DSU awards, computed in accordance with FASB ASC Topic 718 and based on the closing price of our common stock on the date of grant. DSUs are vested at grant and accrue dividend equivalents as additional DSUs or cash at the election of the Director.2018. 2. The following table sets forth informationamounts in this column represent the aggregate grant date fair value of the DSU awards, computed in accordance with respectFASB ASC Topic 718 and based on the closing price of the Company’s common stock on the date of grant. DSUs are vested at grant and accrue dividend equivalents as additional DSUs or cash at the election of the Director. 3. The amount in the “Fees Earned or Paid in Cash ($)” column includes fees earned for service on a special committee of the Board established to evaluate changes to the aggregate outstandingterms 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. The following table sets forth information with respect to the aggregate unexercised option awards at December 31, 2018 of each of the 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(1) Unexercised Option Awards at 12/31/18 Kevin P. Brady 12,500 Jonathan D. Green 50,000 Michael Haylon 50,000 E. Wayne Nordberg 50,000 Donnell A. Segalas 37,500 ____________________ 1. Ms. Bovich, Ms. Denahan, Ms. Fallon, Mr. Schaefer and Ms. Williams did not hold any unexercised option awards at December 31, 2016 of each of our Independent Directors. All such option awards have vested. We no longer grant options as part of our Director compensation program. Name Outstanding Option2018. Dr. Hannan and Mr. Hamilton were elected to the Board effective February 13, 2019 and March 6, 2019, respectively. Awards at 12/31/16 32 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Management The following table sets forth certain information with respect to the Company’s executive officers, all of whom are indirect owners and/or employees of the Manager: Name Age Title Kevin G. Keyes 51 Chairman, Chief Executive Officer and President Francine J. Bovich – Kevin P. Brady 43,750 Jonathan D. Green 91,250 Michael Haylon 76,250 E. Wayne Nordberg 91,250 John H. Schaefer – Donnell A. Segalas 78,750 16      Annaly Capital Management Inc. 2017 Proxy Statement Table of Contents Our Management The following table sets forth certain information with respect to our executive officers, all of whom are indirect owners and/or employees of our Manager: Name Age Title Kevin G. Keyes 49 Chief Executive Officer, President and Director Wellington J. Denahan                 53 Chairman of the Board and Executive Chairman Glenn A. Votek 58 Chief Financial Officer David L. Finkelstein 44 Chief Investment Officer Timothy P. Coffey 43 Chief Credit Officer Anthony C. Green 42 Chief Legal Officer and Secretary Biographical information on Mr. Keyes and Ms. Denahan is provided above under the heading “Election of Directors.” Certain biographical information for Messrs. Votek, Finkelstein, Coffey and Green is set forth below. Glenn A. Votekhas served as 60 Chief Financial Officer of Annaly since August 2013. Mr. Votek served as Chief Financial Officer of Fixed Income Discount Advisory Company (FIDAC) from August 2013 until October 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. David L. Finkelsteinhas served as 46 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. 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. Timothy P. Coffeyhas served as 45 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 44 Chief Corporate Officer, Chief Legal Officer and Secretary of Annaly since March 2017. Mr. Green previously served as Annaly’s Deputy General Counsel from 2009 until February 2017. Prior to joining Annaly, Mr. Green was a partner in the Corporate, Securities, Mergers & Acquisitions Group at the law firm K&L Gates LLP. Mr. Green has over 17 Biographical information on Mr. Keyes is provided above under the heading “Election of Directors.” Certain biographical information for Messrs. Votek, Finkelstein, Coffey and Green is set forth below. 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, a former wholly-owned subsidiary of the Company, from August 2013 until October 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. David L. Finkelsteinhas 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. 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 since March 2017. Mr. Green previously served as Annaly’s Deputy General Counsel from 2009 until February 2017. Prior to joining Annaly, Mr. Green was a partner in the Corporate, Securities, Mergers & Acquisitions Group at the law firm K&L Gates LLP. Mr. Green has over 19 years of experience in corporate and securities law. Mr. Green holds a B.A. in Economics and Political Science from the University of Pennsylvania and a J.D. and LL.M. in International and Comparative Law from Cornell Law School. www.annalyannualmeeting.com      17 Table of ContentsStock Purchases by Executive Officers Since 2011 Since 2011, the executive officers have purchased approximately 1.5 million shares of the Company’s common stock (including open market purchases and dividend reinvestments) with an aggregate purchase price of approximately $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 stock Kevin 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 ____________________ 1. Our Management Stock Purchases by Executive Officers since 2011 Since 2011, our executive officers have purchased over 2 million shares of our common stock (including open market purchases, dividend reinvestments, and option exercises) with an aggregate purchase price of $23.1 million as set forth in the table below. Executive Officer Shares Purchased Purchase Price(1)        None of our NEOs has ever sold shares of our common stock Kevin G. Keyes 606,908      $ 6,895,000 Wellington J. Denahan 1,059,871 $ 12,311,000 Glenn A. Votek 61,266 $ 640,000 David L. Finkelstein 200,000 $ 2,122,000 Timothy P. Coffey 30,000 $ 304,000 Anthony C. Green 77,750 $ 843,000 TOTAL 2,035,794 $ 23,115,000 (1)     Rounded to the nearest thousand. 18      Annaly Capital Management Inc. 2017 Proxy Statement Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Our Management Structure Overview33 Following our management externalization transaction (the “Externalization”), which was approved by approximately 83% of our stockholders on May 23, 2013, we became externally managed by our Manager. Pursuant to the terms of the Management Agreement, we pay our Manager a management fee and our Manager pays all of the compensation to our management personnel (including our NEOs) Table of Contents Management Structure Overview The Company has been externally-managed by the Manager since 2013. Pursuant to the terms of the Management Agreement, the Company pays the Manager a management fee and the Manager determines the compensation of its employees, including the NEOs other than Mr. Keyes(1). The Compensation Committee annually reviews the management fee and the performance of the Manager, including the achievements discussed beginning on page 3. The Independent 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 management fee reduction discussed under “Recent Changes,” the Independent Directors believe that the Management Agreement continues to be in the best interests of the Company. For additional information, see “Certain Relationships and Related Party Transactions,” “Compensation Paid by the Manager to the Named Executive Officers” and “Compensation Discussion and Analysis.” The Compensation Committee annually reviews the management fee and the performance of our Manager, including the accomplishments discussed beginning onpage IV of the Proxy Summary. The Independent 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, the Independent Directors have determined that the Management Agreement continues to be in the best interests of the Company and our stockholders. For additional information, see “Certain Relationships and Related Party Transactions”, “Compensation Paid by our Manager to our Named Executive Officers” and “Compensation Discussion and Analysis.” Our Management Agreement compares favorably to the management agreements of our externally-managed peers Management Agreement Terms We believe that the terms and conditions of the Management Agreement compare favorably to the terms and conditions that exist between our externally-managed mREIT management agreements of the Company’s externally- managed peers and their respective managers. In particular, as illustrated by the table below, when compared to the median for the peer comparison, (i) the management fee paid to our Manager is lower as a percentage of stockholders’ equity, (ii) the term of the Management Agreement was of a shorter duration, and (iii) the Management Agreement has no termination fee, which is expressed in the table below as a multiple of trailing average annual management fees. Mean Median Min Max Agency Residential REITs   Base management fee(1) 1.13% 1.13% 1.05% 1.20% 1.05% Initial term in years 6.0 6.0 2.0 10.0 2.0 Termination fee multiple(2) 4.4x 4.4x 3.3x 5.5x None 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 Termination fee multiple 3.1x 2.9x 2.1x 5.0x None Incentive fee(3) 21% above 8% hurdle 20% above 8% hurdle None 25% above 8% hurdle None Non-Agency Residential / Hybrid REITs   Base management fee 1.50% 1.50% 1.50% 1.50% 1.05% Initial term in years 2.5 3.0 1.0 3.0 2.0 Termination fee multiple(4) 3.1x 3.2x 1.0x 5.0x None Incentive fee(5) N/A N/A None 25% above 10% hurdle None Source: Public filings as of year ended December 31, 2016. 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 represent the Agency mREIT Peers, with the exception of AGNC, CYS and CMO, which are internally-managed companies; Commercial REITs represent the externally-managed commercial mortgage REITs included in the BBREMTG Index as of December 31, 2016 with market capitalization above $200 million and includes Blackstone Mortgage Trust, Inc. (“BXMT”), Ares Commercial Real Estate Corp. (“ACRE”), Resource Capital Corp. (“RSO”), Apollo Commercial Real Estate Finance, Inc. (“ARI”), and Starwood Property Trust, Inc. (“STWD”); Non-Agency Residential/Hybrid REITs represents the externally-managed non-agency residential and hybrid mortgage REITs included in Recent Changes 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. www.annalyannualmeeting.com      19 Table of ContentsManagement Agreement Terms Our Management Structure The 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 Annaly’s externally-managed mREIT 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 the Manager is lower as a percentage of stockholders’ equity and (ii) the term of the Management Agreement is of a shorter duration. 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% hurdle 20% above 8% hurdle None 25% above 8% hurdle None 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% hurdle 35% above 12.5% hurdle None Note: For footnoted information, please refer to “Overview, Recent Changes & Management Agreement Terms” in Endnotes section. 34 Annaly Capital Management Inc. 2019 Proxy Statement the BBREMTG Index as of December 31, 2016 with market capitalization above $200 million and includes New Residential Investment Corp. (“NRZ”), Western Asset Mortgage Capital Corp. (“WMC”), AG Mortgage Investment Trust, Inc. (“MITT”), PennyMac Mortgage Investment Trust (“PMT”), Invesco Mortgage Capital Inc. (“IVR”) and Two Harbors Investment Corp. (“TWO”). (1) For ARR, base management fee is calculated as 1.5% of gross equity raised up to $1.0 billion plus 0.75% of gross equity raised in excess of $1.0 billion. (2) ARR’s termination fee is calculated as the greater of (a) the base management fee calculated prior to the effective date of agreement termination for the remainder of the term or (b) 3x the base management fee during the preceding full 12 months. (3) Of the five Commercial REITs, four have incentive fees in addition to their base management fees. STWD and RSO have incentive fees of 20% above an 8% hurdle. BXMT has a 20% incentive fee above a 7% hurdle. RSO has a 25% incentive fee above an 8% hurdle. For purposes of this table, the calculation of the mean includes only the four Commercial REITs that have incentive fees. (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. (5) Of the six Non-Agency Residential/Hybrid REITs, two 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 above 8%. Table of Contents Management Structure Structure and Amount of the Management Fee 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 Manager 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 fee formulated as a percentage of Stockholders’ Equity(1)represents a responsible and prudent method of compensating the Manager. In particular, in the context of an mREIT that uses leverage as a key component of its business strategy, the Compensation Committee believes that providing for a contractually required payment structured as an “incentive fee” may misalign the goals of the Manager from those of the stockholders. Moreover, the Compensation Committee believes that a management fee that is based upon Stockholders’ Equity (along with the stock ownership guidelines discussed on page 35) aligns the management team to the goals of the Company, and that focusing the management fee on the preservation and growth of the Company’s book value incentivizes the Manager to achieve long-term performance that protects Stockholders’ Equity because realized losses decrease such equity and, ultimately, the management fee. Additionally, for the Manager to earn a larger management fee, Stockholders’ Equity would need to increase. As a result, the growth of Stockholders’ Equity aligns the interests of stockholders and the Manager. Further, this alignment is stronger in the REIT industry than in other businesses. REIT regulations require the Company to pay at least 90% of its earnings to stockholders as dividends. As a result, unlike most companies, Annaly cannot grow its business and book value by reinvesting its earnings. This places a unique market discipline on the Company. The Compensation Committee annually reviews the structure and amount of the management fee to determine whether they incentivizeit appropriately incentivizes the management team 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 management fee formulated as a percentage of stockholders’ equity (as defined in our Management Agreement) represents a responsible and prudent method of compensating the management team. In particular, in the context of an mREIT that uses leverage as a key component of its business strategy, the Compensation Committee believes that providing for a contractually required payment structured as an “incentive fee” may misalign the goals of the management team fromthose of the stockholders. Moreover, the Compensation Committee believes that a management fee that is based upon stockholders’ equity, along with the stock ownership guidelines discussed on page 27, aligns the management team to the goals of the Company. We believe that focusing the management fee on the preservation and growth of the Company’s book value incentivizes our Manager to achieve long-term performance that protects our stockholders’ equity as realized losses decrease such equity and, ultimately, the management fee. Additionally, for our Manager to earn a larger management fee, the stockholders’ equity of the Company would need to increase. As a result, the growth of the stockholders’ equity is an alignment between the interests of our stockholders and the management team. Further, this alignment is stronger in the REIT industry than in other businesses. REIT regulations require us to pay at least 90% of our earnings tostockholders as dividends. As a result, unlike most companies, we cannot grow our business and our book value by reinvesting our earnings. This places a unique market discipline on us. The Compensation Committee annually reviews the structure and amount of the management fee to determine whether it appropriately incentivizes the management team We also believe that our management fee structure is more favorable to our stockholders than if it were 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 term In March 2019, the Manager 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. The Compensation Committee also believes that the structure of the management fee is more favorable to the Company’s stockholders than if the 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-term incentive payouts. Clawback for the Management Fee 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 2016 amendment and restatement of the Management Agreement, the Company is 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. Continued Cost Savings Related to the Externalization We believe that the Externalization has materially reduced the Company’s compensation-related costs. When comparing the management fees we paid for the fiscal years ended December 31, 2013, 2014, 2015 and 2016 against the estimated compensation costs (including tax costs) we would have paid for the same period if those costs remained what they were in 2012, we estimate Continued Cost Savings Related to the Externalization The Compensation Committee believes that the Externalization has materially reduced the Company’s compensation-related costs. When comparing the management fees and related expenses the Company paid for the fiscal years ended December 31, 2013(3)through December 31, 2018 against the estimated compensation costs (including tax costs) the Company would have paid for the same period if those costs remained what they were in 2012, management estimates that the Externalization has resulted in total compensation savings, including tax savings, (calculated in accordance with GAAP) of approximately $300 million. The Company estimates that the Externalization has resulted in total compensation savings, (calculated in accordance with GAAP)including tax savings, of approximately $138 million. 20      Annaly Capital Management Inc. 2017 $300 million Note: For footnoted information, please refer to “Structure and Amount of the Management Fee & Continued Cost Savings Related to the Externalization” in Endnotes section. Annaly Capital Management Inc. 2019 Proxy Statement 35 Table of Contents Our Management Structure As illustrated by the table below, the management fee for each of 2013(1), 2014, 2015 and 2016 is significantly lower than our 2012 compensation expenses (which is represented by the dashed blue line): Management Fee / Compensation Expense (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, 2015 and 2016 would have remained what they were in 2012 (the last full year prior to the Externalization). Table of ContentsAnnual Review of Manager Performance and Management Fee Considerations The Compensation Committee annually reviews our performance and management fee against both our historical results and our mREIT peers, based on a number of metrics, including those discussed above in the “Proxy Summary” and the expense ratios discussed below. Management Structure Annual Review of Manager Performance and Management Fee Considerations The Compensation Committee annually reviews the Manager’s performance and management fee against both historical results and the Company’s mREIT peers based on a number of metrics, including those discussed above in the “Proxy Summary”. The Compensation Committee also reviews the Company’s total operating expenses (including the management fee and related expenses), as a percentage of both average assets and average stockholders’ equity. The Compensation Committee believes these ratios, which allow comparison of the Manager’s performance against the Company’s internally- and externally-managed mREIT peers, measure the extent to which the Manager operates in an economically efficient manner. We annually review both our performance and the terms and conditions of our Management Agreement Peer Comparison of Operating Expenses as a Percentage of Average Assets and Average Stockholders’ Equity The Compensation Committee reviews our total operating expenses (including the management fee), Operating Expense as a percentagePercentage of both our average assets and our average stockholders’ equity. The Compensation Committee believes these ratios, which allow us to compare the performance of our Manager to both our internally- and externally-managed mREIT peers, measure the extent to which we operate in an economically efficient manner. www.annalyannualmeeting.com      21Average 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 Peers 0.54% 1.05% 0.87% 0.72% 0.37% 0.44% 0.46% 0.64% Externally-Managed Peers 0.67% 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% Table of Contents Our Management Structure 2012 2013 2014 2015 2016       Average Annaly 0.19% 0.22% 0.24% 0.25% 0.25% 0.23% Internally-Managed Peers 0.54% 0.91% 0.87% 0.73% 0.44% 0.70% Externally-Managed Peers 0.60% 0.66% 0.75% 0.79% 0.66% 0.69% 2012 2013 2014 2015 2016 Average Annaly 1.45% 1.66% 1.61% 1.58% 1.65%(1) 1.59% Internally-Managed Peers 2.72% 3.83% 4.13% 3.84% 2.48%   3.40% Externally-Managed Peers 2.20% 3.06% 3.57% 3.75% 4.06% 3.33% 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 with market capitalization above $200 million 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 sumas a Percentage 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.Average Equity(1) (1) Excludes costs of $49 million related to the Company’s acquisition of Hatteras. In its review of these operating expense ratios, the Compensation Committee noted that the Company has outperformed both our internally- and externally-managed mREIT peers over the last five 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 Peers 2.71% 3.95% 3.92% 3.68% 2.14% 2.10% 2.36% 2.98% Externally-Managed Peers 2.38% 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% In its review of these operating expense ratios, the Compensation Committee noted that the Company has outperformed both its internally- and externally-managed mREIT peers over the last seven fiscal years. In this regard, the Compensation Committee has viewed the Company’s performance as an indicator that, among other things, our Manager has managed the Company in an indicator that, among other things, the Manager has managed the Company in a comparatively efficient manner with appropriately scaled operating costs (including the management fee). 22      Annaly Capital Management Inc. 2017 Note: For footnoted information, please refer to “Annual Review of Manager Performance and Management Fee Considerations” in Endnotes section. 36 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Compensation Paid by the Manager to the Named Executive Officers Compensation Paid by our Manager to our Named Executive Officers Overview The NEOs for 2018 are: Name 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 Introduction 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: ■ 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. Summary of 2018 NEO Compensation ■ 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. Note: For footnoted information, please refer to “Summary of 2018 NEO Compensation” in Endnotes section. Annaly Capital Management Inc. 2019 Proxy Statement 37 Table of Contents Compensation Paid by the Manager to the Named Executive Officers NEO 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 maintains a rigorous and thorough talent and compensation review process to ensure that its employees are in appropriate roles that maximize their full potential. This process also ensures that there is strong leadership guiding employees and that there is a succession and development plan for each role. The Manager’s goal is to make employee and leadership development an integral part of its culture, supporting each employee and the continued success of the Company. 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 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: What the Manager Does ■ 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 What the Manager Does Not Do ■ 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 38 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents 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. Compensation Element What It Does Key Measures Base Salary ■Provides a level of fixed pay appropriate to an executive’s role and responsibilities ■Evaluated on an annual basis; may be adjusted up or down ■Experience, duties and scope of responsibility ■Internal and external market factors Performance-Based Incentive Bonus ■Provides a competitive annual cash incentive opportunity ■Links executives’ interests with stockholders’ interests ■Incentivizes and rewards superior group individual and Company performance ■Based on achievement of both rigorous Company performance metrics (including core return on equity, core return on assets and operating expenses as percentage of average equity and as a percentage of average assets), together with group and individual performance objectives 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. 2018 NEO Fixed vs. Variable Pay Mix Annaly Capital Management Inc. 2019 Proxy Statement 39 Table of Contents 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. In determining the Peer Group, the Manager considers both industry- and company-specific dynamics to identify the peers with which the Company competes for assets, stockholders and talent. As a result, the Manager focuses on peers within the mREIT industry, as well as asset management companies that manage mREITs, along with other asset managers and financial companies within relevant market capitalization and/or revenue bands. The Manager annually reviews the Peer Group and may update its composition to better reflect the Company’s competitive landscape or, if necessary, to account for corporate changes, including acquisitions and dispositions. The Manager considers both industry- and company- specific dynamics to identify the peers with which the Company competes for assets, stockholders and talent Compensation Peer Group Affiliated 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 Table of Contents Executive Compensation PROPOSAL 02 Advisory Approval of Executive Compensation The Board is committed to corporate governance best practices and recognizes the significant interest of stockholders in executive compensation matters. The Company is providing this non-binding advisory vote pursuant to Section 14A of the Exchange Act. As discussed throughout this proxy statement, we pay ourdescribed in detail under the headings “Management Structure” and “Compensation Paid by the Manager to the Named Executive Officers” above and “Compensation Discussion and Analysis” below, the Company is externally-managed by the Manager pursuant to the Management Agreement between the Manager and the Company. The Manager is responsible for paying all compensation amounts to the NEOs. The Company pays the Manager a management fee, and the purpose of which is not to provide compensation to our NEOs, but rather to compensate our Manager for the services it provides for the day-to-day management of Annaly. The proceedsuses a portion of the proceeds from the management fee are used by our Manager in part to pay compensation to our Manager’s personnel, including ourthe NEOs other than Mr. Keyes (who does not receive any compensation for serving as our Chief Executive Officer,the Company’s Chairman, CEO and President, but has an interest in the management fee as an indirect equityholder of ourthe Manager); however,. 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 we paythat the Company pays to the compensation of ourthe NEOs, and we dothe Company does not reimburse ourthe Manager for the cost of such compensation. OurThe Manager makes all decisions relating to the compensation it pays to ourof the NEOs based on the factors the Manager determines to be appropriate, including both individual and Company performance, it determines to be appropriate and subject to the terms of any employment agreementsagreement entered into between ourthe Manager and an individual NEOs. Changes for 2017 Given that we do not provide any compensation to our NEOs, we have not previously provided information related to our Manager’s executive compensation program for our NEOs and such information has not been previously provided to us. However, at the request of our Independent Directors and in response to our conversations with stockholders following the 2016 Say-on-Pay vote and our commitment to continuous improvement and transparency, our Manager has furnished the following information to the Company about its executive compensation program: > With the exception of Mr. Keyes (who does not receive any direct or indirect compensation from our Manager or the Company for his services as our Chief Executive Officer, but does have an interest in the fees paid to our Manager as an equityholder of the parent of our Manager), each of our other NEOs receives a base salary and is eligible for a performance-based cash incentive bonus as further described under “Components of Our NEOs’ Compensation” below;  > A significant majority of the NEOs’ target compensation is performance-based and “at-risk”; > Payout of performance-based bonuses is based on achievement of both rigorous Company and investment group performance metrics, along with individual performance objectives; and  > Our Manager considers a list of specified peer companies (set forth below under “Company Market Data”), together with advice from compensation consultants, including F. W. Cook, when it develops appropriate compensation packages for our NEOs. In addition, our Independent Directors have also requested that our Manager establish a framework for isolating the portion of the management fee allocable to 2017 NEO compensation. While the parameters of this framework are currently under review, our Independent Directors have asked our Manager to consider the guidance issued by proxy advisory firms regarding the level of compensation disclosure sufficient to facilitate an assessment of an externally-managed issuer’s pay programs.NEO. Specifically, the Independent Directors have requested that our Manager establish a compensation framework that will enable it to provide the Company with the following information for disclosure in our 2018 proxy statement: > The portion of the management fee that is allocated to NEO compensation paid by our Manager; > Of this compensation, the breakdown of fixed vs. variable/incentive pay; and > The metrics our Manager uses to measure performance to determine our NEOs’ variable/incentive pay. For additional information on our stockholder outreach efforts following the 2016 Say-on-Pay vote, please see “Compensation Discussion & Analysis – Consideration of “Say-on-Pay” Voting Results” below. www.annalyannualmeeting.com      23 Table of Contents Compensation Paid by our Manager to our Named Executive Officers Components of our NEOs’ Compensation Our Manager’s executive compensation program includes both a base salary and a performance-based cash incentive bonus. Although our Compensation Committee has discretion to grant equity awards of Company common stock to our NEOs (which it has not exercised since our Externalization), the management fee we pay to our Manager is paid entirely in cash and therefore our Manager has no independent ability to provide awards of Company stock as part of our NEOs’ compensation. To address this limitation on our Manager’s executive compensation program, our Manager has structured our NEOs’ performance-based cash incentive bonuses with a mix of both rigorous Company performance metrics and individual performance objectives. The table below describes the objectives supported by each of our Manager’s primary compensation elements, along with an overview of the key design features of each element. Compensation Element What It Does Key Measures Base Salary >Provides a level of fixed pay appropriate to an executive’s role and responsibilities >Evaluated on an annual basis, may be adjusted up or down >Experience, duties and scope of responsibility >Internal and external market factors Performance-Based Cash Incentive Bonus >Provides a competitive annual cash incentive opportunity >Links executives’ interests to those of our stockholders >Based on achievement of both rigorous Company performance metrics and individual performance objectives Company Market Data Our 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 our NEOs. In determining the Peer Group, our Manager considers both industry and company-specific dynamics to identify the peers with which we compete for assets, stockholders and talent. As a result, our Manager focuses on peers within the mREIT industry, as well as asset management companies that manage mREITs, along with other asset managers and financial companies within relevant market capitalization and/or revenue bands. Our Manager annually reviews the Peer Group and may update its composition tobetter reflect the Company’s competitive landscape or, if necessary, to account for corporate changes, including acquisitions and dispositions. Our Manager considers both industry and company-specific dynamics to identify the peers with which we compete for assets, stockholders and talent Compensation Peer Group > Affiliated Managers Group, Inc. > Janus Capital Group Inc. > AG Mortgage Investment Trust, Inc. > KKR & Co. L.P. > AGNC Investment Corp. > Leucadia National Corporation > American Capital, Ltd. > MFA Financial, Inc. > Ameriprise Financial, Inc. > New Residential Investment Corp. > Anworth Mortgage Asset Corporation > New York Mortgage Trust, Inc. > Apollo Commercial Real Estate Finance, Inc. > Newcastle Investment Corp. > Apollo Global Management LLC > Northern Trust Corporation > Ares Capital Corporation > NorthStar Asset Management Group Inc. > Ares Management LP > PennyMac Mortgage Investment Trust > ARMOUR Residential REIT, Inc. > Redwood Trust, Inc. > Blackstone Mortgage Trust, Inc. > SEI Investments Company > Colony Capital, Inc. > Starwood Property Trust, Inc. > Eaton Vance Corp. > T. Rowe Price Group, Inc. > Fortress Investment Group LLC > The Blackstone Group L.P. > Franklin Resources, Inc. > The Carlyle Group L.P. > Invesco Ltd. > Two Harbors Investment Corp. > Invesco Mortgage Capital Inc. > Waddell & Reed Financial, Inc. 24      Annaly Capital Management Inc. 2017 Proxy Statement Table of Contents Executive Compensation Advisory Approval of Our Executive Compensation Our Board is committed to corporate governance best practices and recognizes the significant interest of stockholders in executive compensation matters. We are providing this advisory vote pursuant to Section 14A of the Exchange Act. As described in detail under the headings “Our Management Structure” and “Compensation Paid by our Manager to our Named Executive Officers” above and “Compensation Discussion and Analysis” below, we are externally-managed by our Manager pursuant to the Management Agreement between our Manager and us. Our Manager is responsible for paying all compensation expense associated with managing us and our subsidiaries. We pay our Manager a management fee, and our Manager uses the proceeds from the management fee to pay compensation to our Manager’s personnel, including our NEOs other than Mr. Keyes (who does not receive any compensation for serving as our Chief Executive Officer, but has an interest in the management fee as an indirect equityholder of our Manager); however, the Company does not allocate any specific portion of the management fee we pay to the compensation of our NEOs and we do not reimburse our Manager for the cost of such compensation. Our Manager makes all decisions relating to the compensation of our NEOs based on the factors our Manager determines to be appropriate, including both individual and Company performance, and subject to the terms of any employment agreement entered into between our Manager and an individual NEO. Our Compensation Committee has no authority to influence or determine how our Manager compensates our NEOs. Our Manager does not consult with the Compensation Committee prior to making compensation determinations for our NEOs, including how much such officers are paid. Our NEOs are eligible to receive equity awards pursuant to our equity incentive plan, which is administered by the Compensation Committee. No equity awards were made to any of our NEOs in 2016. In 2016, we did not pay any compensation to our NEOs. The Board 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 narrative discussion, is hereby APPROVED.” While this vote is advisory and not binding on us, our Board and Compensation Committee value the views of our stockholders and will consider the voting results when making compensation decisions regarding our equity incentive plans. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THIS RESOLUTION. www.annalyannualmeeting.com      25 Table of Contents Executive Compensation Named Executive Officers Our NEOs for 2016 are: Name Title Kevin G. Keyes Chief Executive Officer (CEO), President and Director Glenn A. Votek Chief Financial Officer (CFO) David L. Finkelstein Chief Investment Officer (CIO) Timothy P. Coffey Chief Credit Officer (CCO) Anthony C. Green Chief Legal Officer (CLO) and Secretary Compensation Discussion and Analysis As discussed above, our Manager pays all of the compensation, including benefits, to its employees (including our NEOs other than Mr. Keyes). Although certain personnel (but none of our NEOs) are employed by our subsidiaries 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. The proceeds of the management fee are used in part to pay compensation to our Manager’s personnel, including our NEOs other than Mr. Keyes (who does not receive any compensation for serving as our Chief Executive Officer, but has an interest in the management fee as an indirect equityholder of our Manager); however, the Company does not allocate any specific portion of the management fee we pay to the compensation of our NEOS and we do not reimburse our Manager for the cost of such compensation. Accordingly, we did not pay any cash compensation to our NEOs, nor did we grant them any plan-based awards, for 2016. We do not provide our NEOs with pension benefits, perquisites or other personal benefits. The Company is not party to any employment agreements entered into between ourthe Manager and individual NEOs,NEOs. However, the Company is party to a Severance and we do not have any arrangements to pay such individuals anyNoncompetition Agreement (the “CEO Severance Agreement”) with Mr. Keyes, which provides for cash severance upon their termination or a change in control of the Company. As a result, no compensation is includable in the Summary Compensation Table for the NEOs. Pursuant to the terms 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 $152 million during the year ended December 31, 2016. Our Manager, which is a private company that is not subject to the disclosure requirements of the SEC, has sole discretion to determine the compensation it pays to its employees, including our NEOs. Under the terms of the management agreement, our Compensation Committee has no decision-making role related to and is not entitled to approve our Manager’s compensation decisions. Our Manager does not consult with the Compensation Committee prior to making any compensation determinations for our NEOs. Rather, as discussed above, the Compensation Committee is responsible for annually reviewing the performance of, and feesbe 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”, “Our Management Structure” and “Compensation Paid by our Manager to our Named Executive Officers” above. As noted above, the Company has no specific compensation arrangements for our Manager’s employees whoto Mr. Keyes in certain termination events. For more information, see “CEO Severance Agreement” and “Potential Payments upon Termination or Change in Control” below. The NEOs are furnishedeligible to receive equity awards pursuant to the Management AgreementCompany’s equity incentive plan, which is administered by the Compensation Committee. No equity awards were made to serve asany of the NEOs in 2018. In 2018, the Company did not pay any compensation to the NEOs. The Board unanimously recommends that the stockholders vote in favor of the following resolution: “RESOLVED, that the compensation paid to the Company’s NEOs,named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and our Manager makes allAnalysis, compensation determinations for its employees without any direction bytables and related narrative discussion, is hereby APPROVED.” While this vote is advisory and non-binding, the Board and without reference to any specific policies or programs underCompensation Committee value the oversightviews of the Board. Our Manager compensates its employees (including our NEOs) forCompany’s stockholders and will consider the voting results when making compensation decisions regarding the CEO Severance Agreement and the Company’s equity incentive plans. The Board unanimously recommends a varietyvoteFOR the Approval of this Resolution. Annaly Capital Management Inc. 2019 Proxy Statement 41 Table of Contents 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 benefit of our Manager. Thus the compensation paid by our 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. 26      Annaly Capital Management Inc. 2017 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.” Over 94% of votes cast supported the Company’s most recent Say-on-Pay vote Note: For footnoted information, please refer to “Compensation Discussion and Analysis” in Endnotes section. 42 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Executive Compensation Consideration of “Say-on-Pay” Voting Results At our 2016 Annual Meeting, 53% of the votes cast supported our advisory resolution on the fiscal year 2015 compensation of our NEOs (commonly known as a “Say-on-Pay” vote). While the Say-on-Pay vote received majority support, the CompensationCommittee was disappointed with the percentage of votes cast against the proposal. The Company promptly embarked on a multi-pronged effort to gather feedback from key stakeholders regarding our compensation and external management structures. These efforts included: We reached out to investors representing 65% of shares held by institutional investors > Outreach to investors representing 65% of shares held by institutional stockholders, including 45 of our 50 largest stockholders > Internal discussions with our Manager’s employees > Analysis of market practices at peer companies > Advice from compensation consultants > Attendance at investor conferences > Discussions with proxy advisory services and corporate governance research firms During the course of this review, we identified that certain stockholders and other key stakeholders would like the Company to provide expanded disclosure on our Manager’s executive compensation program in order to enable them to fully evaluate such program, including the degree of alignment between executive pay and Company performance. In order to address these concerns, our Manager has provided the Company with certain qualitative information about its executive compensation program for this proxy statement. In addition, our Independent Directors specifically requested that our Manager establish a framework for isolating the portion of the management fee allocable to 2017 NEO compensation so that the Company can provide related quantitative information in our 2018 proxy statement. For additional details, please see “Compensation Paid by our Manager to our Named Executive Officers – Changes for 2017” above. We 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.” Executive Compensation Policies Stock Ownership Guidelines for Certain Employees To align the interests of the employees of our Manager with those of our stockholders, the Board instituted expanded stock ownership guidelines for certain employees of our Manager, including our executive officers, in 2016. These guidelines provide for the following ownership levels: Position Number of Individuals Required Ownership of Annaly Stock Timeframe to Meet Guideline Chief Executive Officer 1 $10,000,000 April 12, 2019 Executive Chairman 1 1,673,134 shares April 12, 2016 Other Operating Committee Members 7 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 62     www.annalyannualmeeting.com      27 Table of Contents Executive Compensation These stock ownership guidelines apply to more than 40% of our Manager’s employees. As of March 31, 2017, all such individuals either met or, within the applicable period, are expected to meet the stock ownership guidelines. Stock Holding Period Under a policy adopted by the Compensation Committee in 2016, our Manager’s employees(including our executive officers) Executive Compensation Policies Stock Ownership Guidelines/Commitments Position Number of Individuals Annaly Stock Ownership Guideline/Commitment Timeframe to Meet Guideline/Commitment Chief 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 The stock ownership guidelines outlined above apply to more than 40% of the Manager’s employees. As of December 31, 2018, over 50% of the Manager’s employees had purchased stock in the open market, which includes senior employees subject to the Company’s stock ownership guidelines as well as junior team members. 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 stock they receive through stock option exercises or vesting of equity incentive awards. In 2016, we adopted expansive stock ownership guidelines and a four-year stock holding period requirement  Prohibition on Hedging Company Securities We have a policy prohibiting our Manager’s employees (including our executive officers) from engaging in any hedging transactions with respect to our equity securities held by them, which includes 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 our equity securities. Prohibition on Pledging Company Securities In 2016, we adopted a policy prohibiting our Manager’s employees (including our executive officers) 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 Proxy Statement. Donnell A. Segalas (Chair) Jonathan D. Green E. Wayne Nordberg John H. Schaefer Vicki Williams Note: For footnoted information, please refer to “Stock Ownership Guidelines/Commitments” in Endnotes section. Annaly Capital Management Inc. 2019 Proxy Statement 43 As discussed above in “Our Management Structure,” our Compensation Committee is not entitled to approve compensation decisions made by our Manager and our 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 our Manager uses the management fee to cover its operating expenses, including employee compensation. However, in connection with the Compensation Committee’s administration of the Company’s equity incentive plan, the Committee conducts an annual risk assessment of the Company’s compensation policies and practices applicable to such plan. In 2016, 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 us. Executive Compensation Tables Summary Compensation Table We did not pay any compensation to our NEOs with respect to the years ended December 31, 2016, December 31, 2015 or December 31, 2014. Grants of Plan-Based Awards We did not grant our NEOs any plan based awards in 2016. Outstanding Equity Awards at Fiscal Year-End None of our NEOs had outstanding equity awards at December 31, 2016. We did not pay any cash or equity compensation to our NEOs for 2016. We do not provide them with pension benefits, perquisites or other personal benefits.  28      Annaly Capital Management Inc. 2017 Proxy Statement Table of Contents Executive Compensation Options Exercised and Stock Vested 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. Grants of Plan-Based Awards 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 No options were exercised by and no stock vested for the NEOs during 2018. The Company did not pay any cash or equity compensation to the NEOs for our NEOs during 2016. Pension Benefits and Nonqualified Deferred Compensation We do2018. The Company does not provide ourthem with pension benefits, perquisites or other personal benefits. Pension Benefits and Nonqualified Deferred Compensation The Company does not provide the NEOs with any benefits pursuant to defined benefit plans and nonqualified deferred compensation plans. Potential Payments upon Termination or Change in Control 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. Type of Termination(1) Executive By Company without Cause By Executive with Good Reason Company Non-Renewal of Severance Agreement Kevin G. Keyes    $30,000,000    $30,000,000    $30,000,000 ____________________ 1. Payments are subject to the execution of a waiver and release of claims and compliance with applicable noncompetition provisions. We 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, 2016. Compensation Committee Report 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 proxy statement. Donnell A. Segalas (Chair)Jonathan D. GreenE. Wayne NordbergJohn H. Schaefer Compensation Committee Interlocks and Insider Participation Our Compensation Committee is comprised solely of the following Independent Directors: Messrs. Segalas (Chair), Green, Nordberg and Schaefer. None of them is serving or has served as an officer or employee of us or any affiliate or has any other business relationship or affiliation with us, except his service as a Director, and there are no other Compensation Committee interlocks that are required to be reported under the rules and regulations of the Exchange Act. Advisory Vote on the Frequency of Future Advisory Votes to Approve our Executive Compensation As required pursuant to Section 14A of the Exchange Act, we are seeking a vote from stockholders as to how frequently (a “Say-on-Frequency” vote) we should hold Say-on-Pay votes. By voting on this proposal, stockholders may indicate whether they would prefer that we conduct future Say-on-Pay votes once every one, two or three years. Stockholders may also abstain from casting a vote on this proposal. The Board has determined that conducting a Say-on-Pay vote every year is the most appropriate alternative for the Company. In reaching this recommendation, the Board considered that holding an annual Say-on-Pay vote is consistent with the preference expressed by our stockholders in response to our prior Say-on-Frequency vote in 2011, where a majority of the votes cast voted to hold an annual Say-on-Pay vote. In addition, the Board recognizes that holding a Say-on-Pay vote on an annual basis is a corporate governance best practice and is consistent with the Company’s policy of facilitating communications of stockholders with the Board and its various committees, including the Compensation Committee. Although the Board intends to carefully consider the voting results of this proposal, the vote is advisory and not binding on the Company or the Board. The Board may decide that it is in the best interests of stockholders and the Company to hold an advisory vote to approve our executive compensation more or less frequently than the frequency preferred by stockholders. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU SELECT “EVERY ONE YEAR” FOR THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE OUR EXECUTIVE COMPENSATION. 44 Annaly Capital Management Inc. 2019 Proxy Statement                                                   www.annalyannualmeeting.com      29 Table of Contents Audit Committee Matters Ratification of Appointment of Independent Registered Public Accounting Firm The Audit Committee is responsible for the appointment, compensation, retention, and oversight of the Company’s independent registered public accounting firm. Our Audit Committee has appointed Ernst & Young LLP (“Ernst & Young” or “E&Y”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2017, and stockholders are asked to ratify the selection at the Annual Meeting as a matter of good corporate governance. Ernst & Young has served as our independent registered public accounting firm since 2012. In appointing Ernst & Young, the Audit Committee considered a number of factors, including Ernst & Young’s independence, objectivity, level of service, industry knowledge, technical expertise, and tenure as our independent auditor. We expect that representatives of Ernst & Young will be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. If the appointment of Ernst & Young is not ratified, our Audit Committee will reconsider the appointment. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR 2017. Report of the Audit Committee The Audit Committee has reviewed and discussed our audited financial statements with management and with Ernst & Young, our independent auditors for 2016. The Audit Committee has discussed with Ernst & Young the matters required to be discussed by Statement on Auditing Standards No. 61, as amended. The Audit Committee has received from Ernst & Young the written statements required by Public Company Accounting Oversight Board (PCAOB) Rule No. 3526, “Communications with Audit Committees Concerning Independence,” and has discussed Ernst & Young’s independence with Ernst & Young. The Audit Committee is responsible for the appointment, compensation, retention and oversight of our independent auditors  In reliance on these reviews and discussions, and the report of the independent registered public accounting firm, the Audit Committee has recommended to our Board, and our Board has approved, that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2016 for filing with the SEC. The foregoing report has been furnished by the Audit Committee: Kevin P. Brady (Chair)     Francine J. Bovich     Michael Haylon     John H. Schaefer 30      Annaly Capital Management Inc. 2017 Proxy Statement Table of Contents Audit Committee Matters Executive Compensation Compensation Committee Interlocks and Insider Participation The Compensation Committee is comprised solely of the following Independent Directors: Messrs. Segalas (Chair), Green, Nordberg and Schaefer and Ms. Williams. None of them is serving or has served as an officer or employee of the Company or any affiliate or has any other business relationship or affiliation with the Company, except service as a Director. 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 or Board. Ceo Pay Ratio The Manager is responsible for managing the Company’s affairs pursuant to the Management Agreement and, as of December 31, 2018, directly employed 95% of the individuals who provide services to the Company. The remaining employees are employed by subsidiaries of the Company for regulatory or corporate efficiency reasons. 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 in accordance with the requirements of the Summary Compensation Table as its consistently applied compensation measure to identify the median 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 CEO. As a result, the CEO to median employee pay ratio required to be disclosed under Item 402(u) of Regulation S-K is not applicable. This information is being provided for compliance purposes. Neither the Compensation Committee nor the Manager used the pay ratio measure in making any compensation decisions. Annaly Capital Management Inc. 2019 Proxy Statement 45 Table of ContentsRelationship with Independent Registered Public Accounting Firm Executive Compensation PROPOSAL 03 Approval of an Amendment to the Company’s Charter to Increase the Number of Authorized Shares of Capital Stock to 3,000,000,000 Shares As of March 25, 2019, we had 1,442,971,679 shares of 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. 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 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. The proposed amendment to our charter deletes the current ARTICLE VI(A) of our charter and replaces it with the following: “ARTICLE VI A.The total number of shares of stock of all classes which the Corporation has authority to issue is three billion (3,000,000,000) shares of capital stock, par value one cent ($0.01) per share, amounting in the aggregate par value to thirty million dollars ($30,000,000). Of these shares of capital stock, 2,924,050,000 shares are classified as “Common Stock,” 7,000,000 shares are classified as “7.625% Series C Cumulative Redeemable Preferred Stock,” 18,400,000 shares are classified as “7.50% Series D Cumulative Redeemable Preferred Stock,” 28,800,000 shares are classified as “6.95% Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock,” 19,550,000 shares are classified as “6.50% Series G Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock,” and 2,200,000 shares are classified as “8.125% Series H Cumulative Redeemable Preferred Stock.” Our Board may 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 redemption of such shares of stock.” 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. 46 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Executive Compensation Purpose and Background To retain the ability to issue 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 issued and outstanding, leaving 483,628,321 shares of capital stock 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 stock dividends or splits. Although the Company’s charter permits the 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 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. Potential Effect Future issuances of common stock or securities convertible into common stock could have a dilutive 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. Vote Required 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 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 beneficial owners. As a result, a broker non-vote cannot occur with respect to this proposal. For more information on the voting requirements, see the “Questions and Answers about the Annual Meeting” section in this Proxy Statement. Conclusion The Board considers this amendment to the Company’s charter 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 stockholders at the Annual Meeting may avoid the expensive procedure of calling and holding a special meeting of stockholders for such a purpose at a later date. Annaly Capital Management Inc. 2019 Proxy Statement 47 Table of Contents Audit Committee Matters PROPOSAL 04 Ratification of Appointment of Independent Registered Public Accounting Firm The Audit Committee is responsible for the appointment, compensation, retention, and oversight of the Company’s independent registered public accounting firm. The Audit Committee has appointed Ernst & Young LLP (“Ernst & Young” or “EY”) to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019, and stockholders are being asked to ratify this appointment at the Annual Meeting as a matter of good corporate governance. Ernst & Young has served as Annaly’s independent registered public accounting firm since 2012. In appointing Ernst & Young, the Audit Committee considered a number of factors, including Ernst & Young’s independence, objectivity, level of service, industry knowledge, technical expertise, and tenure as the independent auditor. The Company expects that representatives of Ernst & Young will be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. If the appointment of Ernst & Young is not ratified, the Audit Committee will reconsider the appointment. Even if the appointment is ratified, the Audit Committee may, in its discretion, appoint a different independent auditor at any time during the year if the Audit Committee determines that such a change would be in the stockholders best interest. The Board unanimously recommends a voteFORthe ratification of the appointment of Ernst & Young LLP as the Company’s Independent Registered Public Accounting Firm for the year ending December 31, 2019. Report of the Audit Committee 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 is responsible for the appointment, compensation, retention and oversight of the independent auditors The Audit Committee has reviewed and discussed Annaly’s audited financial statements with management and with Ernst & Young, the Company’s independent auditor for 2018. The Audit Committee has discussed with Ernst & Young the matters required to be discussed by applicable standards adopted by the Public Company Accounting Oversight Board, including matters concerning Ernst & Young’s independence. 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 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. In reliance on these reviews and discussions, and the report of the independent registered public accounting firm, the Audit Committee has recommended to the Board, and the Board has approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC. Kevin P. Brady (Chair) Michael Haylon E. Wayne Nordberg John H. Schaefer Vicki Williams The aggregate fees billed for 2016 and 2015 by E&Y for each of the following categories of services are set forth below: Service Category 2016 2015 Audit $2,416,392 $2,144,350 Audit-Related 30,000 127,500 Tax 239,900 223,310 All Other – – Total $2,685,292 $2,495,160 (1)     For 2015, $15,000 that was included in “Tax” fees in our 2016 proxy statement has been reclassified to “Audit” fees. 48 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Audit Committee Matters Relationship with Independent Registered Public Accounting Firm The aggregate fees billed for 2018 and 2017 by EY for each of the following categories of services are set forth below: Service Category     2018     2017 Audit(1) $ 2,708,050 $ 2,569,311 Audit-Related(2) 62,000 61,000 Tax(3) 509,800 316,700 All Other(4) 134,000 – Total $ 3,413,850 $ 2,947,011 ____________________ 1. Audit fees primarily relate to integrated audits of ourthe Company’s annual consolidated financial statements and internal control over financial reporting under Sarbanes-Oxley Section 404, reviews of ourthe Company’s quarterly consolidated financial statements, audits of ourthe Company’s subsidiaries’ financial statements and comfort letters and consents related to 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. The Audit Committee has also adopted policies and procedures for pre-approving all non-audit work performed by the independent registered public accounting firm. The Audit Committee retained EY to provide certain non-audit services in 2018, all of which were pre-approved by the Audit Committee. Specifically, the Audit Committee pre-approved the use of EY for the following categories of non-audit services: ■ accounting consultations on matters addressed during the audit or interim reviews ■ agreed upon procedures in connection with financing arrangements of certain Company subsidiaries ■ tax compliance and procedures for pre-approving all non-audit work performed by our independent registered public accounting firm. The Audit Committee retained E&Y to provide certain non-audit services in 2016, all of which were pre-approved by the Audit Committee. Specifically, the Audit Committee pre-approved the use of E&Y for the following categories of non-audit services: > accounting consultations on matters addressed during the audit or interim reviews > agreed upon procedures in connection with financing arrangements of certain Company subsidiaries > tax compliance and consultations In addition to these non-audit services, 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. We understand the need for E&Y to maintain objectivity and independence as the auditor of our financial statements and our internal control over financial reporting. In accordance with SEC rules, the Audit Committee requires the lead E&Y partner assigned to our The Audit Committee determined that the provision by EY of these non-audit services is compatible with EY maintaining its independence. In 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. The Company understands the need for EY to maintain objectivity and independence as the auditor of its financial statements and internal control over financial reporting. In accordance with SEC rules, the Audit Committee requires the lead EY partner assigned to Annaly’s audit to be rotated at least every five years, and the Audit Committee and its chair is involved in selecting each new lead audit partner. The Audit Committee approved the hiring of EY to provide all of the services detailed above prior to such independent registered public accounting firm’s engagement. None of the services related to the Audit-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 is involved in selecting each new lead audit partner. Our Audit Committee approved the hiring of E&Y to provide all of the services detailed above prior to such independent registered public accounting firm’s engagement. Noneof the services related to thepartnerAudit-Related Feesdescribed 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 is involved in selecting each new lead audit partner  www.annalyannualmeeting.com Annaly Capital Management Inc. 2019 Proxy Statement      31 Table of Contents Stock Ownership Information Security Ownership of Certain Beneficial Owners and Management49 The following table sets forth certain information as of March 28, 2017 Table of Contents Stock Ownership Information Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information as of March 25, 2019 relating to the beneficial ownership, as defined in SEC rules, of the Company’s common stock by (i) each NEO, (ii) each Director and nominee for Director, (iii) all executive officers and Directors as a group, and (iv) all persons that the Company knows beneficially own more than 5% of its 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. Knowledge of the beneficial ownership of the 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. Beneficial Owner(1)     Amount and Nature of Beneficial Ownership(2)     Percent of Class(3) Kevin G. Keyes 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 1,811,272 * Katie Beirne Fallon 12,858 * Jonathan D. Green 198,379 * Thomas Hamilton(5),(6) 250,000 * Kathy Hopinkah Hannan(6) - * Michael Haylon 152,629 * E. Wayne Nordberg(7) 214,879 * John H. Schaefer 126,474 * 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 our common stock by (i) each NEO, (ii) each Director, (iii) all of our executive officers and Directors as a group, and (iv) all persons that we know beneficially own moreless than 5% of our outstanding common stock. Knowledgeone percent of the beneficial ownership of our common stock is drawn from statements filed with the SEC pursuant to Section 13(d) or 13(g) of the Exchange Act. Beneficial Owner(1) Amount and Nature of Beneficial Ownership(2) Percent of Class(3) Kevin G. Keyes 656,908 * Wellington J. Denahan 2,223,134 * Glenn A. Votek 61,266 * David L. Finkelstein 200,000 * Timothy P. Coffey 38,000 * Anthony C. Green 77,750 * Kevin P. Brady(4) 244,704 * Jonathan D. Green 197,074 * Michael Haylon 136,324 * Donnell A. Segalas 209,954 * E. Wayne Nordberg(5) 213,574 * John H. Schaefer 94,155 * Francine J. Bovich 45,692 * All executive officers and Directors as a group (13 people) 4,398,535 * BlackRock, Inc.(6) 91,946,636 9.0% The Vanguard Group, Inc.(7) 78,782,459 7.7% *stock. 1. Represents beneficial ownership of less than one percent of the common stock. (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 our knowledge, each stockholder listed has sole voting and investment power with respect to the shares beneficially owned by the stockholder. (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 have 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 43,750 shares; Jonathan D. Green 91,250 shares; Michael Haylon 76,250 shares; Donnell A. Segalas 78,750 shares; E. Wayne Nordberg 91,250 shares. The DSUs included in the table above are as follows: Kevin P. Brady 55,054 DSUs; Jonathan D. Green 60,074 DSUs; Michael Haylon 60,074 DSUs; Donnell A. Segalas 55,054 DSUs; E. Wayne Nordberg 60,074 DSUs; John H. Schaefer 28,112 DSUs; and Francine J. Bovich 45,692 DSUs. (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, 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) Includes: (i) 48,750 shares owned by the Kevin P. Brady Family Trust, (ii) 42,500 shares owned by Mr. Brady’s wife, (iii) 1,500 shares owned by Mr. Brady’s daughter, and (iv) 9,000 shares owned by Mr. Brady’s mother. Mr. Brady disclaims beneficial ownership of these 101,750 shares. (5) Includes: (i) 10,000 shares owned by the Olivia Nordberg Trust and (ii) 9,000 shares owned by Mr. Nordberg’s spouse. (6) BlackRock, Inc., 55 East 52nd Street, New York, NY 10055, as a parent holding company or control person of certain named funds (“BlackRock”), filed a Schedule 13G/A on January 19, 2017 reporting, as of December 31, 2016, beneficially owning 91,946,636 shares of common stock with the sole power to vote or to direct the vote of 83,299,090 shares of common stock, the shared power to vote or to direct the vote of zero shares of common stock, the sole power to dispose or to direct the disposition of 91,946,636 shares of common stock and the shared power to dispose or to direct the disposition of zero shares of common stock. This information is based solely on information contained in the Schedule 13G/A filed by Blackrock. (7) 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 9, 2017 reporting, as of December 31, 2016, beneficially owning 78,782,459 shares of common stock with the sole power to vote or to direct the vote of 839,393 shares of common stock, the shared power to vote or to direct the vote of 440,856 shares of common stock, the sole power to dispose or to direct the disposition of 77,539,383 shares of common stock and the shared power to dispose or to direct the disposition of 1,243,076 shares of common stock. This information is based solely on information contained in the Schedule 13G/A filed by Vanguard. 32      Annaly Capital Management Inc. 2017 Proxy Statement Table of Contents Stock Ownership Information Section 16(a) Beneficial Ownership Reporting Compliance We believe that based solely on our review of the reports filed during the fiscal year ended December 31, 2016 and on the written representations of those filing reports, all filing requirements under Section 16(a) of the Exchange Act, as amended, applicable to our executive officers, Directors and beneficial owners of more than ten percent of our common stock were complied with on a timely basis. Other Information Access to Form 10-K On written request, we will provide without charge to each record or beneficial holder of our common stock as of March 28, 2017 (the “Record Date”) a copy of our annual report on Form 10-K for the year ended December 31, 2016, as filed with the SEC. You should address your request to Investor Relations, Annaly Capital Management, Inc., 1211 Avenue of the Americas, New York, NY 10036 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.” Stockholder Proposals Any10036. To the best of the Company’s knowledge, each stockholder intending to present a proposal at our 2018 annual meeting of stockholderslisted has sole voting and have the proposal included in the proxy statement for such meeting must, in addition to complyinginvestment power with the applicable laws and regulations governing submissions of such proposals, submit the proposal in writing to us no later than December 12, 2017. Pursuant to our Amended and Restated 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 statement for such annual meeting, must notify us in writing not less than 120 days nor more than 150 days priorrespect to the first anniversaryshares beneficially owned by the stockholder. 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. The Company has also included shares of common stock underlying vested options. The shares of common stock underlying vested options included in the proxy statementabove table are as follows: Kevin P. Brady 12,500 shares; Jonathan D. Green 50,000 shares; Michael Haylon 50,000 shares; E. Wayne Nordberg 50,000 shares; and Donnell A. Segalas 37,500 shares. The DSUs included in the above table are as follows: Francine J. Bovich 84,740 DSUs; Kevin P. Brady 94,102 DSUs; Wellington J. Denahan 12,858 DSUs; Katie Beirne Fallon 12,858 DSUs; Jonathan D. Green 102,629 DSUs; Michael Haylon 102,629 DSUs; E. Wayne Nordberg 102,629 DSUs; John H. Schaefer 48,980 DSUs; Donnell A. Segalas 94,102 DSUs; and Vicki Williams 12,858 DSUs. 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 preceding year’s annual meeting. Accordingly,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 stockholder who intendsother person or group of persons. 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 daughters. Mr. Brady disclaims beneficial ownership of these 92,750 shares. 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 submit such a nomination or such a proposal at our 2018 annual meeting of stockholders must notify us in writing of such proposal by December 12, 2017, but in no event earlier than November 12, 2017. Any such nomination or proposal should be sent to Secretary, the Board effective February 13, 2019 and March 6, 2019, respectively. 50 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Stock Ownership Information 7. Includes: (i) 10,000 shares owned by Olivia Nordberg Trust and (ii) 9,000 shares owned by Mr. Nordberg’s spouse. 8. 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. 9. BlackRock, Inc., 1211 Avenue of the Americas,55 East 52nd Street, New York, NY 1003610055, as a parent holding company or control person of certain named funds (“BlackRock”), filed a Schedule 13G/A on February 4, 2019 reporting, as of December 31, 2018, beneficially owning 120,128,838 shares of common stock with the sole power to vote or to direct the vote of 110,212,604 shares of common stock and the sole power to dispose or to direct the extent applicable, must includedisposition of 120,128,838 shares of common stock. This information is based solely on information contained in the Schedule 13G/A filed by Blackrock. 10. 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 11, 2019 reporting, as of December 31, 2018, beneficially owning 119,048,402 shares of common stock with the sole power to vote or to direct the vote of 893,469 shares of common stock, the shared power to vote or to direct the vote of 665,240 shares of common stock, the sole power to dispose or to direct the disposition of 117,558,870 shares of common stock and the shared power to dispose or to direct the disposition of 1,489,532 shares of common stock. This information requiredis based solely on information contained in the Schedule 13G/A filed by our Bylaws.Vanguard. Other Matters Section 16(a) Beneficial Ownership Reporting Compliance The Company believes that based solely on its review of the reports filed during the fiscal year ended December 31, 2018, and on the written representations of those filing reports, all Section 16(a) forms required to be filed by Annaly’s executive officers, directors and beneficial owners of more than ten percent of its common stock were filed on a timely basis and in compliance with Section 16(a) of the Exchange Act, with the exception of one transaction reported on a Form 5 filed on January 19, 2019, on behalf of David Finkelstein, which was filed late due to an administrative error. Annaly Capital Management Inc. 2019 Proxy Statement 51 As of the date Table of Contents Other Information Where You Can Find More Information 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. Additionally, on written request, the Company will provide without charge to each record or beneficial holder of the Company’s common stock as of the close of business on March 25, 2019 (the “Record Date”) a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 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, NY 10036 or email your request to investor@annaly.com. Stockholder Proposals Any stockholder intending to propose a matter for consideration at the 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 no later than December 11, 2019, in order to be timely. Pursuant to the Company’s current Amended and Restated Bylaws (“Bylaws”), any stockholder intending to nominate a Director or present a proposal at an annual meeting of stockholders that is not intended to be included in the Proxy Statement for such annual meeting must provide written notification not later 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 earlier than 150 days prior to the first anniversary of the date of the Proxy Statement for the preceding year’s annual meeting. Accordingly, any stockholder who intends to submit such a nomination or such a proposal at the 2020 Annual Meeting must provide written notification of such proposal by December 11, 2019, but in no event earlier than November 11, 2019. 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 the Company’s Bylaws. Other Matters As of the date of this 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. Questions and Answers About the Annual Meeting  Q  When and where is the Annual Meeting?  A  The Annual Meeting will be held on May 22, 2019, at 9:00 a.m. (Eastern Time) online at www.virtualshareholdermeeting.com/NLY2019. If you plan to attend the Annual Meeting online, you will need the 16-digit control number included in your Notice, on your proxy card or on the instructions that accompany your proxy materials. 52 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Other Information  Q  Why did I receive a Notice in the mail regarding the Internet availability of proxy materials instead of a paper copy of proxy materials?  A  The SEC has approved “Notice and Access” rules relating to the delivery of proxy materials over the Internet. These rules permit the Company to furnish proxy materials, including this Proxy Statement and the Annual Report, to stockholders by providing access to such documents on the Internet instead of mailing printed copies. Most stockholders will not receive paper copies of the proxy materials unless they request them. Instead, the Notice, which will be mailed to stockholders, provides instructions regarding how you may access and review all of the proxy materials on the Internet. The Notice also instructs you as to how you may authorize your proxy via the Internet or by telephone. If you would like to receive a paper or email copy of the Company’s proxy materials, you should follow the instructions for requesting such materials printed on the Notice.  Q  Can I vote my shares by filling out and returning the Notice?  A  No. The Notice identifies the items to be considered and voted on at the Annual Meeting, other thanbut 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.  Q  Who is entitled to vote at the Annual Meeting?  A  Only common stockholders of record as describedof the close of business on the Record Date (March 25, 2019) are entitled to vote at the Annual Meeting.  Q  How can I vote my shares?  A  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.  Q  What quorum is required for the Annual Meeting?  A  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. At the close of business, on the Record Date there were 1,442,971,679 outstanding shares of the Company’s common stock, each entitled to one vote per share. Abstentions and “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  What are the voting requirements that apply to the proposals discussed in this proxy statement. www.annalyannualmeeting.com      33 Table of ContentsProxy Statement? Other Information  A  Proposal Vote Questions and Answers about the Annual MeetingRequired Discretionary 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 Q: When and where is the Annual Meeting? A: The Annual Meeting will be held on Thursday, May 25, 2017 at 9:00 a.m. (Eastern Time) at the Warwick Hotel, 65 West 54th Street, New York, NY 10019. Q: Who is entitled to vote at the Annual Meeting? A: Only common stockholders of record as of the close of business on the Record Date (March 28, 2017) are entitled to vote at the Annual Meeting. Q: What quorum is required for the Annual Meeting? A: A quorum will be present at the Annual Meeting if a majority of the votes entitled to be cast are present, in person or by proxy. Since there were 1,018,971,441 outstanding shares of common stock, each entitled to one vote per share, as of the Record Date, we will need at least 509,485,721 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. Q: What are the voting requirements that apply to the proposals discussed in this proxy statement? A: Proposal Vote Required Discretionary Voting Allowed? (1) Election of Directors Majority No (2) Advisory approval of our executive compensation Majority No (3) Advisory vote on the frequency of future advisory votes to approve our executive compensation Plurality No (4) Ratification of the appointment of Ernst & Young Majority Yes “Majority” means (a) with regard to an uncontested election of Directors, the affirmative vote of a majority of all thetotal votes cast onfor and against 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 on the matter at the Annual Meeting. “Plurality” means,Meeting; and (c) with regard to the advisoryproposed 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 frequency of future advisory votes to approve our executive compensation, the option (every one, two or three years) receiving the greatest number of “for” votes will be considered the frequency recommended by stockholders.proposal. Annaly Capital Management Inc. 2019 Proxy Statement 53 Table of Contents 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.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.”  Q  What is the effect of abstentions and there is“broker non-votes” on the proposals submitted at least one other proposalthe Annual Meeting?  A  Abstentions will have no effect on whichProposal 1, Proposal 2, or Proposal 4. Abstentions will have the same effect as a vote against Proposal 3. “Broker non-votes,” if any, will have no effect on 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  How will my shares be voted if I do not specify how they should be voted?  A  Properly executed proxies that do not contain voting instructions will be voted as follows: (1) Proposal No. 1: FOR the affectedelection of each Director nominee listed herein; (2) Proposal No. 2: FOR the approval, on a non-binding and advisory basis, of the Company’s executive compensation as described in this Proxy Statement; (3) Proposal No. 3: FOR the approval of the amendment to our charter; and (4) Proposal No. 4: FOR the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019. The Company officers you authorize 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  What do I do if I want to change my vote?  A  You may revoke a proxy at any time before it is exercised by filing a duly executed revocation of proxy, by submitting a duly executed proxy with a later date, using the phone or online voting procedures, or by participating in the Annual Meeting via live webcast and voting online during the Annual Meeting prior to the closing of the polls. You may revoke a proxy by any of these methods, regardless of the method used to deliver your previous proxy. Virtual attendance at the Annual Meeting without voting online will not itself revoke a proxy.  Q  How will voting on any other business be conducted?  A  Other than the four proposals described in this Proxy Statement, the Company knows of no other business to be considered at the Annual Meeting. If any other matters are referredproperly presented at the meeting, your signed proxy card authorizes Kevin G. Keyes, Chairman, Chief Executive Officer and President, and Anthony 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 in their discretion.  Q  Who will count the vote?  A  Representatives of American Election Services, LLC, the independent inspector of elections, will count the votes. 54 Annaly Capital Management Inc. 2019 Proxy Statement Table of Contents Other Information  Q  How can I participate in the Annual Meeting?  A  All stockholders of record as of the Record Date can attend the Annual Meeting online 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 cannot vote from such audio broadcast. If you plan to attend the Annual Meeting online or listen to the telephonic audio broadcast, you will need the 16-digit control number included in your Notice, on your proxy card or on the instructions that accompany your proxy materials. Online check-in will begin at 8:30 a.m. (Eastern Time), and you should allow ample time for online check-in procedures. 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. 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.  Q  What is the pre-meeting forum and how can I access it?  A  One of the benefits of the online Annual Meeting format is that it allows the Company to communicate more effectively with its stockholders via a pre-meeting forum that you can access by visiting www.proxyvote.com. Through use of the pre-meeting forum, stockholders can submit questions in advance of the Annual Meeting and view copies of the Company’s proxy materials. The Company will respond to as broker “non-votes.”many inquiries at the Annual Meeting as time allows. Q: What is the effect of abstentions and broker “non-votes”?  Q  Why is the Company holding the Annual Meeting online?  A  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 the 2018 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  What if I have difficulties accessing the pre-meeting forum or locating my 16-digit control number prior to the day of the Annual Meeting on May 22, 2019?  A  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.  Q  What if during the check-in time or during the Annual Meeting I have technical difficulties or trouble accessing the live webcast of the Annual Meeting?  A  If you encounter any difficulties accessing the live webcast of the Annual Meeting during the check-in or during the Annual Meeting itself, including any difficulties with your 16-digit control number, please call toll-free 1-855-449-0991 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.  Q  How will the Company solicit proxies for the Annual Meeting?  A  The expense of soliciting proxies will be borne by the Company. Proxies will be solicited principally through the use of mail, but Directors, executive officers and employees, who will not be specially compensated, may solicit proxies from stockholders by telephone, facsimile or other electronic means or in person. Also, the Company will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for any reasonable expenses in forwarding proxy materials to beneficial owners. Annaly Capital Management Inc. 2019 Proxy Statement 55                          A: Table of Contents Other Information The Company has retained Georgeson Inc., a proxy solicitation firm, to assist it in the solicitation of proxies in connection with the Annual Meeting. The Company will pay Georgeson a fee of $15,000 for its services. In addition, the Company may pay Georgeson additional fees depending on the extent of additional services requested by the Company and will reimburse Georgeson for expenses Georgeson incurs in connection with its engagement by the Company. In addition to the fees paid to Georgeson, the Company will pay all other costs of soliciting proxies. Stockholders have the option to vote over the Internet or by telephone. Please be aware that if you vote over the Internet, you may incur costs such as telephone and access charges for which you will be responsible.  Q  Abstentions and broker “non-votes” will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum. Abstentions and broker non-votes, if any, will have no effect on any of the proposals submitted at the Annual Meeting. 34      Annaly Capital Management Inc. 2017 Proxy Statement TableWhat is “Householding” and does Annaly do this?  A  “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 Contentsproxy materials receive only one copy of a company’s Proxy Statement and Annual Report unless one or more of these stockholders notifies the company or their respective bank, broker or other intermediary that they wish to continue to receive individual copies. The Company engages in this practice as it reduces printing and postage costs. However, if a stockholder of record residing at such an address wishes to receive a separate Annual Report or Proxy Statement, he, she or it may request it by writing to Annaly Capital Management, Inc., 1211 Avenue of the Americas, New York, NY 10036, Attention: Investor Relations, by emailing investor@annaly.com, or by calling 212-696-0100, and the Company will promptly deliver the requested Annual Report or Proxy Statement. If a stockholder of record residing at such an address wishes to receive a separate Annual Report or Proxy Statement in the future, he, she or it may contact the Company in the same manner. If you are an eligible stockholder of record receiving multiple copies of the Company’s Annual Report and Proxy Statement, you can request householding by contacting the Company in the same manner. If you own your shares through a bank, broker or other nominee, you can request householding by contacting the bank, broker or other nominee.  Q  Could the Annual Meeting be postponed or adjourned? Other Information  A  If a quorum is not present or represented, the Company’s Bylaws permit the chairman of the meeting to adjourn the Annual Meeting, without notice other than an 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  Who can help answer my questions?  A  If you have any questions or need assistance voting your shares or if you need copies of this Proxy Statement or the proxy card, you should contact: Q: How will my shares be voted if I do not specify how they should be voted? A: Properly executed proxies that do not contain voting instructions will be voted as follows: (1) Proposal No. 1: FOR the election of Directors; (2) Proposal No. 2: FOR the approval, on a non-binding basis, of our executive compensation; (3) Proposal No. 3: For EVERY ONE YEAR with regard to the frequency of future advisory votes to approve our executive compensation; and (4) Proposal No. 4: FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm. The Company officers you appoint as proxies may vote for one or more adjournments of the Annual Meeting, including adjournments to permit further solicitations of proxies. 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: You may revoke a proxy at any time before it is voted by filing with us a duly executed revocation of proxy, by submitting a duly executed proxy to us with a later date or by appearing at the Annual Meeting and voting in person. You may revoke a proxy by any of these methods, regardless of the method used to deliver your previous proxy. Attendance at the Annual Meeting without voting will not itself revoke a proxy. Q: How will voting on any other business be conducted? A: Other than the four proposals described in this proxy statement, we know 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, our Chief Executive Officer and President, and Anthony C. Green, our Secretary, to vote on those matters in their discretion. Q: Who will count the vote? A: Representatives of Broadridge Financial Solutions, Inc., the independent Inspector of Elections, will count the votes. Q: Who can attend the Annual Meeting? A: All stockholders of record as of the Record Date can attend the Annual Meeting, although seating is limited. If your shares are held through a broker and you would like to attend, please either (1) write us at Investor Relations, Annaly Capital Management, Inc., 1211 Avenue of the Americas, New York, NY 10036 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) to the Annual Meeting. In addition, you must bring a valid, government-issued photo identification, such as a driver’s license or a passport. If you plan to attend the Annual Meeting, please check the box on your proxy card when you return your proxy or follow the instructions on your proxy card 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 place 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. www.annalyannualmeeting.com      35 Table of Contents Other Information Q: How will we solicit proxies for the Annual Meeting? A: The expense of soliciting proxies will be borne by the Company. Proxies will be solicited principally through the use of mail, but 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. We have retained Innisfree M&A Incorporated, a proxy solicitation firm, to assist us in the solicitation of proxies in connection with the Annual Meeting. We will pay Innisfree a fee of $15,000 for its services. In addition, we may pay Innisfree additional fees depending on the extent of additional services requested by us and will reimburse Innisfree for expenses Innisfree incurs in connection with its engagement by us. In addition to the fees paid to Innisfree, we will pay all other costs of soliciting proxies. Stockholders have the option to vote over the Internet or by telephone. Please be aware that if you vote over the Internet, you may incur costs such as telephone and access charges for which you will be responsible. Q: What is “Householding” and does Annaly do this? A: “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 proxy statement and annual report from a company, bank, broker or other intermediary, unless one or more of these stockholders notifies the company, bank, broker or other intermediary that they wish to continue to receive individual copies. We engage 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 report or proxy statement, he or she may request it orally or in writing by contacting us at 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 we will promptly deliver the requested annual report or proxy statement. If a stockholder of record residing at such an address wishes to receive a separate annual report or proxy statement in the future, he or she may contact us in the same manner. If you are an eligible stockholder of record receiving multiple copies of our annual report and proxy statement, you can request householding by contacting us 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: Could the Annual Meeting be postponed or adjourned? A: If a quorum is not present or represented, our Bylaws permit the chairman of the meeting to postpone or adjourn the Annual Meeting, without notice other than an announcement at the Annual Meeting. Q: Who can help answer my questions? A: If you have any questions or need assistance voting your shares or if you need copies of this proxy statement or the proxy card, you should contact: Annaly Capital Management, Inc. 1211 Avenue of the Americas New York, NY 10036 Phone: 1-888-8 ANNALY Facsimile: (212) 696-9809 Email: investor@annaly.com Attention: Investor Relations Our The Company’s principal executive offices are located at the address above. 36      Annaly Capital Management Inc. 2017 Proxy Statement Table of Contents56 Other Information Where You Can Find More Information We 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 atwww.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, NY 10005. 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. www.annalyannualmeeting.com Annaly Capital Management Inc. 2019 Proxy Statement                         37 Table of Contents Table of Contents Table of Contents ANNALY CAPITAL MANAGEMENT, INC. 1211 AVENUE OF THE AMERICAS NEW YORK, NY 10036 ATTN: GLENN A. VOTEK VOTE BY INTERNET -www.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 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.                          ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS Table of Contents Endnotes Message from our Chairman, CEO and President (page i) 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. If 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. Annaly at a Glance & Recent Operating Achievements (page 3) 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. Annaly’s Diversified Shared Capital Model (page 4) 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                          VOTE BY PHONE - 1-800-690-6903 Table of Contents Endnotes Annaly’s Diversified Shared Capital Model(cont’d)(page 4) 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. Use 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. Growth and Income (page 5) 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. Delivering Significant Value for Stockholders (page 6) 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. Stockholder Engagement (page 8) 1. “Continuing Directors” represent the eleven members of the Board following the 2019 Annual Meeting (assuming all nominees are elected). Corporate Responsibility & The Manager and the Management Agreement (page 9) 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. Overview of the Manager’s 2018 Executive Compensation Program (page 10) 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. Board Composition, Structure and Refreshment (page 11) 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. Corporate Governance at Annaly (page 13) 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                          VOTE BY MAIL 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. Table of Contents Endnotes The Board’s Role and Responsibilities (page 20) 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. Board Effectiveness, Self-Evaluations and Refreshment (page 22) 1. “Continuing Directors” represent the eleven members of the Board following the 2019 Annual Meeting (assuming all nominees are elected). Management Agreement (page 25) 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. Board Committees (page 28) 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. Audit Committee & Compensation Committee (page 29) 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. NCG Committee, Corporate Responsibility Committee & Risk Committee (page 30) 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. Overview, Recent Changes & Management Agreement Terms (page 34) 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 Table of Contents Endnotes Overview, Recent Changes & Management Agreement Terms(cont’d)(page 34) 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. Structure and Amount of the Management Fee & Continued Cost Savings Related to the Externalization (page 35) 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. Annual Review of Manager Performance and Management Fee Considerations (page 36) 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. Summary of 2018 NEO Compensation (page 37) 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. Compensation Discussion and Analysis (page 42) 1. “Base Stockholders’ Equity” represents Stockholders’ Equity of $17.28bn. 2. “Incremental Stockholders’ Equity” represents Stockholders’ Equity in excess of $17.28bn. Stock Ownership Guidelines/Commitments (page 43) 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 Table of Contents 2019 ANNUAL MEETING OF STOCKHOLDERS RESERVATION REQUEST FORM 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. Your name and address: Number of Shares of NLY Common Stock You Hold: 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. Registered Stockholder: (Name of Your Bank, Broker or Other Nominee) THIS IS NOT A PROXY CARD Annaly Capital Management Inc. 2019 Proxy Statement 61 Table of Contents Table of Contents ANNALY CAPITAL MANAGEMENT, INC. 1211 AVENUE OF THE AMERICAS NEW YORK, NY 10036 ATTN: GLENN A. VOTEK VOTE BY INTERNET 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. 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 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. VOTE BY MAIL 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: E26881-P89845 KEEP THIS PORTION FOR YOUR RECORDS E68909-P18327      KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. ANNALY CAPITAL MANAGEMENT, INC. The Board of Directors recommends you vote FOR the following: ANNALY CAPITAL MANAGEMENT, INC. The Board of Directors recommends you vote FOR the following: 1.    Election of Directors. Nominees: For Against Abstain 1a.    Kevin G. Keyes ☐ ☐ ☐ 1b. Thomas Hamilton ☐ ☐ ☐ 1c. Kathy Hopinkah Hannan ☐ ☐ ☐ 1d. Vicki Williams ☐ ☐ ☐ 1.   Election of Directors Nominees: For   Against   Abstain 1a.   Francine J. Bovich ☐ ☐ ☐ 1b. Jonathan D. Green ☐ ☐ ☐ 1c. John H. Schaefer ☐ ☐ ☐ The Board of Directors recommends you vote FOR proposal 2: 2.   Advisory approval of the company's executive compensation. ⬜ ⬜ ⬜ The Board of Directors recommends you vote 1 YEAR on proposal 3: 1 Year 2 Years 3 Years Abstain 3. Advisory vote on the frequency of future advisory votes to approve the company's executive compensation. ⬜ ⬜ ⬜ ⬜ The Board of Directors recommends you vote FOR proposal 4:  For   Against   Abstain  4.   Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2017. ⬜ ⬜ ⬜ NOTE:Voting items may include such other business as may properly come before the meeting or any adjournment thereof. For address changes and/or comments, please check this box and write them on the back where indicated. Please indicate if you plan to attend this meeting. Yes No ☐ ⬜ ⬜ For address changes and/or comments, please check this box and write them on the back where indicated. ⬜ 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.           Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date   TableThe Board of ContentsDirectors recommends you vote FOR proposal 2: For Annaly Capital Management, Inc. 1211 AvenueAgainst Abstain 2.      Advisory approval of the Americas,company's executive compensation. New York, NY 10036 ☐ ☐ ☐ The Board of Directors recommends you vote FOR proposal 3: Important Notice Regarding 3. Approval of an amendment of our charter to increase the Availabilitynumber of Proxy Materialsauthorized 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 Annual Meeting: meeting or any adjournment thereof.The2016 ANNUAL REPORT TO STOCKHOLDERS and 2017 NOTICE & PROXY STATEMENT are available at www.proxyvote.com. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date Table of Contents 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 2018 ANNUAL REPORT TO STOCKHOLDERS and 2019 NOTICE & PROXY STATEMENT are available at www.proxyvote.com. E68910-P18327 E26882-P89845 Annaly Capital Management, Inc. Annual Meeting of Stockholders May 25, 201722, 2019 This proxy is solicited by the Board of Directors 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 theAnnual Meeting of Stockholders of the Company, which will be a virtual meeting conducted via live webcast to be held at the Warwick Hotel, 65 West 54th Street, New York, New York 10019,commencing at 9:00 a.m., New York time,Eastern Time, on Thursday,Wednesday, May 25, 2017,22, 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 Sharesshares 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:             Address Changes/Comments:    (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