UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No.
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Filed by the Registrant
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Filed by a Party other than the Registrant
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☐Preliminary
Proxy Statement
☐Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
☐Definitive
Proxy Statement
☒ Definitive
Additional Materials
☐Soliciting
Material under to §240.14a-12
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Annaly Capital Management, Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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Payment of Filing Fee (Check all boxes that apply):
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fee required.
☐Fee
paid previously with preliminary materials.
☐Fee
computed on table in exhibit required by Item 25(b) per Exchange
Act Rules 14a-6(i)(1) and 0-11.
COMMENCING ON MAY 8, 2023, ANNALY CAPITAL MANAGEMENT, INC. SENT THE
BELOW COMMUNICATIONS TO CERTAIN STOCKHOLDERS.
ANNALY’S 2023 PROXY STATEMENT
TEN KEY HIGHLIGHTS
1.Evolution
of Annaly
Annaly continued to enhance our position as a leader in the
residential housing finance market since the beginning of 2022
through a number of strategic milestones, which
include:
February 2022 – Amended bylaws to lower the threshold for
stockholders to call a special meeting
April 2022 – Announced agreement to sell middle market lending
portfolio, which includes assets held on balance sheet as well as
assets managed for third parties, for approximately $2.4
billion
May 2022 – Added minimum performance threshold to annual incentive
program and increased relative performance metrics to target above
median (55%+) performance
May 2022 – Announced public offering of common stock for gross
proceeds of $742 million
June 2022 – Published third annual corporate responsibility report,
including climate-related disclosures following TCFD
guidance
August 2022 – Included in the FTSE4Good Index for the fourth
consecutive year
August 2022 – Announced public offering of common stock for gross
proceeds of $765 million
September 2022 – Added to the S&P MidCap 400 Index, becoming
the first mortgage REIT in the index
October 2022 – Celebrated the 25th anniversary of the Company’s
IPO
October 2022 – MSCI ESG rating upgraded to A
December 2022 – Announced the appoint of Steven F. Campbell, our
Chief Operating Officer, to the additional office of
President
December 2022 – Grew mortgage servicing rights (“MSR”) portfolio to
$1.8 billion at year-end
December 2022 – Remained the largest non-bank issuer of Prime Jumbo
and Expanded Credit MBS from 2021-2022
January 2023 – Included in Bloomberg’s Gender-Equality Index for
the sixth consecutive year
2.Focus
on Residential Housing Finance
The Company is once again dedicated to our original mission of
being the market’s leading residential mortgage REIT and has made
significant progress towards expanding our leadership and
operational capabilities across the spectrum of housing finance. In
2022, we sold our middle market lending portfolio, inclusive of
on-balance sheet assets as well as assets managed for third
parties, for approximately $2.4 billion. Combined with the 2021
sale of our commercial real estate business, buildout of our MSR
business and expansion of our residential credit business, we
believe that the Company continues to be well-positioned to
allocate capital across the housing finance space.
3.Advisory
Approval of Executive Compensation (“Say-on-Pay”)
In the Company’s second full year being internally-managed, the
Management Development and Compensation (“MDC”) Committee of our
Board of Directors introduced a number of additional enhancements
to our executive compensation program, which are intended to
institutionalize a market competitive program that incentivizes
strong performance, drives alignment with stockholders and reflects
best practices, market insights and robust governance. These
enhancements included:
Adding a minimum performance threshold to the corporate performance
scorecard used to determine 75% of executives’ annual incentive
opportunities
−Below
this threshold, no incentive payments ($0) will be
made
Increasing relative performance metrics to target above median
(55%+) performance rather than median performance for purposes of
determining annual incentive opportunities and ultimate performance
stock unit (“PSU”) payouts
In 2022, the MDC Committee determined that the achievement of our
corporate/organizational objectives exceeded target performance and
that each named executive officer (“NEO”) had attained their
individual performance objectives at target. However, in light of
our stock market performance and to increase alignment between the
NEOs and our stockholders, the MDC Committee determined it was
appropriate to exercise its authority to apply discretion to reduce
total incentive award amounts for 2022 to slightly below target
levels.
4.Expanded
Diversity, Equity and Inclusion (“DE&I”)
Initiatives
In addition to continuing to publicly disclose our workforce
diversity statistics, including our EEO-1 Reports, the Company took
a number of actions to demonstrate and further our commitment to a
diverse, equitable and inclusive workforce in 2022,
including:
Supporting seven employee-led networks, which collectively led over
20 DE&I activities throughout the year, including speakers,
volunteerism, trainings and brown bag lunch
discussions
Sponsoring Wellness Week focused on employee well-being, mental
health and educational opportunities including medical and
financial wellness
Conducting manager training on effective performance and hosted
career conversations to promote employee engagement and reinforce
our corporate culture
Partnering with highly acclaimed leadership coach on a firmwide
branding workshop to promote individual personal and professional
development
Teaching two fixed income and mortgage market courses to a diverse
group of college students traditionally underrepresented in finance
in partnership with Project Destined
Hosting interns in partnership with Girls Who Invest and Cristo Rey
High School
5.Board
Composition and Diversity
The Company remains committed to seeking out highly qualified
candidates of diverse gender and race/ethnicity, as well as taking
into account other factors that promote principles of diversity.
The composition of our Board reflects this commitment as 60% of our
Director nominees identify as women or racially/ethnically diverse.
In addition, we are proud that all five Committees of the Board are
chaired by women or racially/ethnically diverse Directors. The
Board is also proud to welcome its newest Director, Martin
Laguerre, who joined the Board on March 13, 2023.
6.Delivering
for Our Shareholders
In 2022, the Company continued to generate strong earnings despite
a challenging financial market environment and enhanced our
positioning as the largest dedicated housing finance REIT through a
number of strategic initiatives, including:
$1.6 billion of common and preferred dividends declared in
2022
Ended 2022 as the largest non-bank issuer of Prime Jumbo and
Expanded Credit MBS and third largest buyer of
bulk MSR
$6.3 billion of unencumbered assets at the end of 2022, including
cash and unencumbered Agency MBS of $4.0 billion
The $2.4 billion sale of the Company's middle market lending
portfolio, which included assets held on balance sheet as well as
assets managed for third parties
$2.7 billion of accretive common equity raised in 2022 through two
common equity offerings and the Company's at-the-market sales
program
7.Stockholder
Engagement
The Company is committed to ongoing engagement with retail and
institutional stockholders through a wide range of mediums,
including in-person and virtual meetings, conferences, phone calls,
electronic communication and social media. Since the beginning of
2022, the Company’s outreach efforts have encompassed over 90% of
our institutional investors, including 100% of the Company’s 100
largest investors. During the same time, the Company hosted over
125 meetings with investors across the U.S., Canada and Europe.
Annaly’s stockholder engagement efforts have generated significant
feedback for both the Board and management, which informed a number
of recent corporate governance enhancements, including the
decisions to further enhance the Company’s executive compensation
practices and disclosures, maintain the focus on the Company’s
human capital and DE&I effort, augment the Company’s
stockholder rights framework and continue focus on corporate
responsibility and environmental, social and governance (“ESG”)
initiatives.
8.Advisory
Stockholder Proposal to Further Reduce the Ownership Threshold to
Call a Special Meeting
A stockholder proponent has submitted an advisory proposal
requesting that the Board take steps to further reduce the
ownership threshold to call a special meeting to 10% of shares
outstanding. The Board continually enhances its corporate
governance framework in response to evolving best practices,
stockholder feedback and the results of the Board’s annual
self-evaluation and success planning processes. The Company
conducted extensive stockholder outreach to assess desired
enhancements to our stockholder rights framework. As a result, in
February 2022, the Board proactively amended our bylaws to lower
the threshold for all stockholders to call a special meeting from
the previous majority threshold to the more standard threshold of
25% of shares outstanding. The Board believes that this threshold
is the most appropriate for the Company at this time because it
preserves a reasonable balance between providing all stockholders
with a meaningful right to vote on important matters that arise
between annual meetings and protecting against the potential misuse
of that right by a small group of stockholders with narrow
short-term interests. Further, the Board reviewed the policies of
our major investors and considered that the 25% stock ownership
threshold is the most common threshold used by companies in the
S&P 500 with special meeting rights, while a 10% ownership
threshold is lower than that of approximately 83% of S&P 500
companies that offer special meeting rights.
In addition to providing all stockholders with the meaningful right
to call a special meeting at a 25% ownership threshold, we have
also implemented a number of other corporate governance measures to
safeguard the interests of our stockholders over the last five
years, including:
Declassifying our Board so that Directors are elected annually with
a majority voting standard in uncontested elections
Separating the roles of CEO and Chair of the Board and appointing
an Independent Chair of the Board
Internalizing the management of the Company, with the MDC Committee
of the Board assuming oversight of the Company's executive
compensation program
Amending our Corporate Governance Guidelines to formalize our
Board's commitment to seeking out highly qualified candidates of
diverse gender and race/ethnicity
Adding 5 new Independent and diverse Directors to our Board since
2018
Amending our governance documents to reflect integrated ESG
oversight across the Board and its Committees
The Board believes that these strong and effective corporate
governance measures provide the appropriate balance between
ensuring accountability to our stockholders and enabling us to
effectively oversee the Company’s business and affairs for the
long-term benefit of our stockholders. After careful consideration,
in light of the recent amendment to our special meeting right and
the Board’s demonstrated commitment to strong corporate governance,
and based on stockholder feedback and market practice, the Board
believes that the adoption of the stockholder proposal to further
reduce the ownership threshold to call a special meeting is
unnecessary and not in the best long-term interests of all of our
stockholders.
9.Corporate
Responsibility Report
The Company published our third Corporate Responsibility Report,
Taking Stock of Our Impact, in June 2022, demonstrating our
commitment to transparency and robust ESG practices. Among other
things, the report outlines the Company’s progress towards meeting
our ESG goals and commitments, which span four key ESG areas:
corporate governance, human capital, responsible investments and
the environment. The report also includes new ESG goals and
commitments, including pledges to increase the number of Board and
Committee educational sessions and maintain a high employee
retention rate. Additionally, the report includes climate-related
disclosures following TCFD guidance and supplemental disclosures
under the Sustainability Accounting Standards Board framework and
references the Global Report Initiative.
10.Virtual
Shareholder Meeting
Annaly will hold our 2023 Annual Meeting of Stockholders via an
online (virtual) format on May 17, 2023 at 9:00 am EST. The Company
has successfully conducted virtual stockholder meetings since 2018
and designs our meetings to provide the same rights to participate
as you would have at in-person meeting, including providing
opportunities to vote, make statements and ask
questions.
Annaly’s Board of Directors unanimously recommends that you vote
FOR each of the Director nominees (Proposal 1),
FOR the advisory approval of the Company’s executive compensation
(Proposal 2), for EVERY ONE YEAR for the advisory vote on the
frequency of future advisory votes to approve the Company’s
executive compensation (Proposal 3), FOR the approval of an
amendment to the Company’s charter to decrease the number of
authorized shares of stock (Proposal 4), FOR the ratification of
the appointment of Ernst & Young LLP as the Company’s
independent auditors (Proposal 5)
and AGAINST the advisory stockholder proposal to further reduce the
ownership threshold to call a special meeting (Proposal
6).
The Company is pleased that the proxy advisory firms ISS and Glass
Lewis have recommended that Annaly stockholders vote FOR Proposal
1, Proposal 2, Proposal 4 and Proposal 5 and vote EVERY ONE YEAR
for Proposal 3.
Cautionary Note Regarding Forward-Looking Statements
This definitive additional proxy materials contain or incorporate
by reference certain forward-looking statements which are based on
various assumptions (some of which are beyond our control) and may
be identified by reference to a future period or periods or by the
use of forward-looking terminology, such as "may," "will,"
"believe," "expect," "anticipate," "continue," or similar terms or
variations on those terms or the negative of those terms. Actual
results could differ materially from those set forth in
forward-looking statements due to a variety of factors, including,
but not limited to, changes in interest rates; changes in the yield
curve; changes in prepayment rates; the availability of
mortgage-backed securities and other securities for purchase; the
availability of financing and, if available, the terms of any
financing; changes in the market value of the Company’s assets;
changes in business conditions and the general economy; the
Company’s ability to grow our residential credit business; the
Company’s ability to grow our mortgage servicing rights business;
credit risks related to the Company’s investments in credit risk
transfer securities, residential mortgage-backed securities and
related residential mortgage credit assets; risks related to
investments in mortgage servicing rights; the Company’s ability to
consummate any contemplated investment opportunities; changes in
government regulations or policy affecting the Company’s business;
the Company’s ability to maintain our qualification as a REIT for
U.S. federal income tax purposes; the Company’s ability to maintain
our exemption from registration under the Investment Company Act of
1940; operational risks or risk management failures by us or
critical third parties, including cybersecurity incidents; and
risks and uncertainties related to the COVID-19 pandemic, including
as related to adverse economic conditions on real estate-related
assets and financing conditions. For a discussion of the risks and
uncertainties which could cause actual results to differ from those
contained in the forward-looking statements, see "Risk Factors" in
our most recent Annual Report on Form 10-K and any subsequent
Quarterly Reports on Form 10-Q. The Company does not undertake, and
specifically disclaims any obligation, to publicly release the
result of any revisions which may be made to any forward-looking
statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such
statements, except as required by law.
Annaly Capital Management (NYSE:NLY-F)
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