Additional Proxy Soliciting Materials (definitive) (defa14a)
May 19 2016 - 12:21PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
[X]
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Filed by a Party other than
the Registrant [ ]
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Check the appropriate
box:
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Preliminary Proxy
Statement
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy
Statement
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[X]
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Definitive Additional
Materials
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Soliciting Material Pursuant 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
the appropriate box):
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[X]
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No fee required.
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Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of
securities to which transaction applies:
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which transaction applies:
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value of transaction computed pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state how it
was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously
with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
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1)
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Amount Previously
Paid:
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Form, Schedule or Registration
Statement No.:
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Filing Party:
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Date Filed:
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Dear Fellow
Stockholders,
We are writing to ask for your support on
all of the proposals submitted for your vote at the upcoming 2016 Annual Meeting
of Stockholders of Annaly Capital Management, Inc. in accordance with the
recommendations of your Board of Directors.
In
particular, we are requesting your support on Proposal 2 the annual advisory
vote on the compensation paid to our named executive officers (the Say-on-Pay
Proposal).
This year,
the proxy advisory firm Glass Lewis has again recommended that Annaly
stockholders vote FOR all of our proposals, including the Say-on-Pay
Proposal
. However, Institutional
Shareholder Services, Inc. (ISS) has departed from its
positive 2015 and 2014 pay recommendations, which were in favor of our executive
compensation program, and recommended against the Say-on-Pay Proposal this year.
We believe that the ISS recommendation is incorrect and understand it is
attributable to a new ISS policy change adopted at the end of last year that is
not specific to our Company rather than attributable to any action taken by us.
Accordingly, we believe that our stockholders should continue to support our
approach as they have done the past two years and vote FOR our Say-on-Pay
Proposal.
We hope that this letter, together with
the more detailed information in our 2016 Proxy Statement, will help you make a
fully informed decision. As further highlighted below, we have made a number of
significant enhancements to our governance recently to further promote
stockholder interests and have instituted robust processes, procedures and
disclosure around our external management structure for the benefit of
stockholders.
Since Our Stockholders Approved
Externalization of Our Management, Our External Manager Has Made All Executive
Compensation Decisions.
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Following our management externalization transaction
(Externalization), which was approved at our 2013 annual meeting of
stockholders, we have been externally managed by Annaly Management Company
LLC (our Manager).
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The
Externalization received positive voting recommendations from both ISS and
Glass Lewis and strong support from our stockholders (approximately 82.8%
of votes cast).
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Pursuant to our management
agreement, our Manager is responsible for managing our affairs and
providing us with our executive officers, all of whom are employed by our
Manager.
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Our Manager has sole discretion to
determine the compensation it pays to its employees, including our
executive officers. Our independent directors have oversight of the
arrangements between the Company and our Manger pursuant to our management
agreement, but do not have oversight of the arrangements between the
Manager and its employees.
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Our
Compensation Committee does not receive, review or approve our Managers
compensation determinations.
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We Have Not Changed Our Executive
Compensation Practices in Any Manner Adverse to Our Stockholders.
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Our
two most recent Say-on-Pay Proposals submitted to stockholders since the
Externalization
(in 2014 and 2015),
received positive voting recommendations from both ISS and Glass Lewis and
strong support from our stockholders (approximately 90.8% and 94.2% of
votes cast, respectively).
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Annaly has not made any changes to our executive compensation
practices adverse to our stockholders since the Externalization and has
not paid any compensation or benefits to our executive officers during
such time.
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In
November 2015, ISS adopted a new policy that provides that it will
generally recommend against the Say-on-Pay Proposal of an
externally-managed issuer like Annaly unless we make special disclosures
regarding matters determined by our Manager rather than our Compensation
Committee.
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The Board Has Instituted Robust
Processes, Procedures and Disclosure around Our External Management
Structure.
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We
provided expanded disclosure in our 2016 Proxy Statement to help our
stockholders understand the governance processes around our external
management arrangement, as well as to enable you to measure the management
fee we pay to the Manager relative to the performance of the Company.
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Our
Board and Compensation Committee continually evaluate and enhance our
management structure to align the interests of our management team with
those of our stockholders and to reflect industry-leading best practices.
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The
Compensation Committee reviews the performance of our Manager, along with
the structure and amount of the management fee, to ensure the fee
incentivizes our Manager to achieve long-term performance that protects
our stockholders equity. The Compensation Committee also reviews the
management fee against our pre-Externalization compensation expenses and
benchmarks our total operating expenses (which includes the management
fee) against our peers to promote alignment.
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The
terms and conditions of our management agreement compare favorably to the
management agreements of our externally-managed peers on a number of
bases, including our low management fee of 1.05% of stockholders equity.
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We Have Made a Number of Significant
Enhancements to Our Governance over the Last Few Years that Promote Stockholder
Interests.
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We
expanded our stock ownership guidelines to over 40% of our Managers
employees (including our executive officers). Pursuant to these
guidelines, our Managers employees will not be granted stock, but rather,
will be asked to purchase predetermined amounts of shares in the open
market ($10,000,000 for our CEO). Establishing an ownership culture
throughout the firm, for the long term, is extremely important to us and
is consistent with the fact that our executive officers have purchased
over two million common shares since 2011 with an aggregate purchase price
of $23.5 million.
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We adopted a clawback policy for the management
fee pursuant to which the Company will seek, and be entitled to receive,
reimbursement from our Manager if our Board determines that a computation
error (regardless of the reason or amount of such error) resulted in the
overpayment of a management fee to our Manager.
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We
adopted an anti-pledging policy that prohibits our Managers employees
(including our executive officers) from holding Company securities in a
margin account as eligible collateral, or otherwise pledging Company
securities as collateral for a loan. We also have an anti-hedging policy
in place.
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We
created the role of Lead Independent Director to serve as an additional
link between our management, the Board and our stockholders.
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We Have a Track Record of Exceptional
Performance under the Leadership of Our External Manager.
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As of
May 13, 2016, Annaly had delivered extraordinary total return of 21.94%
(including reinvestment of dividends) since the
Externalization.
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In
2015, Annaly returned $1.32 billion to stockholders with $114.3 million
shares repurchased and $1.2 billion common and preferred stock dividends
declared. In the first quarter of 2016, Annaly returned an additional
$398.2 million comprised of $102.7 million of share repurchases and $295.4
million common and preferred dividends.
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From 2014 2015, we generated a
16.5% economic return (change in book value plus dividends paid) and a
total return of 33.1%, while operating at 30% less leverage than our
Agency mortgage REIT peers.
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Over
the last few years, we have diversified our investment strategy by
investing in credit assets with complementary cash flows to achieve
superior risk-adjusted returns over the long term.
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Our strategic diversification continues with our
recent agreement to acquire Hatteras Financial Corp. for $1.5 billion,
which is the largest mortgage REIT M&A deal ever.
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For the reasons set forth above, and in
further detail in our 2016 Proxy Statement,
we urge you to vote FOR all our proposals in
accordance with the Boards recommendations, including the Say-on-Pay Proposal
(Proposal 2).
If you have questions, or need
assistance in voting your shares, please call our proxy solicitor, Innisfree
M&A Incorporated at 1-888-750-5834. For your reference, you can view copies
of our proxy materials at
www.annalyannualmeeting.com
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Thank you for your support.
Very Truly Yours,
R. Nicholas Singh
Secretary
May 19,
2016
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