Annaly ESG Presentation to Investors January 2019
Safe Harbor Notice This presentation, other written or oral communications, and our public documents to which we refer 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,” “should,” “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 (“MBS”) and other securities for purchase; the availability of financing and, if available, the terms of any financing; changes in the market value of our assets; changes in business conditions and the general economy; our ability to grow our commercial real estate business; our ability to grow our residential credit business; our ability to grow our middle market lending business; credit risks related to our investments in credit risk transfer securities, residential mortgage-backed securities and related residential mortgage credit assets, commercial real estate assets and corporate debt; risks related to investments in mortgage servicing rights (“MSRs”) ; our ability to consummate any contemplated investment opportunities; changes in government regulations or policy affecting our business; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; and our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended. 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 filed with the Securities and Exchange Commission. We do not undertake, and specifically disclaim 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. Past performance is no guarantee of future results. There is no guarantee that any investment strategy referenced herein will work under all market conditions. Prior to making any investment decision, you should evaluate your ability to invest for the long-term, especially during periods of downturns in the market. You alone assume the responsibility of evaluating the merits and risks associated with any potential investment or investment strategy referenced herein. To the extent that this material contains reference to any past specific investment recommendations or strategies which were or would have been profitable to any person, it should not be assumed that recommendations made in the future will be profitable or will equal the performance of such past investment recommendations or strategies. 2
Executive Summary This presentation highlights our commitment to Environmental, Social and Governance practices Board independence, education, self-evaluation Alignment with shareholders and refreshment Investment in human capital Firm diversity Focus on talent and human development Enhanced disclosure Social impact investments Risk management Broad-based unique stock ownership program Awareness of sustainability practices 3
Corporate Governance | Governance and Social Responsibility Timeline Over the past five years, Annaly has made significant enhancements to our corporate governance practices Annaly Strives for Best-in-Class Governance Practices Established Public Adopted broad-based Added 2 Independent Responsibility Stock Ownership Directors Enhanced financial Committee; rotated Guidelines for disclosure through Annaly’s proposal to be Board Committee chairs Kevin Keyes becomes employees and increased financial supplement and members externally managed Robust Lead Director Chairman of the Board guidelines for Board and investor received 83% support role created presentation, which Launched JV in social Enhanced disclosure Adopted Clawback from shareholders includes additional impact investing around executive Policy for Annaly for financial metrics compensation in proxy amount paid to external Launched Women’s statement manager Interactive Network 2013 2014 2015 2016 2017 2018 Adopted enhanced Board evaluation Joined Council of process, including Institutional Investors individual director Adopted anti-pledging Designated second Audit assessments and periodic Added new policy Committee financial use of external facilitator Initiated detailed Independent Director Added new expert succession planning Adopted 4 year stock Independent Director Adopted policy related Established Risk process with Board holding period for Joined NACD as Full to Board tenure of Committee employees Board Member (1) Independent Directors Publication of Board Amended bylaws to de- Skills Matrix classify Board of Directors 1. National Association of Corporate Directors (NACD). 4
Annaly Commitment | Environmental, Social and Governance (“ESG”) Focus Focus on Environmental, Social and Governance pillars drives Annaly’s long -term strategy, purpose and performance Principles Recent Initiatives Gold Environmental LEED Certified HQ Internal campaign to raise awareness and engagement with our Annaly is focused on promoting practices at its corporate Energy employees regarding sustainability and use of resources Recycling headquarters (“HQ”) that contribute to environmental Tracking (1) Programs (1) sustainability Employee Awareness Regarding Resource Efficiency Broad-based Employee Stock Purchase Guidelines Employee Employee Stock 100% of employee-owned stock purchased in the Diversity Purchase Guidelines Annaly celebrates diversity in thought, open market; zero shares sold by management (2) background and experience Employee $25 million social impact JV with CIP (3) Employee Benefits Engagement Social Our people are the cornerstone of our 49% of the firm — female or ethnically diverse (4) strategy 41% of 2018 hires are women Social Impact Annual Employee Partnerships Survey Inclusion in 2018 Bloomberg Gender We make investments in underserved Equality Index areas of the economy Corporate Focus on Human Capital Talent 10 development programs with 100% Philanthropy & Talent Development Recruitment employee participation Shareholder Outreach Disclosure & Transparency Enhanced disclosure in 2018 & Alignment Annaly is committed proxy Governance Outreach to 92% of top 50 to maintaining robust institutional investors (5) governance practices Framework of Ethics Enterprise Risk Board 2 new Independent that benefit the long- & Integrity Management Oversight Directors added in term interests of 2018 – 36% of Board our shareholders is female Board Diversity Operational Board & Refreshment Efficiency Independence Note: Company statistics as of December 31, 2018, unless otherwise noted. 1. Refers to Annaly’s headquarters and any internal programs and initiatives performed at Annaly’s headquarters. This is not int end ed to capture any or all policies or procedures relating to Annaly’s management of assets in its portfolio. 2. Management refers to current executive management. 5 3. Annaly entered into a social impact investing joint venture with Capital Impact Partners (“CIP”) in November 2017, in which A nna ly’s investment represents $20 million and CIP’s investment represents $5 million. 4. As permitted by the Equal Employment Opportunity Commission, diversity composition was obtained from self-identification and visual observation when employee declined to self-identify. Ethnically diverse represents all non-white ethnicities. 5. Representative of outreach during 2018 proxy season and shareholder base as of March 31, 2018. Shareholder data per Ipreo.
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