ARMOUR RESIDENTIAL REIT, INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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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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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
(Name of Registrant as Specified In Its Charter)
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Not Applicable
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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):
x
No fee required.
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
ARMOUR RESIDENTIAL REIT, INC.
3001 Ocean Drive, Suite 201
Vero Beach, Florida 32963
Telephone: (772) 617-4340
3001 Ocean Drive, Suite 201
Vero Beach, Florida 32963
Telephone: (772) 617-4340
March 20, 2025
Dear Stockholder:
ARMOUR Residential REIT, Inc., cordially invites you to attend the 2025 annual meeting of stockholders. We will hold the meeting on Thursday, May 1, 2025, virtually beginning at 8:00 a.m. (EDT). You or your proxy holder may participate and vote virtually, by visiting
www.virtualshareholdermeeting.com/ARR2025
and entering the control number on the proxy card or notice of the meeting you received. You are not required to register before the meeting starts. We hope that you will be able to participate. Your feedback and your vote are very important to us.
Whether or not you plan to participate in the meeting, your shares should be represented and voted. After reading the accompanying proxy statement, please vote your shares as soon as possible. Stockholders may vote by Internet, by phone, or by completing and mailing a proxy card if one has been requested. Stockholders may also vote on the annual meeting website during the meeting, as further explained in the proxy statement. Submitting a vote before the meeting will not preclude you from updating your vote on-line during the virtual meeting. In addition, this proxy statement, the notice of annual meeting, the proxy card and our 2024 annual report will be made accessible via the Internet on the Company’s website at
www.armourreit.com
and at
www.virtualshareholdermeeting.com/ARR2025
, or mailed, if requested, on or about March 20, 2025.
We look forward to the opportunity to interact with stockholders at the 2025 annual meeting.
On behalf of our Board of Directors, I extend our appreciation for your continued support.
Sincerely,
Scott J. Ulm
Chief Executive Officer and Vice Chairman
TABLE OF CONTENTS
| ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE INFORMATION | |||||
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS ON MAY 1, 2025
The annual meeting of stockholders of ARMOUR Residential REIT, Inc. (“ARMOUR”) will be held on Thursday, May 1, 2025 at 8:00 a.m. (EDT) by means of a live audio webcast, for the purpose of considering and acting on the following proposals:
(1)
To elect eight (8) directors to ARMOUR’s Board of Directors until our 2026 annual meeting of stockholders and until their successors are duly elected and qualified;
(2)
To ratify the appointment of Deloitte Touche LLP as ARMOUR’s independent registered certified public accountants for fiscal year 2025;
(3)
To approve, by a non-binding advisory vote, ARMOUR’s 2024 executive compensation;
(4)
To transact any other business as may properly come before the annual meeting or any adjournments or postponements of the meeting.
Only holders of ARMOUR’s common stock of record at the close of business on March 7, 2025, the record date and time fixed by ARMOUR’s Board of Directors, are entitled to notice of and to vote at the annual meeting. Additional information regarding the proposals to be acted on at the annual meeting can be found in the accompanying proxy statement.
Our Board of Directors unanimously recommends that you vote your shares “FOR” proposals 1, 2 and 3.
By Order of the Board of Directors,
Scott J. Ulm
Chief Executive Officer and Vice Chairman
March 20, 2025
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NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
In accordance with the rules of the Securities and Exchange Commission, we are furnishing our proxy materials, including this proxy statement and our 2024 annual report, to our stockholders via the Internet. During the week of March 20, 2025, we will mail to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) that contains instructions on how to access our proxy materials on the Internet. The Notice of Internet Availability also contains instructions on how to vote. Other stockholders, in accordance with their prior requests, will receive an email with instructions on how to access our proxy materials and vote, or will be mailed paper copies of our proxy materials and a proxy card or voting form. Stockholders may request to receive all future proxy materials in printed form by mail or electronically by email by following the instructions contained in the Notice of Internet Availability.
Important Notice Regarding the Availability of Proxy Materials
for the ARMOUR Annual Meeting of Stockholders to be held on May 1, 2025
This proxy statement and our 2024 annual report are available online at
www.virtualshareholdermeeting.com/ARR2025
and
www.armourreit.com
.
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ACCESS TO THE 2025 ANNUAL MEETING
The meeting will be held virtually over the Internet by means of a live audio webcast. Only stockholders who owned common stock as of the close of business on March 7, 2025 will be entitled to attend the meeting. Any stockholder wishing to attend the annual meeting regardless of whether such stockholder’s shares are registered in such stockholder’s name with ARMOUR’s transfer agent, Continental Stock Transfer Trust Company, or such stockholder’s shares are held in a stock brokerage account or by a bank or other holder of record, may attend virtually by visiting
www.virtualshareholdermeeting.com/ARR2025
and entering the control number on such stockholder's proxy card or notice of the meeting. Stockholders are not required to register before the meeting starts.
Stockholders participating in the virtual meeting will be in a listen-only mode and will not be able to speak during the live audio webcast. However, in order to maintain the interactive nature of the virtual meeting, virtual attendees are able to:
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Vote using the online meeting website; and
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Submit written questions or comments to the Company’s officers during the meeting via the live audio webcast by typing in the field provided on the annual meeting website.
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PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies by the board of directors of ARMOUR Residential REIT, Inc. (the “Board” or the “Board of Directors”) for the 2025 annual meeting of stockholders to be held by means of a live audio webcast on Thursday, May 1, 2025, at 8:00 a.m.(EDT) (the “annual meeting”). In this 2025 proxy statement (the “proxy statement”), except where the context suggests otherwise, references to “we,” “us,” “ARMOUR” or the “Company” are to ARMOUR Residential REIT, Inc. and its subsidiaries.
Questions and Answers about Proxy Materials, the Annual Meeting and Voting Your Common Shares
Why am I receiving these materials?
The Board has made these proxy materials available to you on the Internet, or has delivered printed versions of these materials to you by mail, in connection with the solicitation of proxies for use at the annual meeting. As a stockholder, you are invited to participate in the annual meeting and are requested to vote on the proposals described in this proxy statement. This proxy statement includes information that we are required to provide to you under Securities and Exchange Commission (“SEC”) rules and is designed to assist you in voting your shares.
Why did I receive a notice in the mail regarding the Internet availability of the proxy materials instead of a paper copy of the proxy materials?
In accordance with rules adopted by the SEC, we may furnish proxy materials, including this proxy statement and our 2024 annual report to our stockholders, by providing access to such documents over the Internet instead of mailing printed copies. Most stockholders will not receive printed copies of the proxy materials. Instead, the Notice of Internet Availability, which was mailed to certain of our stockholders, will instruct you as to how you may access and review all of the proxy materials on the Internet. If you would like to receive a paper copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice of Internet Availability.
Who is entitled to vote?
Each holder of record of ARMOUR common stock as of the close of business on March 7, 2025, the record date for the annual meeting, is entitled to participate in and vote at the annual meeting.
How many votes do I have?
Every holder of a share of common stock on the record date will be entitled to one vote per share for each director to be elected at the annual meeting and to one vote per share on each other matter presented at the annual meeting. As of the close of business on March 7, 2025, the record date for the annual meeting, there were 79,968,016 shares of common stock outstanding and entitled to vote at the annual meeting.
What proposals are being presented at the annual meeting?
ARMOUR intends to present proposals numbered 1, 2 and 3 for stockholder consideration and voting at the annual meeting. These proposals are for:
(1)
Election of eight (8) members of ARMOUR’s Board of Directors until our 2026 annual meeting of stockholders and until their successors are duly elected and qualified;
(2)
Ratification of the appointment of Deloitte Touche LLP (“Deloitte”) as ARMOUR’s independent registered certified public accountants for fiscal year 2025; and
(3)
Approval, by a non-binding advisory vote, of ARMOUR’s 2024 executive compensation.
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Other than the matters set forth in this proxy statement and matters incident to the conduct of the annual meeting, we do not know of any business or proposals to be considered at the annual meeting. If any other business is proposed and properly presented at the annual meeting, the proxies received from our stockholders give the proxy holders the authority to vote on such matter in their discretion.
How does the Board recommend that I vote?
The Board unanimously recommends that you vote your shares:
(1)
“FOR” the election of each of the eight (8) nominees as directors;
(2)
“FOR” the ratification of the appointment of Deloitte as ARMOUR’s independent registered certified public accountants for fiscal year 2025; and
(3)
“FOR” the approval, by a non-binding advisory vote, of ARMOUR’s 2024 executive compensation.
How do I gain access to the annual meeting?
All stockholders are invited to participate in the annual meeting. Only stockholders who owned common stock as of the close of business on March 7, 2025 will be entitled to attend the annual meeting. Any stockholder wishing to attend the annual meeting meeting regardless of whether such stockholder’s shares are registered in such stockholder’s name with ARMOUR’s transfer agent, Continental Stock Transfer Trust Company, or such stockholder’s shares are held in a stock brokerage account or by a bank or other holder of record, may attend virtually by visiting
www.virtualshareholdermeeting.com/ARR2025
and entering the control number on such stockholder's proxy card or notice of the meeting. Stockholders are not required to register before the meeting starts. The annual meeting will begin at 8:00 a.m. (EDT).
Stockholders participating in the virtual meeting will be in a listen-only mode and will not be able to speak during the live audio webcast. However, in order to maintain the interactive nature of the virtual meeting, virtual attendees are able to:
•
Vote using the online meeting website; and
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Submit written questions or comments to the Company’s officers during the meeting via the live audio webcast by typing in the field provided on the annual meeting website.
What is a proxy?
A “proxy” allows someone else (the “proxy holder”) to vote your shares on your behalf. Our Board of Directors is asking you to allow Scott J. Ulm to vote your shares at the annual meeting.
How do I vote?
If your ARMOUR shares are registered in your name you may vote your shares by Internet or telephone, as set forth in the proxy card, or by completing and returning the proxy card you received. If you hold your common stock in an account with a bank or broker (i.e. in “street name”), you may vote by following the instructions on the voting instruction card provided to you by your bank or broker. You or your proxy holder will also be able to vote virtually during the annual meeting by visiting
www.virtualshareholdermeeting.com/ARR2025
and using the control number on the proxy card or voting instruction card you received.
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May I change or revoke my vote?
Yes. You may change your vote in one of several ways at any time before your proxy is exercised:
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Vote again via the Internet or by telephone before the annual meeting;
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If you are a holder of record, or a beneficial owner with a proxy from the holder of record, vote virtually at the annual meeting by visiting
www.virtualshareholdermeeting.com/ARR2025
and entering the control number on the proxy card or notice of the meeting you received;
•
Submit another proxy card if requested (or voting instruction card if received) with a date later than your previously delivered proxy card (or voting instruction card) before the annual meeting; or
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Notify Scott J. Ulm in writing at: ARMOUR Residential REIT, Inc., 3001 Ocean Drive, Suite 201, Vero Beach, Florida 32963, before the annual meeting that you are revoking your proxy or, if you hold your shares in “street name,” follow the instructions on the voting instruction card.
What is a quorum?
A quorum is necessary to hold a valid meeting. The presence, in person or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum for the conduct of business.
What vote is required in order to approve each proposal?
For Proposal 1: Election of Directors, the affirmative vote of the holders of common stock having a majority of the votes cast on such proposal at the annual meeting is required. See “Environmental, Social and Corporate Governance Information - Corporate Governance - Majority Voting for Directors and Director Resignation Policy.” For Proposal 2: Ratification of the Appointment of Independent Registered Certified Public Accountants, the affirmative vote of the holders of common stock having a majority of the votes cast on such proposal at the annual meeting is required. For Proposal 3: Advisory (Non-Binding) Vote Approving Executive Compensation, the affirmative vote of the holders of common stock having a majority of the votes cast on such proposal at the annual meeting is required.
A “broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner. Under the rules of the New York Stock Exchange (the “NYSE”), a broker does not have the discretion to vote on Proposal 1 - Election of Directors or Proposal 3 - Advisory (Non-Binding) Vote Approving Executive Compensation.
As a result, no broker will have the discretion to vote on Proposal 1 or Proposal 3, but will have the discretion to vote on Proposal 2
.
Accordingly, all stockholders are encouraged to vote their shares on all proposals.
Accordingly, for Proposals 1 and 3 above, shares of common stock that are represented by broker non-votes are not included in the determination of the common stock voting on such matter and will not have an effect on the votes, but are counted for quorum purposes. For Proposal 2 above, shares of common stock which are represented by broker non-votes are included in the determination of the common stock voting on such matter and are counted for quorum purposes. For all three Proposals above, shares which abstain from voting on any matter are counted for quorum purposes.
Who will bear the cost of soliciting proxies?
The cost of soliciting proxies will be borne by the Company. In addition to solicitation by mail and the Internet, solicitations may also be made by telephone, telegram, facsimile, email or in person by directors, officers or other personnel of the Company, who will receive no additional compensation for such services.
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PROPOSAL 1 - ELECTION OF DIRECTORS
Director Nominees
ARMOUR’s Board of Directors is currently comprised of eight (8) members. The eight (8) nominees are listed below. All eight nominees are presently directors of ARMOUR.
If instructed, the proxies indicated in the voting form or proxy card will vote for the election of the nominees named below to serve for the ensuing year and until their successors are elected and qualified. If any nominee for director shall become unavailable (which management has no reason to believe will be the case), it is intended that the shares represented by the enclosed proxy card will be voted for any such replacement or substitute nominee as may be nominated by our Board.
| Director Nominees | Age | Director Since | Current Positions | |||||||||||||||||
| Scott J. Ulm | 66 | 2009 | Chief Executive Officer and Vice Chairman | |||||||||||||||||
| Daniel C. Staton | 72 | 2009 | Non-Executive Chairman | |||||||||||||||||
| Marc H. Bell | 57 | 2009 | Director | |||||||||||||||||
| Z. Jamie Behar | 67 | 2019 | Independent Director | |||||||||||||||||
| Carolyn Downey | 75 | 2013 | Independent Director | |||||||||||||||||
| Robert C. Hain | 71 | 2009 | Independent Director | |||||||||||||||||
| John P. Hollihan, III | 75 | 2009 | Independent Director | |||||||||||||||||
| Stewart J. Paperin | 77 | 2009 | Independent Director | |||||||||||||||||
The following is a brief biographical statement for each director nominee:
Scott J. Ulm
Ulm is the Chief Executive Officer and Vice Chairman. Mr. Ulm was the Co-Chief Executive Officer, Co-Vice Chairman and Head of Risk Management of ARMOUR from November 2009 until March 2024. Mr. Ulm was the Chief Investment Officer until March 2018. Mr. Ulm has been involved in the management of our external manager since March 2008, as a managing member of one of the entities that acts as a general partner of ARMOUR Capital Management LP, our current external manager (“ACM”), since December 2014 and as a Co-Managing Member of ARMOUR Residential Management, LLC (“ARRM”), the predecessor to ACM, from March 2008 to December 2014. Mr. Ulm has also served as a Director, Co-Chief Executive Officer, Co-Vice Chairman, Chief Investment Officer and Head of Risk Management of JAVELIN Mortgage Investment Corp. (“JAVELIN" and former NYSE "JMI") from June 2012 through April 2016. Mr. Ulm also serves as Chairman of the Board and Head of Corporate Finance for BUCKLER Securities LLC (“BUCKLER”), an affiliate of ACM that operates as a broker-dealer registered with the Financial Industry Regulatory Authority ("FINRA") and provides trading and investment banking services to ARMOUR and other financial entities. From 2005 to 2009, Mr. Ulm was Chief Executive Officer of Litchfield Capital Holdings. From 1986 to 2005, he held a variety of senior positions at Credit Suisse both in New York and London, including Global Head of Asset-Backed Securities, Head of United States and European Debt Capital Markets and the Global Co-Head of Collateralized Debt Obligations, both cash and synthetic. At Credit Suisse, he was a member of the Fixed Income Operating Committee and the European Investment Banking Operating Committee. Mr. Ulm holds a B.A. summa cum laude from Amherst College, an M.B.A. from the Yale School of Management and a J.D. degree from Yale Law School.
As a result of Mr. Ulm’s 30 plus years of experience in structured finance and debt capital markets, including mortgage-backed securities, he is able to provide valuable business, leadership, and management advice to our Board of Directors in many critical areas.
Daniel C. Staton
has been the Non-Executive Chairman of ARMOUR since November 2009 and was the President, Chief Executive Officer and Director of Enterprise Acquisition Corp., a blank check company formed for the purpose of acquiring an operating business (“Enterprise”), from its inception in 2007 until its merger with
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ARMOUR in November 2009. Mr. Staton was also the Non-Executive Chairman of JAVELIN from June 2012 until April 2016. Since January 2015, Mr. Staton has directly or indirectly owned a minority limited partnership interest in ACM. Mr. Staton has almost 20 years of experience sourcing private equity and venture capital investments. From October of 2018 to December 2023, Mr. Staton was on the board of Shurgard Self Storage Ltd., a publicly listed company on the Belgium Stock Exchange, headquartered in Guernsey with operations in seven European countries. Mr. Staton also served as Chairman of the Board of Storage Realty Trust from 1997 to 1999, when he led its merger with Public Storage (NYSE: PSA), where he served as a Director until he retired from the Board on December 31, 2020, and as Vice Chairman and Director of Terran Orbital Corporation (NYSE: LLAP), an aerospace company that designs and manufactures nanosatellites for the United States government and military (“Terran Orbital”), from July 2014 until October 2024 when Terran Orbital was acquired by Lockheed Martin. Since February 2003, Mr. Staton has been Managing Director of the private equity firm, Staton Capital LLC. Between 1997 and 2007, he was President of The Walnut Group, a private investment firm, where he served as initial investor and Director of Build-A-Bear Workshop, the initial investor in Deal$: Nothing Over a Dollar (until its sale to Supervalu Inc.), and Director of Skylight Financial. Prior to The Walnut Group, Mr. Staton was General Manager and Partner of Duke Associates from 1981 until its initial public offering in 1993, and then served as Chief Operating Officer and Director of Duke Realty Investments, Inc. (NYSE: DRE) until 1997. Mr. Staton supplements his professional network by co-producing and investing in numerous Broadway musicals as well as with relationships with not-for-profit organizations. Mr. Staton majored in Finance at the University of Missouri and holds a B.S. degree in Specialized Business from Ohio University and a B.S. degree in Business (Management) from California Coast University.
Mr. Staton has extensive experience serving on the boards of directors of private and public companies and sourcing private equity and venture capital investments and brings significant corporate governance expertise to our Board of Directors.
Marc H. Bell
has been a director of ARMOUR since November 2009 and was the Chairman of the Board of Directors and Treasurer of Enterprise from its inception in 2007 until its merger with ARMOUR in November 2009. From November 2009 through August 2013, Mr. Bell served as ARMOUR’s Co-Founder, Co-Chairman of the Board of Directors, and Chief Strategy Officer. Mr. Bell was also a director of JAVELIN from June 2012 until April 2016. Since January 2015, Mr. Bell has directly or indirectly owned a minority limited partnership interest in ACM. He was a co-founder and served as the Chairman of Terran Orbital from July 2014 to October 2024 when Terran Orbital was acquired by Lockheed Martin. Mr. Bell also served as Terran Orbital’s Chief Executive Officer since March 2021 until its sale in October 2024. In September 2000, Mr. Bell founded and has since served as managing partner of Marc Bell Capital, LLC, an investment firm. Mr. Bell was the founder and President of Globix Corporation, a full-service commercial Internet Service Provider. Mr. Bell served as Chairman of the Board of Globix Corporation from 1998 to 2003 and Chief Executive Officer from 1998 to 2001. Mr. Bell was also a member of the Board of Directors of EDGAR Online, Inc. (NASDAQ: EDGR), an Internet-based provider of filings made by public companies with the SEC, from 1998 to 2000. Mr. Bell has also produced Broadway shows, winning three Tony Awards (Jersey Boys, August: Osage County and Stereophonic) and two Drama Desk Awards. Mr. Bell is a member of the Board of Trustees of New York University. Mr. Bell is also a member of the Board of Directors of SOS Children’s Village - Florida and Chairman Emeritus of the Boca Raton Police Foundation. Mr. Bell holds a B.S. degree in Accounting from Babson College and an M.S. degree in Real Estate Development and Investment from New York University.
Mr. Bell’s experience as managing director of an investment firm, as well as serving on the boards of directors of several public companies, allows him to provide valuable business, leadership, and management advice to our Board of Directors in many critical areas.
Z. Jamie Behar
has been a director of ARMOUR since July 2019. From 2005 to 2015, Ms. Behar was Managing Director, Real Estate Alternative Investments, for GM Investment Management Corporation (GMIMCo), having previously served as Portfolio Manager at the company for 19 years. Ms. Behar was responsible for the management of approximately $12 billion at peak portfolio value of primarily private market and publicly traded real estate on behalf of both General Motors Company and other unaffiliated clients. She has served on numerous boards within the real estate sector and she brings this investment, real estate and financial expertise to the ARMOUR Board. Ms. Behar currently serves on the Boards of Directors of Shurgard Self Storage Ltd. (EBR: SHUR), Sila Realty Trust (NYSE: SILA) and Benefit Street Partners Multifamily Trust, a non-traded multifamily REIT,
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and as an independent member of the CBRE Investment Management - Indirect Investment Committee. Ms. Behar is a member of the Real Estate Investment Advisory Council of the National Association of Real Estate Investment Trusts (Nareit), and serves as co-chair of the PREA Governance Committee. Ms. Behar previously served on the boards of directors of Sunstone Hotel Investors, Gramercy Property Trust, Forest City Realty Trust, the Broadstone Real Estate Access Fund, Desarrolladora Homex, SAB de CV and Hospitality Europe, B.V. as well as on the Board of Directors of the Pension Real Estate Association (PREA), having held the position of Board Chair of PREA from March 2010 to March 2011. Ms. Behar holds a B.S. in Economics (magna cum laude) from The Wharton School, University of Pennsylvania, and an M.B.A. from Columbia University Graduate School of Business. Ms. Behar is a Chartered Financial Analyst (CFA) charterholder. In December 2018, Ms. Behar was the recipient of Nareit’s E. Lawrence Miller Industry Achievement Award for her contributions to the REIT industry.
Ms. Behar’s pertinent experience, qualifications, attributes and skills include financial literacy and expertise, and allow her to provide significant expertise in accounting and financial matters and in analyzing and evaluating financial statements.
Carolyn Downey
has been a director of ARMOUR since September 2013. Ms. Downey has nearly 30 years of institutional capital markets experience working with leading institutions in global finance. From 1989 through 2007, Ms. Downey held various executive positions at, including as a Managing Director of, RBS Greenwich Capital, a fixed-income sales, trading and finance firm serving institutional clients, and a U.S. Government securities primary dealer. At RBS Greenwich Capital, Ms. Downey was responsible for relationships with real-estate investment trusts, financial institutions, hedge funds, investment managers and proprietary trading desks, participated in structuring and distribution of net interest margin securities, commercial mortgage securities and collateralized mortgage obligations, and advised on hedging strategies using derivative products and synthetic swaps. Prior to her time at RBS Greenwich Capital, Ms. Downey was a Vice President of Fixed Income Sales at Salomon, Inc. from 1981 through 1989, where she was for some time responsible for residual product placement and other equity tranches of structured debt and sourcing residuals from mortgage originators and security issuers. Ms. Downey also previously served as a mortgage product specialist in London and a thrift specialist in New York.
Ms. Downey holds a B.A. degree from St. Mary’s College, a B.S. degree in Accounting from Boston University and an M.B.A. degree from the Stanford University Graduate School of Business. Through 2020, Ms. Downey served on the Advisory Board of St. Ann School, East Harlem, a partnership of patrons, the Archdiocese and school leaders. She previously served on the Board of Directors of the Student Sponsor Partners.
As a result of Ms. Downey’s 30 plus years of experience in structured finance, investment banking and capital markets, she provides significant financial, leadership and management advice to our Board of Directors in many critical areas.
Robert C. Hain
has been a director of ARMOUR since November 2009. Mr. Hain was also a director of JAVELIN from June 2012 until April 2016. Mr. Hain became a director and the Chairman of City Financial Investment Company Limited (“City Financial”), a private manager of funds organized under the laws of the United Kingdom and authorized by the Financial Conduct Authority, in January 2006, and was the Chief Executive from February 2018 to March 2019. In March 2019 and during Mr. Hain’s service as the Chief Executive and director, the directors of City Financial voluntarily placed City Financial into administration pursuant to the insolvency laws of England and Wales. Investment funds managed by City Financial were transferred to other regulated investment managers. Mr. Hain was also director of Wittering Limited from 2008 to 2018, which was engaged in asset management in the United Kingdom, Europe, Hong Kong, Singapore, and the United States. Mr. Hain is currently a director of White Desert Limited, a luxury hotelier operating in Antarctica, and President of Laurier Partners, a specialist consulting firm in Nova Scotia. Previously, Mr. Hain was a director, Chairman and Chief Executive of Sound Diplomacy Holdings Ltd., a London-based group of economics consultancies, from 2014 to 2024, a director and Vice Chairman of Chika’s Wholefoods Africa Limited, based in Nigeria and a major shareholder of Minois Limited, a British snack food distributor of which he was Chairman, from 2017 to 2023, and a director of HomeChoice International Plc (Mauritius), a retailer of home furnishings to South Africans listed on the Johannesburg Stock Exchange from 2014 to 2022. He was a partner at Shadbolt Partners LLP from 2005 to 2018, a
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director of Majorpoint Limited from 2006 to 2014 and Kingsway Consultancy Limited from 2007 to 2017, the Non-Executive Chairman of Dundee Wealth SA (Luxembourg) from 2007 to 2009, a director of Tailwind Financial Inc. (Canada) from 2006 to 2009 and the Vice Chairman of CSS Stellar Holdings Inc. from 2005 to 2006. Mr. Hain was also the Chief Executive Officer of Invesco UK (Invesco Perpetual), a prominent British asset manager, from 2002 to 2004, and Chief Executive Officer of Invesco Canada (AIM Trimark), a Canadian mutual fund company, from 1998 to 2002. Mr. Hain was a member of the Executive Management Committee of Amvescap Plc (now Invesco Ltd.), from 1998 to 2005. Mr. Hain holds degrees from the University of Toronto (Innis College) and the University of Oxford (Merton College).
Mr. Hain’s extensive experience managing investments allows him to provide our Board of Directors with valuable knowledge regarding financial markets and investment opportunities.
John “Jack” P. Hollihan, III
has been a director of ARMOUR since November 2009. Mr. Hollihan was also a director of JAVELIN from June 2012 until April 2016. Mr. Hollihan has over 40 years of investment banking and investment experience. Mr. Hollihan has served as Executive Chairman of Litchfield Capital Holdings Inc. (Florida) since 2005, as a board member of several privately held companies in the United States and United Kingdom, and since 2019 as a partner of Good Housing Partnership LLC (Montana), for US affordable housing development. Mr. Hollihan was also a trustee of American Financial Realty Trust (NYSE: AFR) from 2005 until its sale in 2008. From 2000 to 2002, Mr. Hollihan was the Head of European Industry Investment Banking for Banc of America Securities (“BAS”), where he was a member of the BAS European Capital Committee and Board, and where he had responsibility for a loan book of approximately $8 billion. Prior to that, from 1986 to 2000, Mr. Hollihan was Head of Global Project and Asset Based Finance and Leasing at Morgan Stanley and was a member of the Morgan Stanley International Investment Banking Operating Committee. In that capacity, he managed approximately $45 billion in asset based and structured financings and leasing arrangements. Mr. Hollihan holds B.S. (Wharton) and B.A. degrees from the University of Pennsylvania, and a J.D. from the University of Virginia School of Law.
Mr. Hollihan’s 40 plus years of investment banking and investment experience provide valuable insights and advice to our Board of Directors, particularly as it pertains to the capital markets and housing.
Stewart J. Paperin
has been a director of ARMOUR since November 2009. Mr. Paperin served as a member of Enterprise’s Board of Directors from its inception in July 2007 to its merger with ARMOUR in November 2009. Mr. Paperin was also a director of JAVELIN from June 2012 until April 2016. Mr. Paperin currently serves as the managing member of Leopard Rock Property Group and LionRock Partners LLC, real property development and investment firms located in Southern California. Mr. Paperin also served as a director of the Board of Directors of Thunder Bridge Acquisition, Ltd., a blank check company formed to acquire an operating business in the financial technology industry, until its acquisition of Hawk Parent Holdings LLC in July 2019, a full-service provider of electronic transaction processing services. He also served on the Board of Directors of Thunderbridge II, a blank check company which acquired Indie Semiconductor, Inc., a company serving the automotive industry, until June 2021. Mr. Paperin also served as a director of Thunderbridge IV, a blank check company organized to acquire emerging businesses until its acquisition in December 2024 of Coincheck Inc., the leading Japanese broker of cryptocurrencies. Mr. Paperin served as Executive Vice President of the Soros Foundation, a worldwide private philanthropic foundation, from 1996 to 2013, where he oversaw financial, administrative and economic development activities. From 1996 to July 2005, Mr. Paperin served as a Senior Advisor and portfolio manager for Soros Fund Management LLC, a financial services company, and from July 2005 to June 2014, he served as a consultant to Soros Fund Management LLC. From 1996 to 2007, Mr. Paperin served as a director of Penn Octane Corporation (NASDAQ: POCC), a company engaged in the purchase, transportation and sale of liquefied petroleum gas. Prior to joining the Soros organizations, Mr. Paperin served as President of Brooke Group International, an investment firm concentrated on the former Soviet Union, from 1990 to 1993, and as Senior Vice President and Chief Financial Officer of Western Union Corporation, a provider of money transfer and message services, which was controlled by Brooke Group, from 1988 to 1990. Prior to Western Union Corporation, Mr. Paperin served as Chief Financial Officer of Timeplex Corporation, a telecommunications equipment provider, from 1986 to 1988 and of Datapoint Corporation, a computer equipment manufacturer, from 1985 to 1986. Prior to Datapoint Corporation, Mr. Paperin served as a financial officer of Pepsico Corporation (NYSE: PEP) from 1980 to 1985 and as a management consultant at Cresap McCormick Paget from 1975 to 1980. Mr. Paperin also served as a member
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of the Board of Directors of Community Bankers Acquisition Corp., a blank check company formed to acquire an operating business in the banking industry. Mr. Paperin also served on the Boards of Directors of several telecommunications firms including Svyazinvest, the national telecommunications firm of Russia and on the Boards of Directors of three banks in Eastern Europe. Mr. Paperin holds a B.A. degree and an M.S. degree from the State University of New York at Binghamton. He is a member of the Council on Foreign Relations and was awarded an honorary Doctor of Humane Letters by the State University of New York.
Mr. Paperin’s pertinent experience, qualifications, attributes and skills include financial literacy and expertise, and allows him to provide significant expertise in accounting and financial matters and in analyzing and evaluating financial statements.
Recommendation of the Board of Directors
ARMOUR’s Board of Directors unanimously recommends a vote
“FOR”
each of the eight nominees for director.
11
ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE ("ESG") INFORMATION
Environmental Sustainability
ARMOUR is committed to promoting sustainable and environmentally friendly practices in our workplace to reduce energy-usage, increase recycling and decrease waste. ACM’s 21 employees work in a 5,650 square feet leased office space in Vero Beach, Florida. As an organization, we are focused on minimizing the environmental impact of our business where possible. Energy conservation and environmental sustainability efforts are a priority and include:
Recycling:
•
paper, glass and aluminum cans.
•
electronic equipment, batteries and ink cartridges.
Reducing carbon footprint through:
•
video conferencing as an alternative to travel.
•
utilizing LED lighting throughout the ACM office space.
•
films on windows to reduce heating, ventilation, and air conditioning ("HVAC") system usage.
•
low flow water fixtures in bathrooms to reduce water consumption.
•
power management features that automatically put the computers and printers into a "sleep mode" after a designated period of inactivity.
Using Energy Star® certified products:
•
computers, monitors, printers and televisions.
•
filtered water dispenser to eliminate the need for plastic bottles.
Reduction of waste:
•
of single-use plastics by providing reusable, compostable and recycled kitchen products.
•
of office paper usage by emphasizing electronic communications, record storage and opting to receive e-statements and invoices from vendors.
Other Initiatives:
•
installation of an eco-friendly porcelain tile flooring, produced with 40% of pre-consumer recycled materials, in high traffic areas that emits zero volatile organic compounds and moderates indoor temperature swings, reducing HVAC system usage.
•
installation of a Self-Contained Commercial Air Cleaner with a high efficiency particulate air filter that removes airborne contaminants like smoke, dust, pollen and dander that contribute to allergies and asthma and reduces British thermal unit loads associated with larger amounts of outside air while helping lower energy costs and maintenance.
•
replaced all carpeting with a PVC-free, Cradle to Cradle Certified,™ carpet rug institute Green Label Plus certified, and fully recyclable commercial carpet tile.
•
replaced all desks with UPLIFT Desk’s ergonomically designed, adjustable height standing desks that include environmentally conscious desktops made from all-natural Moso bamboo. UPLIFT Desks partners with the National Forest Foundation to plant 5 new trees for every 1 desktop sold.
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•
installation of EWS water filtration system to reduce exposure to common contaminants. EWS systems and filters are all USA-made.
Social Responsibility
ARMOUR’s primary social impact comes from its investment activity. As a provider of housing capital, we are honored to assist and strengthen the American housing market and those seeking home ownership. Through thoughtful investment and risk management, our focus on residential real estate finance supports home ownership for a broad and diverse spectrum of Americans. We take this duty seriously, as the benefits of homeownership are wide-reaching and well documented. Homeownership has long been understood as an important part of individual wealth creation and social mobility.
Improving homeownership rates stabilizes communities because homeowners are often engaged in and beneficial to their communities due to their financial and emotional investments in the space. The residential real estate market is an important part of the U.S. economy, and investing in home mortgages is a strong way to support and improve this market and the economy as a whole.
Community Involvement
We believe that sharing our success is key to community and employee development. We strive to create a positive impact in the community in which we do business, making it a better place to live and work. ACM’s employees' and ARMOUR's community involvement is a combination of charitable contributions and employees volunteering in local civic and charitable organizations or providing financial support.
While ACM's employees have the opportunity to donate time and funds to the community organization of their choice, ACM has chosen some key areas of high-impact focus that its employees feel strongly connected to:
•
Food security
•
Affordable housing projects
•
Cancer support
•
Children’s health and social services
•
Mental health awareness
•
Financial literacy
•
Career counseling in underserved communities
Human Capital Resources
Our greatest strength and most important assets are the members of the ARMOUR team. Their overall well-being is paramount to the Company's success. ACM ensures its employees have a rewarding, supportive, and healthy working environment in which to thrive, and endeavors to support their success in all things. A diverse and inclusive internal climate is supported. ACM hires on the basis of qualifications and does not discriminate on the basis of sex, age, color, race, religion, marital status, national origin, ancestry, sexual orientation, physical and mental disability, medical condition, genetic information, veteran status or any other basis protected by federal, state, or local law. ACM provides employees with opportunities for growth and development, both in the personal and professional spheres, as well as a wide variety of resources to support their work and personal lives. ACM’s compensation and comprehensive benefits are thoughtfully designed to recognize and reward their professional skills, resulting in a low voluntary turnover rate for ARMOUR.
A copy of the full ESG report is available on ARMOUR’s website at
www.armourreit.com
under "ESG." Information provided on our website is not part of this proxy statement and not incorporated herein.
13
Corporate Governance
ARMOUR is committed to corporate governance that aligns with the interests of our stockholders and other stakeholders. We strive to maintain a well-rounded and diverse Board that balances financial industry expertise with independence, and the institutional knowledge of longer-tenured directors with the fresh perspectives brought by newer directors. Our directors bring to our Board a variety of skills and experiences developed across a broad range of industries, both in established and growth markets, and in each of the public, private and not-for-profit sectors. Our Board leads this effort by example.
Our Board of Directors has:
•
63% independent directors.
•
25% representation of female directors.
•
13% diversity by ethnicity/race.
•
88% of directors with more than 10 years of tenure.
•
ARMOUR common stock ownership targets, with a prohibition on pledging or hedging.
•
Annual election of directors.
•
Majority election and Director Resignation Policy.
•
Written Board and committee charters with annual self-assessments.
•
Regular meetings of independent directors without management and with independent auditors.
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Similarly, our executive officers have ARMOUR stock awards that vest over 5 years or longer, significant common stock ownership targets, and prohibitions on pledging or hedging their stock positions.
Independence of Directors
We adhere to the rules of the NYSE in determining whether a director is independent. The NYSE requires that a majority of our Board of Directors be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which, in the opinion of our Board of Directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Consistent with these considerations, our Board of Directors has affirmatively determined that Mses. Downey and Behar and Messrs. Hain, Hollihan and Paperin are independent directors.
15
Role of the Board of Directors; Risk Management
Our Board of Directors plays an active role in overseeing management and representing the interests of stockholders. The roles of Chief Executive Officer and Chairman of the Board are held by different individuals. Management, which is responsible for day-to-day risk management, conducts a risk assessment of our business bi-annually. The risk assessment process is global in nature and has been developed to identify and assess our risks, including the nature of the risk, as well as to identify steps to mitigate and manage each risk. Oversight responsibility for each risk is allocated among the full Board of Directors and its committees, and specific Board of Director and committee agendas are developed accordingly.
Board Committees
Our Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee and adopted Charters for each of these committees. The Compensation Committee and Nominating and Corporate Governance Committee each has three directors, and the Audit Committee has 4 directors. All committees are composed exclusively of independent directors, as defined by the listing standards of the NYSE. Also, our Board of Directors has affirmatively determined that each member of our Compensation Committee is independent for Compensation Committee purposes based on the more stringent independence standards imposed by applicable NYSE and SEC rules. Such individuals are intended to be, to the extent required by Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), non-employee directors and will, at such times as we are subject to Section 162(m) of the Internal Revenue Code (the “Code”), qualify as outside directors for purposes of Section 162(m) of the Code.
Board and Committee Meetings
During the year ended December 31, 2024, our Board of Directors held nine meetings and acted by written consent in lieu of a meeting on fifteen occasions. Our Audit Committee held seven meetings and acted by written consent on five occasions, our Compensation Committee held two meetings, and our Nominating and Corporate Governance Committee held one meeting. Each of our directors attended at least 75% of the meetings of the Board of Directors and of the Board’s committees on which they served during 2024. The Company does not have a policy with regard to Board members' attendance at annual meetings. Our management director conducted last year's annual meeting and five non-executive directors were in attendance.
Lead Independent Director
Our independent directors designated John Hollihan, III as our lead independent director. The lead independent director coordinates the activities of our other independent directors. In addition to the duties of all members of the Board of Directors, the lead independent director has the following additional responsibilities and authority:
•
presiding at meetings of the Board of Directors in the absence of, or upon the request of, the Chairman;
•
scheduling, developing the agenda for, and presiding at executive sessions of the independent directors;
•
advising the Chairman and/or the Board of Directors as to the decisions reached, if any, at each executive session;
•
serving as the principal liaison between the independent directors, the Chairman and the Chief Executive Officer;
•
advising the Chairman as to the quality, quantity and timeliness of the information submitted by the Company’s management that is necessary or appropriate for the independent directors to effectively and responsibly perform their duties;
16
•
assisting the Board of Directors and the Nominating and Corporate Governance Committee in better ensuring compliance with and implementation of our Corporate Governance Guidelines; and
•
recommending to the Chairman, at the direction of the independent directors, the retention of outside advisors and consultants who report directly to the Board of Directors on Board-wide issues.
Our Board of Directors has adopted a lead independent director charter. A copy of the lead independent director charter is available on ARMOUR’s website at
www.armourreit.com
under "Governance - Governance Documents.” Information provided on our website is not part of this proxy statement and not incorporated herein.
Audit Committee
The members of our Audit Committee are Messrs. Paperin, Hollihan and Hain and Ms. Behar, with Mr. Paperin serving as chairman. The Audit Committee is responsible for, among other things:
•
engaging independent certified public accountants;
•
reviewing with the independent certified public accountants and the Company's internal audit function, the plans and results of the audit engagement;
•
approving professional services provided by the independent certified public accountants;
•
reviewing the independence of the independent certified public accountants;
•
considering the range of audit and non-audit fees;
•
reviewing the adequacy of our internal accounting controls;
•
reviewing disclosures and the Company’s officer certification process regarding the design and operation of the Company’s internal control over financial reporting;
•
reviewing and approving the Company’s related party transactions;
•
preparing Audit Committee reports; and
•
periodically monitoring and overseeing our information and cybersecurity risks, including reviewing and approving any information and cybersecurity policies, procedures and resources, and reviewing our information and cybersecurity risk assessment, detection, protection, and mitigation systems.
A copy of the Audit Committee Charter is available on ARMOUR’s website at
www.armourreit.com
"Governance - Governance Documents.” Information provided on our website is not part of this proxy statement and not incorporated herein.
Financial Experts on Audit Committee
The Audit Committee will at all times be composed exclusively of “independent directors” who are “financially literate” as defined by the NYSE listing standards and Rule 10A-3(b)(1) of the Exchange Act. The definition of “financially literate” generally means being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement. Our Board has determined that each member of our Audit Committee is financially literate under the NYSE listing standards and Rule 10A-3(b)(1) of the Exchange Act.
In addition, a listed company must certify to the NYSE that the Audit Committee will have at least one member who has past accounting or related financial management expertise as the Board interprets such qualification in its business judgment. Our Board of Directors has determined each of Messrs. Hain, Hollihan and Paperin and Ms. Behar satisfies the definition of financial sophistication and also qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC.
17
Compensation Committee
The Compensation Committee consists of Messrs. Hain and Paperin and Ms. Behar. Mr. Hain chairs our Compensation Committee. The Compensation Committee is responsible for, among other things:
•
overseeing the evaluation of the performance of our officers;
•
reviewing and approving any compensation payable to our officers by the Company (excluding any compensation payable by our external manager, ACM);
•
reviewing and recommending to our Board of Directors any compensation for our directors;
•
evaluating annually the performance of ACM;
•
reviewing annually, the fees and expenses payable to ACM under the management agreement between the Company and ACM;
•
reviewing annually, the Company's equity-based plans, including the executive equity incentive plan and director equity program;
•
approving adoption of Company compensation plans not requiring stockholder approval and recommending for Board approval, Company compensation plans requiring stockholder approval;
•
reviewing and discussing with management disclosures under the section in this proxy statement titled “Compensation Discussion and Analysis,” as required by the SEC; and
•
preparing Compensation Committee reports.
A copy of the Compensation Committee Charter is available on ARMOUR’s website at
www.armourreit.com
under "Governance - Governance Documents.” Information provided on our website is not part of this proxy statement and not incorporated herein.
Compensation Committee Interlocks and Insider Participation
Each of the members of the Compensation Committee is an independent director as required under NYSE listing standards. No member of the Compensation Committee is a current or former officer or employee of ours or any of our subsidiaries. There were no relationships during the 2024 fiscal year and no transactions during the 2024 fiscal year involving us, any of our executive officers, any of the directors who served as members of the Compensation Committee or any other directors for any part of the 2024 fiscal year that would require disclosure by us under the SEC rules requiring disclosure of certain relationships and related-party transactions due to any service on the boards or compensation committees of the Company and another entity.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee consists of Mr. Hollihan, Ms. Behar and Ms. Downey. Mses. Behar and Downey co-chair our Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for, among other things:
• seeking, considering and recommending to the Board qualified candidates for election as directors;
• periodically preparing and submitting to our Board of Directors for adoption the committee’s selection criteria for director nominees;
• reviewing and making recommendations on matters involving the general operation of our Board of Directors and our corporate governance;
• oversight of corporate actions and disclosure, as is determined to be advisable, relating to material ESG matters that may impact long-term performance and risk management strategies in anticipation of changing investor demands and regulatory requirements;
• annually recommending to the Board nominees for each committee of the Board; and
18
• facilitating the assessment of the Board’s performance as a whole and of the individual directors and reporting thereon to our Board of Directors.
The Nominating and Corporate Governance Committee will identify, evaluate and recommend candidates to become members of the Board with the goal of creating a Board with a broad and diverse set of skills, expertise, experience, and background, among other things, and will include his or her independence pursuant to the requirements of the NYSE as part of its criteria. Recommendations for Board candidates may also be submitted to the Nominating and Corporate Governance Committee by the Company’s stockholders in accordance with the Company’s policy set forth in the Nominating and Corporate Governance Committee Charter. Candidates will be reviewed in the context of current composition of the Board, the operating requirements of the Company and the long-term interests of the Company’s stockholders. A copy of the Nominating and Corporate Governance Committee Charter and Corporate Governance Guidelines are available on ARMOUR's website at
www.armourreit.com
under “Governance - Governance Documents.” Information provided on our website is not part of this proxy statement and not incorporated herein.
Director Compensation
Annual Cash and Equity Retainers
. In 2024, we paid our non-management directors an annual retainer of $132,000; 50%, or $66,000 of this retainer, was payable in cash and 50%, or $66,000 of this retainer, was payable in common stock, cash, or a combination of stock and cash (e.g. to cover estimated income taxes) at the option of the director.
Committee Annual Cash Retainers
. In 2024, we paid our directors annual retainers for the additional Board responsibilities associated with the below roles.
| Daniel C. Staton | Z. Jamie Behar | Carolyn Downey | Robert C. Hain | John P. Hollihan, III | Stewart J. Paperin | |||||||||||||||||||||||||||||||||
|
Lead Independent Director
(1)
|
$ | — | $ | — | $ | — | $ | — | $ | 24,694 | $ | — | ||||||||||||||||||||||||||
| Non-executive Chairman | 35,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Audit Committee Chairman | — | — | — | — | — | 35,000 | ||||||||||||||||||||||||||||||||
| Compensation Committee Chairman | — | — | — | 25,000 | — | — | ||||||||||||||||||||||||||||||||
|
Nominating and Corporate Governance Committee Co-chair
(2)
|
— | 8,785 | 8,785 | — | 7,362 | — | ||||||||||||||||||||||||||||||||
| Audit Committee Member | — | 35,000 | — | 35,000 | 35,000 | 35,000 | ||||||||||||||||||||||||||||||||
| Totals | $ | 35,000 | $ | 43,785 | $ | 8,785 | $ | 60,000 | $ | 67,056 | $ | 70,000 | ||||||||||||||||||||||||||
(1)
Mr. Hollihan served as our Nominating and Corporate Governance Committee chairman until April 2024, when he became our Lead Independent Director. Mr. Hollihan's annual cash retainers for Nominating and Corporate Governance Committee chairman ($25,000) and Lead Independent Director ($35,000) were prorated for 2024. Until his retirement on February 1, 2024, Thomas Guba, a previous director of the Company, was paid a prorated amount of $2,981 for his role as Lead Independent Director.
(2)
Ms. Behar and Ms. Downey began their roles as co-chairs to the Nominating and Corporate Governance Committee in April 2024, therefore their annual cash retainers of $12,500 each were prorated for 2024.
Each non-management director could elect to have all or a portion of their annual cash retainer and committee annual cash retainer(s) payable in shares of common stock or fully vested restricted stock units, as described below under "Non-Management Director Compensation and Deferral Program" and set forth in the 2024 Director Compensation Table, as applicable. All per share amounts, common shares outstanding and stock-based compensation amounts for the periods presented reflect the one-for-five reverse stock split (the “Reverse Stock Split”), which was effective September 29, 2023.
19
January 2020 Equity Grants
. In January 2020, our Compensation Committee and Board of Directors approved grants to our non-management directors, totaling 3,600 shares of stock to each of our non-management directors under ARMOUR's Third Amended and Restated 2009 Stock Incentive Plan (the "Plan") pursuant to the time-based vesting schedules as follows:
•
with respect to Messrs. Paperin, Hollihan, Hain and Guba, and Mses. Behar and Downey, the grants vested ratably each quarter over a two year period. All 3,600 shares of stock granted have fully vested.
•
with respect to Messrs. Staton and Bell, the grants vested ratably each quarter over a five year period. All 3,600 shares of stock granted have fully vested.
January 2021 Equity Grants
. In January 2021, our Compensation Committee and Board of Directors approved grants to our non-management directors, totaling 2,500 shares of stock to each of our non-management directors under the Plan pursuant to the time-based vesting schedules as follows:
•
the grants vest over a five year period as follows: 120 shares vested on February 20, 2021 with an additional 120 shares vesting on each following May 20, August 20, and February 20 through August 20, 2025. Additionally, 140 shares vested on November 20, 2021 with an additional 140 shares vesting each following November 20, through November 20, 2025, at which time all shares shall have vested. In connection with Mr. Guba's retirement from our Board, the Board approved the full vesting of his remaining 1,000 unvested shares from this grant pursuant to the terms of his stock award agreement and the Plan.
In January 2021, our Compensation Committee and Board of Directors also approved grants, totaling 12,650 shares of stock to each of Messrs. Staton and Bell through ACM for services provided to and through ACM for the benefit of ARMOUR under the Plan pursuant to the time-based vesting schedules as follows:
•
the grants vest over 26 quarters as follows: 480 shares vested on February 20, 2021 with an additional 480 shares vesting on each following May 20, August 20, and February 20, through August 20, 2026. Additionally, 500 shares vested on November 20, 2021 with an additional 500 shares vesting on each following November 20, through November 20, 2026 and 500 shares vesting on February 20, 2027 and 510 shares vesting on May 20, 2027, at which time all shares shall have vested.
February 2023 Equity Grants
. In February 2023, our Compensation Committee and Board of Directors approved grants to our non-management directors, totaling 8,000 shares of stock to each of our non-management directors under the Plan pursuant to the time-based vesting schedules as follows:
•
the grants vest over a five year period as follows: 400 shares vested on February 20, 2023 with an additional 400 shares vesting on each following May 20, August 20, November 20, and February 20, through November 20, 2027, at which time all shares shall have vested. In connection with Mr. Guba's retirement from our Board, the Board approved the full vesting of his remaining 6,400 unvested shares from this grant pursuant to the terms of his stock award agreement and the Plan.
Directors may elect to receive a portion of their awards in cash solely to cover estimated income taxes due on vested stock.
Non-Management Director Compensation and Deferral Program
.
In December 2019, the Compensation Committee recommended and the Board approved, the Non-Management Director Compensation and Deferral Program (the “Deferral Program”). The Deferral Program became effective on January 1, 2020. Under the Deferral Program, each non-management director may elect to receive his or her annual retainers, including committee annual retainers, either in cash, in shares of unrestricted stock, or in fully-vested restricted stock units (or a combination thereof). Non-management directors must make the election in writing in advance of the calendar year to which the election relates (or, when a non-management director joins the Board, within 30 days of joining
20
the Board). The shares of unrestricted stock and/or the deferred restricted stock units, if chosen, will be issued to the non-management director at the end of each calendar quarter based on the cash retainer earned for that quarter and converted into a number of shares or units based on the closing price for the common stock on the NYSE on such date. If a non-management director chooses to receive fully-vested deferred stock units, the director’s election must also indicate (1) when the units will be settled, such as the director’s separation from service (including retirement), a specified future date, or January 1st of the year following a chosen anniversary of the grant date, and (2) whether the units will be settled in a lump sum or in annual installments (not to exceed 10 years). Notwithstanding a director’s election, the deferred stock units will be settled in a lump sum upon the director’s earlier death or disability or upon an earlier change of control of ARMOUR. In any event, the deferred stock units will be settled in shares of common stock.
The Compensation Committee is committed to the ongoing review and evaluation of our non-executive director compensation levels and program. We have adopted a policy designed to ensure that non-executive directors and executive officers attain and maintain meaningful levels of stock ownership over time to better align their interests with the interests of ARMOUR’s stockholders. We have established stock ownership targets for non-executive directors to beneficially own ARMOUR common shares with a basis equal to a minimum of three times their annual base cash retainer (currently $66,000), or $198,000. The targets for our Chief Executive Officer, our Chief Financial Officer and Co-Chief Investment Officers are $2,000,000, $1,000,000 and $750,000, respectively. Target ownership levels are to be achieved within five years or less from the date the policy was adopted or within five years or less from the date the non-executive director or executive officer was appointed and, after achievement, are to be maintained. Such maintenance requirement will be deemed to be satisfied notwithstanding any subsequent change in the market value of common stock holdings. All ARMOUR shares received as compensation (on an after tax basis) are to be retained until the individual’s share ownership targets are met. As of the date of this proxy statement, all of our directors are in compliance with this policy.
We do not have, and we do not currently intend to adopt, any plans or programs for our directors that provide for pension benefits.
Any member of our Board of Directors who is also an officer of ARMOUR or an officer or employee of ARMOUR's affiliates does not receive any compensation from us for serving on our Board of Directors. All members of our Board are reimbursed for their costs and expenses of serving on the Board, including costs and expenses of attending all meetings of our Board and our committees.
The following table summarizes the compensation that we paid to our non-executive directors in 2024.
2024 Director Compensation
| Name |
Directors Retainer Earned or Paid in Cash
(1)
|
Directors Retainer Earned or Paid in
Stock
(2)
|
Total | |||||||||||||||||
| Daniel C. Staton | $ | 167,000 | — | 167,000 | ||||||||||||||||
| Marc H. Bell | $ | 132,000 | — | 132,000 | ||||||||||||||||
| Z. Jamie Behar | $ | 175,785 | — | 175,785 | ||||||||||||||||
| Carolyn Downey | $ | 74,785 | 66,000 | 140,785 | ||||||||||||||||
|
Thomas K. Guba
(3)
|
$ | 14,223 | — | 14,223 | ||||||||||||||||
| Robert C. Hain | $ | 192,000 | — | 192,000 | ||||||||||||||||
| John P. Hollihan, III | $ | 199,056 | — | 199,056 | ||||||||||||||||
| Stewart J. Paperin | $ | 136,000 | 66,000 | 202,000 | ||||||||||||||||
(1)
Represents annual directors retainers of $66,000 (plus any portion of the second $66,000 in annual retainer that a director elects to receive in cash) and committee annual cash retainers (which may be paid either in
21
cash, in shares of unrestricted stock, or in fully-vested restricted stock units pursuant to the Non-Management Director Compensation and Deferral Program).
(2)
Represents annual directors retainers of $66,000, which may be paid in stock, cash or a combination of stock and cash (e.g. to cover estimated income taxes) at the option of the director. To the extent a director elects to receive directors fees in stock, shares are distributed quarterly with the actual number of shares being based on the reported closing trade price of ARMOUR common stock on the NYSE at the end of each quarter.
(3)
Mr. Guba retired on February 1, 2024.
Code of Business Conduct and Ethics
We have adopted a code of business conduct and ethics that applies to all our directors and officers. We do not have any employees. The code of business conduct and ethics is available at our website at
www.armourreit.com
under “Investor Relations - Governance Documents.” Any amendments or waivers thereto will be provided on our website within four business days following the date of the amendment or waiver. Information provided on our website is not part of this proxy statement and not incorporated herein.
Corporate Governance Guidelines
Our Board of Directors has adopted a set of corporate governance guidelines, which provide a framework within which the Board and its committees direct the affairs of ARMOUR. The corporate governance guidelines address the roles of the Board and management, functions of the Board, qualifications for directors, director independence, ethics and conflicts of interest, among other matters. The corporate governance guidelines are available at our website at
www.armourreit.com
under “Investor Relations - Governance Documents.”
Requesting Corporate Governance Documents
Our code of business conduct and ethics, corporate governance guidelines and lead independent director and committee charters are available at our website at
www.armourreit.com
. Copies of these documents are also available in print to any stockholder who requests them. Requests should be sent to: ARMOUR Residential REIT, Inc., 3001 Ocean Drive, Suite 201, Vero Beach, Florida 32963, Attention: Gordon Harper.
Communication with the Board of Directors, Independent Directors and the Audit Committee
Our Board of Directors may be contacted by any party via mail at the address listed below:
Chairman
Board of Directors
ARMOUR Residential REIT, Inc.
3001 Ocean Drive, Suite 201
Vero Beach, Florida 32963
We believe that providing a method for interested parties to communicate directly with our independent directors, rather than the full Board, would provide a more confidential, candid and efficient method of relaying any interested party’s concerns or comments. The independent directors can be contacted by any party via mail at the address listed below:
Lead Independent Director
ARMOUR Residential REIT, Inc.
3001 Ocean Drive, Suite 201
Vero Beach, Florida 32963
22
The Audit Committee has adopted a process for anyone to send communications to the Audit Committee with concerns or complaints concerning our Company’s regulatory compliance, accounting, audit or internal controls issues. The Audit Committee can be contacted by any party via mail at the address listed below:
Chairman
Audit Committee
ARMOUR Residential REIT, Inc.
3001 Ocean Drive, Suite 201
Vero Beach, Florida 32963
Relevant communications are distributed to the Board, or to any individual director or directors, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, our Board of Directors has requested that certain items that are unrelated to the duties and responsibilities of the Board should be excluded or redirected, as appropriate, such as: business solicitations or advertisements; junk mail and mass mailings; resumes and other forms of job inquiries; spam; and surveys. In addition, material that is unduly hostile, threatening, potentially illegal or similarly unsuitable will be excluded; however, any communication that is excluded will be made available to any outside director upon request.
ARMOUR’s Mortgage REIT Peer Group
We refer to the FTSE NAREIT Mortgage REIT Home Financing index of 20 companies to identify overall performance and other trends in the mortgage REIT industry. We have also identified a focused peer group of six publicly-traded mortgage REITs that we believe are most directly comparable to ARMOUR. The peer group companies are: AGNC Investment Corp., Dynex Capital, Inc., Invesco Mortgage Capital, Annaly Capital Management, Orchid Island Capital and Two Harbors Investment Corporation. In addition to reviewing general industry trends and market and regulatory factors applicable to our Company, our management carefully reviews these specific companies periodically as part of the process of developing appropriate operating, corporate governance and compensation practices and policies for our Company, including using such review as a factor in considering executive pay.
Cybersecurity
We rely on our financial, accounting and other data processing systems. Computer malware, viruses, computer hacking and phishing attacks have become more prevalent in our industry and may occur on our systems. Although we have not detected a material cybersecurity breach to date, other financial services institutions have reported material breaches of their systems, some of which have been significant. Even with all reasonable security efforts, not every breach can be prevented or even detected; as such, it is possible that we have experienced an undetected breach. There is no assurance that we, or the third parties that facilitate our business activities, have not or will not experience a breach. It is difficult to determine what, if any, negative impact may directly result from any specific interruption or cyber-attacks or security breaches of our networks or systems (or the networks or systems of third parties that facilitate our business activities) or any failure to maintain performance.
ACM has established an Information Technology Steering Committee (the "ITSC") to help mitigate technology risks including cybersecurity. One of the roles of the ITSC is to oversee cyber risk assessments, monitor applicable key risk indicators, review cybersecurity training procedures, oversee the Company’s cybersecurity policies, including an incident response plan, and engage third parties to conduct periodic penetration testing. Our cybersecurity risk assessment includes an evaluation of cyber risk related to sensitive data held by third parties on their systems. There is no assurance that these efforts will effectively mitigate cybersecurity risk and mitigation efforts are not an assurance that no cybersecurity incidents will occur.
In addition, our Audit Committee periodically monitors and oversees our information and cybersecurity risks including reviewing and approving any information and cybersecurity policies, procedures and resources, and reviewing our information and cybersecurity risk assessment, detection, protection, and mitigation systems.
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Investor Outreach
In our continuing effort to promote dialogue with our investors about our business, ESG concerns, and executive compensation practices, we contacted stockholders who reportedly held 90,000 or more of our common shares outstanding. These 30 stockholders are all institutional investors and collectively held approximately 43% of our common shares outstanding as of December 31, 2024. According to CapIQ, as of December 31, 2024, institutional investors held approximately 43.5% of our shares of common stock outstanding, while the other approximately 56.5% was represented largely by individual retail investors, including our directors and officers who collectively owned approximately 0.36% of our common shares outstanding. While we value the views of all of our stockholders, we believed that outreach efforts focused on our largest stockholders would provide us timely and representative insights more efficiently. Institutional investors may contact us directly at
investor@armourreit.com
with the word “engagement” in the subject line to schedule a discussion anytime during the year. We are also committed to ongoing engagement with prospective and former institutional stockholders as well. These direct outreach efforts have resulted in ongoing and prospective dialogues with over 60 additional significant institutional investors in our space. We look forward to continuing constructive engagement with our stockholders and prospective stockholders on these important topics.
Majority Voting for Directors and Director Resignation Policy
Our Amended and Restated Bylaws (the “Bylaws”) provide that a director nominee will be elected by receiving the affirmative vote of the majority of votes cast on the election of such nominee on a per nominee basis in an uncontested election (which occurs when the number of director nominees is the same as the number of directors elected). The Bylaws further provide that any director nominee who is an incumbent director but who is not elected by the vote required in the Bylaws, and with respect to whom no successor has been elected, shall promptly tender his or her offer to resign to our Board for its consideration following certification of the stockholder vote. Within 90 days following certification of the stockholder vote, our Nominating and Corporate Governance Committee shall consider the tendered resignation offer and make a recommendation to our Board whether or not to accept such offer, and our Board shall act on the Nominating and Corporate Governance Committee’s recommendation. In determining whether to accept the resignation, our Nominating and Corporate Governance Committee and Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation, including, among other things, whether accepting the resignation of such director would cause the Company to fail to meet any applicable stock exchange or SEC rules or requirements. Thereafter, our Board shall promptly and publicly disclose its decision-making process regarding whether to accept the director’s resignation offer or the reasons for rejecting the resignation offer, if applicable, on a Form 8-K. A director who tenders his or her resignation shall not participate in the Nominating and Corporate Governance Committee’s recommendation or our Board’s action regarding whether to accept such resignation offer. If our Board does not accept the director’s resignation, the director will continue to serve until the next annual meeting of stockholders and until the director’s successor is duly elected and qualified or until the director’s earlier resignation as provided for in the Bylaws or removal as provided for by the Maryland General Corporate Law.
In a contested election, the director nominees who receive a plurality of votes cast will be elected as directors. Under the plurality standard, the number of persons equal to the number of vacancies to be filled who receive more votes than the other nominees are elected to our Board, regardless of whether or not they receive a majority of the votes cast.
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Director and Executive Officer Minimum Stock Ownership and Retention Guidelines
We have adopted a policy designed to ensure that non-executive directors and executive officers attain and maintain meaningful levels of stock ownership over time to better align their interests with the interests of ARMOUR’s stockholders. We have established stock ownership targets for non-executive directors to beneficially own ARMOUR common shares with a basis equal to a minimum of three times their annual base cash retainer (currently $66,000), or $198,000. The targets for our Chief Executive Officer, our Chief Financial Officer and Co-Chief Investment Officers are $2,000,000, $1,000,000 and $750,000, respectively. Target ownership levels are to be achieved within five years or less from the date the policy was adopted or within five years or less from the date the director or executive officer was appointed, and after achievement, are to be maintained. Such maintenance requirement will be deemed to be satisfied notwithstanding any subsequent change in the market value of common stock holdings. We have also adopted a policy for our directors and executive officers that all ARMOUR shares received as compensation (on an after tax basis) are to be retained until the individual’s share ownership targets are met. As of the date of this proxy statement, all of our directors are in compliance with this policy.
Policy Regarding the Mandatory Recovery of Compensation (Clawback Policy)
In October 2023, we adopted a new clawback policy to comply with the SEC requirements. The clawback policy applies to incentive compensation received (as such term is defined in the policy) in any fiscal period ending on or after the effective date of the rule set forth in Section 303A.14 of the NYSE Listed Company Manual. The clawback policy provides that, in the event of any accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under applicable securities laws, the Company will recover the excess incentive compensation received by current or former executive officers who served as such during the three completed fiscal years preceding the date of the restatement, subject to limited permitted exceptions. Recovery under the policy applies regardless of any misconduct, fault, or illegal activity of the Company, the executive officer, the Board or any committee thereof.
Policy Prohibiting Hedging and Pledging
We have adopted a policy prohibiting the hedging and pledging of our securities, which applies to all officers and directors of the Company and provides that such individuals are prohibited from (i) engaging in any hedging transactions (including short-selling, options, puts, and calls, as well as derivatives such as swaps, forwards, and futures transactions) with respect to securities of the Company, and (ii) making or maintaining any pledges of securities of the Company or otherwise holding securities of the Company in a margin account. As of the date of this proxy statement, all of our directors and executive officers are in compliance with this policy. In addition, no securities beneficially owned by our officers and directors are pledged.
Equity Award Grant Practices
We grant equity awards upon the recommendation of our Compensation Committee and approval of our Board.
We do not currently grant stock options, stock appreciation rights or similar option-like instruments to our named executive officers or other service providers and did not grant any such type of equity award during the fiscal year ended December 31, 2024. Current and future stockholders, including our named executive officers,
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may voluntarily participate in the Company’s 2012 Dividend Reinvestment and Stock Purchase Plan or 2013 Dividend Reinvestment and Stock Purchase Plan and receive an option to purchase shares at a discount using cash in excess of $10,000.
We have an insider trading policy governing the purchase, sale and other dispositions of the Company’s securities that applies to all directors and officers of the Company and each subsidiary of the Company and certain other persons associated with the foregoing categories of persons. The policy also applies to the securities of other companies with which we have a business relationship, including partners, counterparties, underwriters, placement agents, brokers, dealers, auditors, legal counsel and competitors of the Company and its subsidiaries and those with which the Company may be negotiating major transactions, such as an acquisition, merger, investment or sale. We believe that our insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, as well as applicable listing standards. A copy of our insider trading policy is included in Exhibit 19.1 to our Annual Report on Form 10-K for the year ended December 31, 2024.
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ARMOUR’S EXECUTIVE OFFICERS
The following is a list of individuals who currently serve as ARMOUR's executive officers.
Effective March 15, 2024, Jeffrey Zimmer retired from his positions of Co-Chief Executive Officer, President, Vice Chair and director of the Company. Mr. Zimmer serves as an ex-officio, non-voting special advisor to the Board. On March 11, 2024, the Company appointed Gordon Harper, the Company’s then Vice President of Finance and Controller, as Chief Financial Officer and Secretary to succeed James Mountain, who departed as Chief Financial Officer and Secretary. Effective March 18, 2024, Mr. Gruber resigned from his position as Chief Investment Officer of the Company and the Company appointed Desmond Macauley, the Company's then Director of Investment Strategies, and Sergey Losyev, the Company's then Deputy Chief Investment Officer, as Co-Chief Investment Officers. Mr. Macauley was also appointed as the Company's Head of Risk Management.
All executive officers serve at the discretion of our Board of Directors.
| Name | Age | Position | ||||||||||||
| Scott J. Ulm | 66 | Chief Executive Officer and Vice Chairman (former Co-Chief Executive Officer, Co-Vice Chairman and Head of Risk Management) | ||||||||||||
| Gordon M. Harper | 58 | Chief Financial Officer, Controller and Secretary (former Vice President of Finance and Treasurer) | ||||||||||||
| Desmond E. Macauley | 56 | Co-Chief Investment Officer and Head of Risk Management | ||||||||||||
| Sergey Losyev | 44 | Co-Chief Investment Officer | ||||||||||||
Please refer to the biographical information for Mr. Ulm listed above in the section titled “Director Nominees.” The biographical information for Messrs. Harper, Macauley and Losyev are provided below.
Gordon M. Harper
is the Chief Financial Officer, Controller and Secretary of ARMOUR. Mr. Harper was the VP of Finance and Controller of ARMOUR from December 2015 to March 2024 and the Treasurer of ARMOUR from February 2020 until March 2024. Mr. Harper was the VP of Finance and Controller of ACM from December 2015 to March 2024, at which point he became Chief Financial Officer. Mr. Harper has served as the controller of BUCKLER since 2017 and in March 2024, became BUCKLER's Chief Financial Officer and Secretary and was appointed as a member of its board. Mr. Harper joined ARMOUR after a career at Deloitte spanning 25 years. At Deloitte, Mr. Harper was an audit client service partner serving banking and insurance clients in the United States, Canada and the Caribbean. His experience includes advising companies on internal control matters including Sarbanes-Oxley 404 requirements as well as GAAP and International Financial Reporting Standards and public company regulatory and securities reporting requirements. He has advised and assisted on complex accounting matters, mergers and acquisitions, divestitures, due diligence, and securities filings in the United States, Canada and Europe. Mr. Harper is a Chartered Professional Accountant Ontario. He holds a Bachelor of Commerce (Honors), from Queen’s University.
Desmond E. Macauley
is the Co-Chief Investment Officer and Head of Risk Management of ARMOUR. Mr. Macauley served as the Director of Investment Strategies at ARMOUR from May 2013 to March 2024. He has 25 years of experience in the mortgage-backed securities market and has been cited among the top analysts in Structured MBS Securities by the U.S. Institutional Investor survey. Prior to ARMOUR, Mr. Macauley was a Managing Director in the MBS Strategy group of RBS Greenwich Capital and a Vice President in the MBS Research group at Merrill Lynch. He has an MBA from the Wharton School of the University of Pennsylvania, an M.S. in electrical engineering from the Georgia Institute of Technology and a B.S. magna cum laude in electrical engineering from the New Jersey Institute of Technology. He is a CFA charterholder.
Sergey Losyev
is a Co-Chief Investment Officer of ARMOUR. Mr. Losyev joined ARMOUR in 2016 and served as Deputy Chief Investment Officer from January 2020 to March 2024. Prior to ARMOUR, he served as an Agency MBS Portfolio Analyst at Deutsche Asset Management, co-managing more than $25 billion of Agency MBS
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assets from 2009 to 2016. Earlier in his career, Mr. Losyev was a financial programmer at Zebra Capital Management LLC. He has an MBA from the Johnson School of Management at Cornell University and a B.S. in computer science from the University of Connecticut and is a CFA charterholder.
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EXECUTIVE OFFICER COMPENSATION
Compensation Discussion and Analysis
All per share amounts, common shares outstanding and stock-based compensation amounts for the periods presented reflect the Reverse Stock Split which was effective September 29, 2023.
This compensation discussion and analysis describes our compensation objectives and policies in relation to compensation received for the year ended December 31, 2024 by our named executive officers (collectively, the "named executive officers" or "NEOs" and individually, each a "named executive officer"), which during the year consisted of Scott J. Ulm, the Chief Executive Officer and Vice Chairman (former Co-Chief Executive Officer, Co-Vice Chairman and Head of Risk Management), Jeffrey J. Zimmer, the former Co-Chief Executive Officer, Co-Vice Chairman and President, James R. Mountain, the former Chief Financial Officer and Secretary, and Gordon M. Harper, our Chief Financial Officer, Controller and Secretary (former Vice-President of Finance and Treasurer).
At our 2024 annual meeting of stockholders, we provided our stockholders with a proposal to approve, on an advisory basis, the compensation of our named executive officers. Approximately 86% of our stockholders that voted at the annual meeting of stockholders with respect to this advisory, non-binding vote, approved the compensation of our named executive officers as described in our proxy statement for our 2024 annual meeting of stockholders.
2024 Executive Compensation
Based upon the results of the advisory vote, our investor outreach and a review of our 2024 compensation policies, we believe that our 2024 compensation policies and decisions are consistent with the compensation philosophy and objectives discussed below and effectively align the interests of our named executive officers and other key professionals with the long-term goals of the Company. We are managed by ACM pursuant to a management agreement between ACM and ARMOUR (as amended from time to time, (the “Management Agreement”). We do not have any employees whom we compensate directly with salaries, bonuses or other compensation. Our named executive officers, who are employees of ACM, do not receive cash compensation directly from us for serving as executive officers, but are primarily compensated by ACM for services they perform for ACM and for us as our named executive officers. Pursuant to the terms of the Management Agreement, ACM provides us with executive personnel, including the individuals who act as our executive officers. We compensate ACM for these services and all other services performed by ACM pursuant to the Management Agreement through payments of management fees and reimbursements and awards under the Plan. We have limited our role in compensating our named executive officers to granting equity compensation. See the section in this proxy statement below titled, “Certain Relationships and Related Party Transactions” for a further description of the Management Agreement, the relationships between ACM and ARMOUR, the management fees that we pay to ACM, and how ACM compensates our named executive officers. The pay ratio disclosure rules of Item 402(u) of Regulation S-K requires an issuer to disclose the ratio of the total compensation of the median employee of the issuer and its consolidated subsidiaries, if any, to the total compensation of the issuer’s Chief Executive Officer. Because we are externally-managed and therefore have no employees, we do not believe such pay ratio disclosure would provide meaningful information to our stockholders and, therefore, do not provide this disclosure in the proxy statement.
Mr. Ulm and Mr. Zimmer did not receive any cash compensation from ARMOUR for their services as our executive officers, and we did not specifically reimburse ACM for cash compensation paid to Mr. Ulm and Mr. Zimmer. Mr. Ulm and Mr. Zimmer are, however, employees and substantial equity holders of ACM and, accordingly, have an interest in the profits and losses of ACM from its past, present and future investments and businesses, including ARMOUR. Equity returns to the equity holders of ACM are not directly related to services rendered by Mr. Ulm and Mr. Zimmer to ACM or us and would be distributed to such equity holders even if they did not personally perform any services for ACM or us. Prior to July 1, 2020, payments made to Mr. Ulm and Mr. Zimmer by ACM were considered partnership distributions, and as such, fluctuated each year based on the net operating cash flow of ACM and ACM’s overall investment and financing decisions. Effective July 1, 2020, Mr.
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Zimmer and Mr. Ulm began receiving salaries at the rate of $150,000 per annum from ACM, in lieu of equivalent prior partnership distributions. ACM does not pay Mr. Zimmer or Mr. Ulm bonuses.
Mr. Harper and Mr. Mountain also did not receive cash compensation directly from us, and we also do not reimburse ACM for cash compensation paid to them. Mr. Harper and Mr. Mountain did, however, receive compensation directly from ACM in the form of salaries and bonuses. Such compensation amounts are determined by ACM and not by us, our Board or the Compensation Committee. In determining such salaries and bonuses, ACM considers the general compensation practices in our industry, including anticipated compensation requirements of other candidates who could potentially fill the positions, as well as the relative and absolute financial performance of ARMOUR and each person's role in the achievement of that performance, and the nature and results of their contribution to ACM business activities unrelated to ARMOUR.
During 2024, our named executive officers as a group received aggregate salaries of $1,026,750 and aggregate cash bonuses of $700,000 from ACM. Our named executive officers also received aggregate realized incentive compensation consisting of the value of vested shares and dividend equivalent payments on unvested shares of $1.3 million during 2024. For context, ARMOUR paid aggregate management fees to ACM of $33.1 million, net of fees waived, during 2024.
Notwithstanding the fact that we do not pay cash compensation to our named executive officers, our Compensation Committee may award equity compensation directly to our executive officers, ACM employees or to ACM for awards to ACM employees serving us, in addition to the management fees we pay ACM. In making the determination of whether or not to award equity compensation, our Compensation Committee takes into account, among other things, the management fees we pay to ACM and individual and company performance, both on an absolute basis and relative to our peers.
In January 2020, our Compensation Committee and Board of Directors approved grants through ACM totaling 20,000 shares of stock to each of Messrs. Zimmer and Ulm, 10,000 shares of stock to Mr. Mountain and 6,000 shares of stock to Mr. Harper, under the Plan pursuant to the time-based vesting schedules as follows:
•
with respect to Messrs. Zimmer and Ulm, 1,000 shares vested on February 20, 2020 with an additional 1,000 shares vesting on each following May 20, August 20, November 20, and February 20, through November 20, 2024. All 20,000 shares of stock granted have fully vested;
•
with respect to Mr. Mountain, 500 shares vested on February 20, 2020 with an additional 500 shares vesting on each following May 20, August 20, November 20, and February 20, through November 20, 2024. Mr. Mountain departed from his role as the Chief Financial Officer, effective March 11, 2024, and, therefore, the remaining 1,500 shares were forfeited; and
•
with respect to Mr. Harper, 300 shares vested on February 20, 2020 with an additional 300 shares vesting on each following May 20, August 20, November 20, and February 20, through November 20, 2024. All 6,000 shares of stock granted have fully vested.
On May 15, 2024, the 1,500 shares forfeited by Mr. Mountain and 450 shares forfeited by Mr. Gruber in connection with his stepping down from his role as Chief Investment Officer, effective March 18, 2024, from a grant of 3,000 shares made in January 2020, of which 150 shares vested on February 20, 2020 and each following May 20, August 20, November 20 and February 20 through February 20, 2024, were reallocated to Mr. Harper. All 1,950 shares have fully vested with vesting in equal installments on May 20, 2024, August 20, 2024 and November 20, 2024.
Also on May 15, 2024, an additional 450 shares that were forfeited by Mr. Gruber in connection with his stepping down, from a grant of 2,700 shares made in June 2020, of which 150 shares vested on August 20, 2020 and each following November 20, February 20, May 20 and August 20, thereafter through February 20, 2024, were reallocated to Mr. Harper and have all fully vested with vesting in equal installments on May 20, 2024, August 20, 2024 and November 20, 2024.
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In January 2021, our Compensation Committee and Board of Directors approved a grant totaling 35,850 shares of stock, on substantially the same terms as the 2020 grants previously disclosed in our SEC filings, to each of Mr. Zimmer and Mr. Ulm, 4,000 shares of stock to Mr. Mountain and 2,000 shares of stock to Mr. Harper, under the Plan pursuant to the time-based vesting schedules as follows:
•
with respect to Messrs. Zimmer and Ulm, 1,380 shares vested on February 20, 2021 with an additional 1,380 shares vesting on each following May 20, August 20, November 20 and February 20, through February 20, 2027, and an additional 1,350 shares vesting on May 20, 2027, at which time all stock shall have vested;
•
with respect to Mr. Mountain, 160 shares vested on February 20, 2021 with an additional 160 shares vesting on each following May 20, August 20, November 20 and February 20, through February 20, 2027. Mr. Mountain departed from his role as the Chief Financial Officer, effective March 11, 2024, and therefore, the remaining 1,920 shares were forfeited; and
•
with respect to Mr. Harper, 80 shares vested on February 20, 2021 with an additional 80 shares vesting on each following May 20, August 20, November 20 and February 20, through February 20, 2027, at which time all stock shall have vested.
On May 15, 2024, the 1,920 shares forfeited by Mr. Mountain and an additional 1,920 shares forfeited by Mr. Gruber in connection with his stepping down, from a grant of 4,000 shares with 160 shares vesting on February 20, 2021 and each May 20, August 20, November 20 and February 20 thereafter through February 20, 2024, were reallocated to Mr. Harper. This reallocated grant totaling 3,840 shares began vesting with 320 shares vesting on May 20, 2024 with an additional 320 shares vesting on each following August 20, November 20, February 20, and May 20, through February 20, 2027.
In February 2023, our Compensation Committee recommended, and Board of Directors approved, a grant totaling 196,000 shares of stock, previously disclosed in our SEC filings, comprised of the following grants: to each of Mr. Zimmer and Mr. Ulm, 56,000 shares of stock, to Mr. Mountain, 33,600 shares of stock, and to Mr. Harper, 16,800 shares of stock under the Plan pursuant to the time-based vesting schedules as follows:
•
with respect to Messrs. Zimmer and Ulm, 2,000 shares vested on February 20, 2023 with an additional 2,000 shares vesting on each following May 20, August 20, November 20 and February 20, through November 20, 2029, at which time all stock shall have vested;
•
with respect to Mr. Mountain, 1,200 shares vested on February 20, 2023 with an additional 1,200 shares vesting on each following May 20, August 20, November 20 and February 20, through November 20, 2029. Mr. Mountain departed from his role as the Chief Financial Officer, effective March 11, 2024, and, therefore, the remaining 27,600 shares were forfeited; and
•
with respect to Mr. Harper, 600 shares vested on February 20, 2023 with an additional 600 shares vesting on each following May 20, August 20, November 20 and February 20, through November 20, 2029, at which time all stock shall have vested.
Officers may elect to receive a portion of their award in cash solely to cover estimated income taxes due on vested stock.
The Compensation Committee has not recommended that any grants of stock awards be made to our named executive officers in 2025 in respect to 2024 performance and no such grants have been made.
The Plan is used to align the interests of our named executive officers and other key professionals with our long-term goals. Our named executive officers’ compensation in 2024, other than the reallocated grants to Mr. Harper, was derived from the stock awards previously granted to them in 2023, 2021 and 2020, by our Board of Directors, upon the recommendation of the Compensation Committee, pursuant to our Plan, which vest or vested on a quarterly basis over 20 quarters or more. We believe that the equity compensation program provides the appropriate balance to encourage long-term performance without excessive risk-taking. Incentive equity awards under the Plan vest over time and require continued service to ARMOUR.
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Our success is dependent, in large part, on our ability through our Management Agreement with ACM and our equity incentive program to attract, motivate and retain high-performing executives who are committed to our core values of stockholder value, prudent risk-taking and integrity. The REIT and mortgage investment industry is highly competitive and attracting and retaining experienced professionals represents a comparative advantage. We compete with a large number of REIT companies, funds, financial institutions and specialty finance companies for executive talent which has significant career mobility. Many of those companies are privately owned and/or have significantly larger market capitalization than we do. Accordingly, they may have significantly more flexibility and resources as it relates to compensating their key professionals. We are a specialized company in a highly competitive industry and our ability to attract, retain and reward our executive officers and other key professionals is essential to maintaining our competitive position. We strongly believe that offering incentives in the form of equity awards is critical to our ability to do so and aligns the interests of our named executive officers and other key professionals with those of our stockholders.
The Compensation Committee’s objectives in overseeing and administering our equity compensation program are to:
•
focus decision-making and behavior on goals that are consistent with our overall business strategy without threatening the long-term viability of our company;
•
attract, retain and motivate highly-skilled executive officers that will contribute to our successful performance;
•
align the interests of our named executive officers with the interests of our stockholders by motivating executives to increase long-term stockholder value while employing appropriate risk management;
•
provide compensation opportunities that are competitive within industry standards thereby reflecting the value of the position in the marketplace;
•
support a culture committed to paying for performance where compensation is commensurate with the level of performance achieved; and
•
maintain flexibility and discretion to allow us to recognize the unique characteristics of our operations and strategy, and our prevailing business environment, as well as changing labor market dynamics.
We take a disciplined approach to the expense management of our compensation programs. The Compensation Committee has historically limited, and intends to continue to limit, the total equity awards granted in any given year to no more than 1.25% of the weighted-average shares of common stock outstanding for the year (see the table below for more information). Since 2021, our awards vest ratably over a period of 20 or more quarters for directors, and 25 or more quarters for executive officers. These vesting schedules are designed to both further the retention, incentive and goal alignment objectives of the awards as well as to appropriately apportion the expense of the awards.
| Fiscal Year |
Burn Rate
(1)
|
Adjusted. Burn Rate
(2)
|
Realized Dilution Rate
(3)
|
|||||||||||||||||
| 2024 | — | % | — | % | 0.11 | % | ||||||||||||||
| 2023 | 0.60 | % | 1.50 | % | 0.14 | % | ||||||||||||||
| 2022 | — | % | — | % | 0.17 | % | ||||||||||||||
| 2021 | 0.79 | % | 1.98 | % | 0.29 | % | ||||||||||||||
| 2020 | 0.23 | % | 0.58 | % | 0.26 | % | ||||||||||||||
(1)
Total equity awards granted in a fiscal year divided by total weighted-average shares of common stock outstanding for the year. No grants were awarded in 2024, other than the reallocated grants to Mr. Harper, or in 2022.
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(2)
Total equity awards granted in a fiscal year divided by total weighted-average shares of common stock outstanding for the year weighted by a factor of 2.5.
(3)
Total equity awards issued, net of withholdings, divided by total weighted-average shares of common stock outstanding for the year ended December 31, 2024.
We have proactively managed the overall affordability of our equity compensation programs to limit dilutive effects to our stockholders and, in each year since our initial public offering, have consistently returned a significant amount of cash to our stockholders through dividends and share repurchases. Dividends paid on our common stock from 2010 through 2024 totaled approximately $2.2 billion, which has been comprised of returns of capital and earnings for a particular period, if any. Additionally, during 2024, we repurchased 69,566 common shares, capturing an estimated $1.3 million in incremental value for continuing stockholders.
The ability to appropriately use our stock as part of our compensation program is also important to our continued success because it fosters a pay-for-performance culture, which is an important element of our overall compensation program. We believe that equity compensation motivates our named executive officers and other key professionals to create stockholder value because the value they realize from equity compensation is based on our common stock performance.
The Compensation Committee will consider placing conditions on the granting and vesting of future awards based on meeting appropriate performance targets focused on our absolute and relative performance compared to comparable companies. The Compensation Committee is committed to overseeing the ongoing review and evaluation of our named executive officer compensation levels and program.
It is the Compensation Committee’s view that compensation decisions are best made after a deliberate review of Company and individual performance, as well as mortgage REIT industry compensation levels, within the risk parameters established by management and the Board of Directors. See "ARMOUR’s Mortgage REIT Peer Group" on page 23 for a discussion of our peer group. Consistent with this view, the Compensation Committee periodically assesses our performance within the context of the mortgage REIT industry’s overall performance and internal performance standards and oversees and evaluates individual executive officer performance relative to the performance expectations for their respective position.
The Compensation Committee makes all Company equity compensation decisions related to the named executive officers. When making equity compensation decisions for our named executive officers, the Compensation Committee seeks input from members of the Board of Directors and, with respect to our non-CEO executive officers, Scott J. Ulm, our Chief Executive Officer. The Compensation Committee engages in discussions and makes final determinations related to equity compensation paid to the named executive officers.
ARMOUR Third Amended and Restated 2009 Stock Incentive Plan
In 2009, we adopted the Plan to attract, retain and reward directors, officers and other employees, and other persons who provide services to us (“Eligible Individuals”). The Plan allows us to grant a variety of stock-based and cash-based awards to Eligible Individuals. The Plan is administered by the Compensation Committee. The Compensation Committee has the full authority to administer and interpret the Plan, to authorize the granting of awards, to determine the eligibility to receive an award, to determine the number of shares of common stock to be covered by each award (subject to the limitations provided in the Plan), to determine the terms, provisions and conditions of each award (which may not be inconsistent with the terms of the Plan), to prescribe the form of instruments evidencing awards and to take any other actions and make all other determinations that it deems necessary or appropriate in connection with the Plan or the administration or interpretation thereof. In connection with this authority, the Compensation Committee may, among other things, establish required periods of service and/or performance goals that must be met in order for awards to be granted or to vest, or for the restrictions on any such awards to lapse. The Compensation Committee administering the Plan is composed exclusively of individuals intended to be, to the extent required by Rule 16b-3 of the Exchange Act, non-employee directors and
33
that will, at such times as we are subject to Section 162(m) of the Code, qualify as an outside director for purposes of Section 162(m) of the Code.
Available Shares
The Plan provides for grants of common stock, restricted shares of common stock, stock options, performance shares, performance units, restricted stock units (“RSUs”), stock appreciation rights and other equity-based and cash-based awards. The total number of shares of common stock that may be issued under the Plan is 800,000 shares, of which 228,625 remained available for future issuance at December 31, 2024, and as of the date hereof. In March 2024 55,200 shares previously granted became available for issuance due to the forfeiture of shares caused by the departure of certain former executive officers.
The Plan allows for the Compensation Committee or the Board to expand the types of awards available under the Plan. The number of shares that may underlie awards in any one year to any Eligible Person will be determined by the Compensation Committee or the Board, subject to a maximum of 750,000 shares under the Plan. If an award granted under the Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards.
The following table provides information as of December 31, 2024 with respect to shares of common stock reserved for future issuance under our equity compensation plans:
| Plan Category | Number of Securities to be Issued upon the Vesting of Stock Awards Outstanding | Weighted-Average Exercise Price of Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans | |||||||||||||||||
|
Equity Compensation Plans Approved by Stockholders
(1)
|
170,020 |
(2)
|
228,625 | |||||||||||||||||
|
Equity Compensation Plans Not Approved by Stockholders
|
— | — | — | |||||||||||||||||
| Total | 170,020 | — | 228,625 | |||||||||||||||||
(1)
Consists of the Plan under which the Compensation Committee or Board of Directors generally grants common stock, restricted shares of common stock, stock options, performance units, RSUs and stock appreciation rights to officers and directors of ARMOUR and employees of our manager, ACM.
(2)
All outstanding awards represent unvested RSUs.
Awards under the Plan
Restricted Shares of Common Stock.
A restricted share award is an award of shares of common stock that is subject to restrictions on transferability and such other restrictions, if any, the Compensation Committee may impose at the date of grant. Grants of restricted shares of common stock will be subject to vesting schedules as determined by the Compensation Committee. The restrictions may lapse separately or in combination at such times, under such circumstances, including, without limitation, a specified period of employment or the satisfaction of pre-established criteria, in such installments or otherwise, as the Compensation Committee may determine. Except to the extent restricted under the award agreement relating to the restricted shares of common stock, a participant granted restricted shares of common stock has all of the rights of a stockholder, including, without limitation, the right to vote and the right to receive dividends or distributions on the restricted shares of common stock. Such dividends and distributions, however, may be held in escrow until all restrictions on the underlying shares have lapsed. Although dividends may be paid on restricted shares of common stock, whether or not vested, at the same rate and on the same date as on shares of our common stock, holders of restricted shares of common stock are generally prohibited from selling such shares until they vest.
34
Stock Options and Stock Appreciation Rights.
A stock option is a right to purchase a specified number of shares of our common stock at an exercise price established at the date of grant. Stock options granted may be either non-qualified stock options or incentive stock options (which are intended to qualify as “incentive stock options” within Section 422 of the Code). A stock appreciation right (“SAR”) entitles the recipient to receive, upon surrender of the SAR, an amount of cash or number of shares of our common stock having a fair market value equal to the positive difference, if any, between the fair market value of one share of common stock on the date of exercise and the exercise price of the SAR. The Compensation Committee will specify at the time an option or SAR is granted, when and in what proportions an option or SAR becomes vested and exercisable in accordance with the Plan.
Performance-Based Awards.
The Compensation Committee may grant performance awards, which may be cash or equity based, including performance units and performance shares. Generally, performance awards require satisfaction of pre-established performance goals, consisting of one or more business criteria and a targeted performance level with respect to such criteria as a condition of awards being granted or becoming exercisable, or as a condition to accelerating the timing of such events. The Compensation Committee will set the performance goals used to determine the amount payable pursuant to a performance award.
Other Awards
. The Compensation Committee may also award to certain eligible persons shares of our common stock, RSUs or phantom shares or other awards whose value is based, in whole or in part, on our common stock. Such awards may be in addition to any other awards made under the Plan, and subject to such other terms and restrictions as determined by the Compensation Committee in its discretion.
35
2024 Summary Compensation Table
The following table provides information regarding compensation earned by each of the Company’s named executive officers, including our principal executive officers ("PEOs"), for the fiscal years ended December 31, 2024, December 31, 2023 and December 31, 2022. As described in the compensation discussion and analysis section included in this proxy statement, none of the named executive officers of the Company are employees of the Company and the Company did not directly pay any cash compensation to the named executive officers for or in such calendar years but did pay management fees to the Company's external manager, of which the NEOs are employees and certain of them are equity owners. See "Certain Relationships and Related Party Transactions" below for information about these management fees.
|
Name and Principal Positions
(1)
|
Year |
Stock Awards
(2
|
||||||||||||
| Scott J. Ulm Chief Executive Officer and Vice Chairman (former Co-Chief Executive Officer, Co-Vice Chairman and Head of Risk Management) | 2024 | $ | — | |||||||||||
| 2023 | $ | 1,660,400 | ||||||||||||
| 2022 | $ | 0 | ||||||||||||
| Jeffrey J. Zimmer Former Co-Chief Executive Officer, Co-Vice Chairman and President | 2024 | $ | — | |||||||||||
| 2023 | $ | 1,660,400 | ||||||||||||
| 2022 | $ | 0 | ||||||||||||
| Gordon M. Harper Chief Financial Officer, Controller and Secretary (former Vice President of Finance and Treasurer) | 2024 | $ | 418,139 | |||||||||||
| 2023 | $ | 498,120 | ||||||||||||
| 2022 | $ | 0 | ||||||||||||
| James R. Mountain Former Chief Financial Officer and Secretary | 2024 | $ | — | |||||||||||
| 2023 | $ | 996,240 | ||||||||||||
| 2022 | $ | 0 | ||||||||||||
(1)
Mr. Macauley, Mr. Losyev, and Mr. Gruber did not receive compensation from the Company in 2024.
(2)
Represents the fair value of stock awards granted during the year as of the respective grant date calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation - Stock Compensation” ("ASC 718"). Each stock award was valued at the closing market price of our common stock on the date of respective grant, which reflects the value of future dividends. Accordingly, payments in lieu of dividends on unvested awards have been excluded. For additional information regarding assumptions underlying the valuation of equity awards and the calculation method, please refer to Note 10 to our Consolidated Financial Statements, which are contained in our Annual Report on Form 10-K for the year ended December 31, 2024.
36
2024 Pay Versus Performance Table
The following table provides information in accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
| Value of Initial Fixed $100 Investment Based on: | ||||||||||||||||||||||||||||||||
| Year |
Summary Compensation Table Total for PEO 1
(1)
|
Summary Compensation Table Total for PEO 2
(1)
|
Compensation Actually paid to PEO 1
(2)
|
Compensation Actually paid to PEO 2
(2)
|
Average Summary Compensation Table Total for
Non-PEO NEOs
(3)
|
Average Compensation Actually Paid to Non-PEO NEOs
(4)
|
Total Shareholder Return
(5)
|
Peer Group Total Shareholder Return
(6)
|
Net Income (Loss) |
Total Economic Return
(7)
|
||||||||||||||||||||||
| 2024 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
(
|
% | ||||||||||||
| 2023 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
(
|
% | ||||||||||||
| 2022 | $ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
(
|
% | ||||||||||||
| 2021 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
(
|
% | ||||||||||||
| 2020 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
|
$ |
|
$ |
(
|
(
|
% | ||||||||||||
(1)
In the years 2020 through 2023 and until mid March 2024,
Scott J. Ulm
served as one of the Company's Co-Chief Executive Officers. From mid March 2024 to present, Scott J. Ulm serves as the Company's Chief Executive Officer.
(2)
In the years 2020 through 2023 and until mid March 2024,
Jeffrey J. Zimmer
served as one of the Company's Co-Chief Executive Officers. From mid March 2024 to present, he serves as an ex-officio, non-voting special advisor to the Board.
(3)
The following tables set forth the amounts subtracted from the Summary Compensation Table Total and the amounts added back during each year represented in the Pay versus Performance table to arrive at Compensation Actually Paid to each PEO and our Non PEO NEOs during the years presented. Equity values are calculated in accordance with ASC Topic 718.
(4)
In the years 2020 through 2023 the Non-PEO NEOs consisted of James R. Mountain, Mark R. Gruber and Gordon M. Harper. In 2024, the Non-PEO NEOs consisted of James R. Mountain and Gordon M. Harper.
(5)
Total Shareholder Return illustrates the value, as of the last day of the indicated fiscal year, of an investment of $100 in our common stock on December 31, 2019. See graphs below for the relationship between Total Shareholder Return and other metrics in this table.
(6)
Total Shareholder Return illustrates the value, as of the last day of the indicated fiscal year, of an investment of $100 in the six companies in the FTSE NAREIT Mortgage REIT Home Financing Index that constitute our peer group on December 31, 2019. The Peer Group Total Shareholder Return is weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. ARMOUR’s Mortgage REIT Peer Group, which, along with the FTSE NAREIT Mortgage REIT Home Financing Index, is described on page 23, is composed of: AGNC Investment Corp. (weighted average contribution for the years indicated: 34.36, 32.60, 24.66, 28.40, 34.00), Dynex Capital, Inc. (weighted average contribution for the years indicated: 1.66, 2.53, 2.46, 3.06, 4.18), Invesco Mortgage Capital (weighted average contribution for the years indicated: 2.67, 3.58, 1.88, 1.85, 2.04), Annaly Capital Management (weighted average contribution for the years indicated: 47.75, 46.82, 41.10, 41.79, 42.77), Orchid Island Capital (weighted average contribution for the years indicated: 1.53, 3.29, 1.46, 1.88, 2.54), and Two Harbors Investment Corporation (weighted average contribution for the
37
years indicated: 7.04, 8.19, 5.68, 5.78, 5.11). The Company has used this peer group for its pay versus performance calculations in each of its 2023 and 2024 proxy statements as well as this proxy statement.
(7)
Total Economic Return
is calculated by adding the year-end book value per common share for the particular year plus dividends paid per common share for such year and then dividing the sum by book value per common share at the beginning of the year. Book value per common share is calculated as total stockholders' equity, less the liquidation preference on shares of our outstanding Series C Preferred Stock, divided by common shares outstanding.
38
| Adjustments made to Determine Compensation Actually Paid | 2024 | 2023 | 2022 | 2021 | 2020 | |||||||||||||||
| Summary Compensation Table Total | PEO 1 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||
| PEO 2 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Average Non PEO NEOs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table | PEO 1 | $ |
|
$ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||
| PEO 2 | $ |
|
$ |
(
|
$ |
|
$ |
(
|
$ |
(
|
||||||||||
| Average Non PEO NEOs | $ |
(
|
$ |
(
|
$ |
|
$ |
(
|
$ |
(
|
||||||||||
| Increase for year-end fair value of awards granted during year that remain unvested as of year-end | PEO 1 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||
| PEO 2 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Average Non PEO NEOs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Increase/deduction for change in fair value from prior year-end to current year-end of awards granted prior to that year that were outstanding and unvested as of year-end | PEO 1 | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||
| PEO 2 | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
||||||||||
| Average Non PEO NEOs | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
||||||||||
| Increase for fair value as of the vesting dates for awards granted during year that vest during the year | PEO 1 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||
| PEO 2 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Average Non PEO NEOs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Increase/deduction for change in fair value from prior year-end to current year-end of awards granted prior to that year that vested during year | PEO 1 | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||
| PEO 2 | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
||||||||||
| Average Non PEO NEOs | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
||||||||||
| Deduction for fair value of awards granted prior to year that were forfeited during year | PEO 1 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||
| PEO 2 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Average Non PEO NEOs | $ |
(
|
$ |
|
$ |
|
$ |
|
$ |
(
|
||||||||||
| Increase based on dividends or other earnings Paid during year prior to vesting date of award | PEO 1 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||
| PEO 2 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Average Non PEO NEOs | $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||
| Continued | ||||||||||||||||||||
39
| Total Adjustments | PEO 1 | $ |
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||
| PEO 2 | $ |
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
||||||||||
| Average Non PEO NEOs | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
||||||||||
| Compensation Actually Paid | PEO 1 | $ |
|
$ |
|
$ |
(
|
$ |
|
$ |
|
|||||||||
| PEO 2 | $ |
|
$ |
|
$ |
(
|
$ |
|
$ |
|
||||||||||
| Average Non PEO NEOs | $ |
(
|
$ |
|
$ |
(
|
$ |
|
$ |
(
|
||||||||||
Important Factors
The following is a list of the most important factors used by the Company to link executive compensation actually paid to the PEOs and Non-PEO NEOs.The Compensation Committee reviews such factors periodically and, accordingly, such factors remain subject to revision and refinement.
(1)
Economic return
.
(2)
Total shareholder return
.
(3)
Common equity growth through efficient use of the Company's at-the-market common stock offering program
.
(4)
Equity growth in percentage terms as compared to the peer group
.
(5)
CEO open market purchases of Company common stock as compared to open market purchases of common stock by peer group CEOs
.
(6)
Strategic implementation and sale of a preferred stock program as compared to the Company's peer group
.
(7)
Total expenses of the Company as a percentage of its total stockholders' equity, relative to its peers
.
40
Relationship Between Compensation Actually Paid and Financial Performance
The charts below describe the relationship between compensation actually paid to each of our Co-PEOs and Non-PEO NEOs (as calculated above) and our financial and stock performance.
41
42
The foregoing disclosures relating to Pay Versus Performance shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act or under the Exchange Act, except to the extent that we specifically incorporate this information by reference.
2024 Grants of Plan-Based Awards
No equity-based compensation awards were made to the NEOs in 2024 based on 2023 performance. On May 15, 2024, shares forfeited in connection with Mr. Mountain's departure as Chief Financial Officer and Mr. Gruber stepping down from his role as Chief Investment Officer were reallocated to Mr. Harper.
| Name | Date of Grant |
Stock Awards:
Number of Shares |
Weighted Average Grant Date Fair Value of Stock Awards | |||||||||||
| Gordon M. Harper | May 15, 2024 | 2,400 | $ | 205,403 |
(1)
|
|||||||||
| Gordon M. Harper | May 15, 2024 | 3,840 | $ | 212,736 |
(2)
|
|||||||||
43
(1)
Weighted average grant date fair value is based on the original dates of grant ($94.50 on January 14, 2020 with respect to 1,500 shares forfeited by Mr. Mountain, $94.50 on January 14, 2020 with respect to 450 shares forfeited by Mr. Gruber, and $46.95 on June 30, 2020 with respect to 450 shares forfeited by Mr. Gruber).
(2)
Weighted average grant date fair value is based on the original dates of grant ($55.40 on January 12, 2021 with respect to 1,920 shares forfeited by Mr. Mountain and $55.40 on January 12, 2021 with respect to 1,920 shares forfeited by Mr. Gruber).
44
Outstanding Equity Awards at December 31, 2024
The following table sets forth information on the holdings of equity awards by our named executive officers as of December 31, 2024:
| Stock Awards | ||||||||||||||
| Name |
Number of Shares
or Units of Stock
that Have Not Vested
(1)
|
Market Value of Shares
or Units of Stock
That Have Not Vested
(1) (2)
|
||||||||||||
| Scott J. Ulm | 53,770 | $ | 1,014,102 | |||||||||||
| Jeffrey J. Zimmer | 53,770 | $ | 1,014,102 | |||||||||||
| Gordon M. Harper | 15,600 | $ | 294,216 | |||||||||||
(1)
Represents the following time-based vesting rates that began:
•
February 20, 2021; with respect to Messrs. Zimmer and Ulm, 1,380 shares vested on February 20, 2021 with an additional 1,380 shares vesting on each following May 20, August 20, November 20 and through February 20, 2027 with an additional 1,350 shares vesting on May 20, 2027, at which time all stock shall have vested; and with respect to Mr. Harper, 80 shares vested on February 20, 2021 with an additional 80 shares vesting on each following May 20, August 20, November 20 and February 20, through February 20, 2027, at which time all stock shall have vested. In addition for Mr. Harper, following forfeiture in connection with Mr. Mountain's departure as Chief Financial Officer and Mr. Gruber stepping down from his role as Chief Investment Officer, a reallocated grant totaling 3,840 shares began vesting with 320 shares vesting on May 20, 2024 with an additional 320 shares vesting on each following August 20, November 20, February 20, and May 20, through February 20, 2027.
•
February 20, 2023; with respect to Messrs. Zimmer and Ulm, 2,000 shares vested on February 20, 2023 with an additional 2,000 shares vesting on each following May 20, August 20, November 20 and February 20, through November 20, 2029, at which time all stock shall have vested; and with respect to Mr. Harper, 600 shares vested on February 20, 2023 with an additional 600 shares vesting on each following May 20, August 20, November 20 and February 20, through November 20, 2029, at which time all stock shall have vested.
(2)
Based on $18.86 per share, the closing trade price of ARMOUR common stock on the NYSE on December 31, 2024.
Stock Vested in 2024
The following table sets forth information on the shares of stock held by our named executive officers that vested during the year ended December 31, 2024.
| Stock Awards | ||||||||||||||
| Name | Number of Shares Acquired on Vesting |
Value Realized on Vesting
(1)
|
||||||||||||
| Scott J. Ulm | 17,520 | $ | 335,727 | |||||||||||
| Jeffrey J. Zimmer | 17,520 | $ | 335,727 | |||||||||||
| Gordon M. Harper | 7,280 | $ | 139,909 | |||||||||||
|
James R. Mountain
(2)
|
1,860 | $ | 34,968 | |||||||||||
(1)
Reflects the aggregate value of all quarterly vesting of stock awards in 2024 based upon the closing price of our common stock on the NYSE. See 2024 Executive Compensation and the footnotes to the table in “Outstanding Equity Awards at December 31, 2024” above for details on the time-based vesting grants.
45
(2)
Mr. Mountain departed as Chief Financial Officer effective March 11, 2024 and, therefore, forfeited all remaining shares under his stock awards.
Change in Control
Upon a Change in Control, as defined in the Plan, the Compensation Committee may make certain adjustments which it, in its discretion, determines are necessary or appropriate in light of the Change in Control. These include, accelerating the vesting of some or all of the awards under the Plan, terminating all awards under the Plan (allowing for either the exercise of vested awards or a cash payment in lieu of vested awards), converting the awards to the right to receive proceeds in the event of liquidation, or a combination of any of the foregoing. In the event that the Compensation Committee does not terminate or convert an award upon a Change in Control, then the award shall be assumed, or substantially equivalent awards shall be substituted, by the acquiring, or succeeding corporation (or an affiliate thereof).
Our Board may amend, alter or discontinue the Plan but cannot take any action that would impair the rights of a participant without such participant’s consent. To the extent necessary and desirable, the Board must obtain approval of our stockholders for any amendment that would:
• other than through adjustment as provided in the Plan, increase the total number of shares of common stock reserved for issuance under the Plan;
• change the class of persons eligible to participate in the Plan;
• reprice any stock option awards under the Plan; or
• otherwise require such approval.
The Compensation Committee may amend the terms of any award granted under the Plan, prospectively or retroactively, but generally may not impair the rights of any participant without his or her consent
.
Potential Payments Upon Termination or Change in Control
Pursuant to the terms of the individual executive officer's award and in accordance with the Plan, upon a Change in Control (as defined in the Plan) the 2023 and 2021 grants to the executive officers immediately vest and the 2020 grants to the executive officers may immediately vest, without regard to any limitation imposed pursuant to the Plan, and upon a termination of the Management Agreement by us without Cause (as defined in the Management Agreement and determined in accordance with it), all outstanding stock awards immediately vest. The following table sets forth estimates of the potential benefits to our named executive officers assuming immediate vesting of all outstanding awards in connection with a Change in Control or termination of the Management Agreement without Cause, assuming such event occurred on December 31, 2024. The actual payments due on terminations occurring on different dates could materially differ from the estimates in the table.
|
Name
(1)
|
Value of Vesting Stock Awards
(2)
|
|||||||
| Scott J. Ulm | $ | 1,014,102 | ||||||
| Jeffrey J. Zimmer | $ | 1,014,102 | ||||||
| Gordon M. Harper | $ | 294,216 | ||||||
(1)
Mr. Mountain departed as Chief Financial Officer effective March 11, 2024 and, therefore, forfeited all remaining shares under his stock awards.
(2)
Consists of all outstanding Plan-based stock awards held by such named executive officer that had not vested as of December 31, 2024. The values are based on $18.86 per share, the closing price of ARMOUR common stock on the NYSE on December 31, 2024.
46
COMPENSATION COMMITTEE REPORT
In accordance with the powers and duties of the Compensation Committee as set forth in its Charter, the Compensation Committee hereby reports the following:
1.
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K set forth elsewhere in this proxy statement; and
2.
Based on the review and discussion referred to in the preceding paragraph, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Submitted by the Compensation Committee of the Board of Directors:
Robert C. Hain (Chairman)
Z. Jamie Behar
Stewart J. Paperin
47
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock as of the close of business on March 7, 2025 by:
• each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
• each of our named executive officers and directors; and
• all of our current executive officers and directors as a group.
As of the close of business on March 7, 2025, we had 79,968,016 shares of common stock issued and outstanding. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.
|
Name and Address of Beneficial Owner
(1)
|
Amount and
Nature of
Beneficial
Ownership
(2)
|
Approximate
Percentage of Outstanding Common Stock |
||||||||||||
| Named Executive Officers and Directors | ||||||||||||||
| Scott J. Ulm | 66,718 | * | ||||||||||||
| Jeffrey J. Zimmer | 60,589 | * | ||||||||||||
| James R. Mountain | 20,622 |
(3)
|
* | |||||||||||
| Gordon M. Harper | 16,085 | * | ||||||||||||
| Daniel C. Staton | 26,260 |
(4)
|
* | |||||||||||
| Marc H. Bell | 21,838 | * | ||||||||||||
| Z. Jamie Behar | 10,921 | * | ||||||||||||
| Carolyn Downey | 20,643 | * | ||||||||||||
| Robert C. Hain | 7,053 | * | ||||||||||||
| John P. Hollihan, III | 12,509 | * | ||||||||||||
| Stewart J. Paperin | 1,965 |
(5)
|
* | |||||||||||
|
All directors and executive officers as a group
(11 individuals) |
185,053 |
(6)
|
* | |||||||||||
| 5% Holders | ||||||||||||||
| BlackRock, Inc. | 8,472,679 |
(7)
|
10.6% | |||||||||||
| The Vanguard Group Inc. | 5,390,046 |
(8)
|
6.7% | |||||||||||
*less than 1%
(1)
Unless otherwise noted, the business address of each of the following is 3001 Ocean Drive, Suite 201, Vero Beach, Florida 32963.
(2)
Includes shares of common stock to be issued upon vesting of stock awards granted to our directors and executive officers, which the person has the right to acquire within 60 days of March 7, 2025.
(3)
Information is from Mr. Mountain's last Form 4, filed on February 26, 2024.
(4)
Represents shares held by DM Staton Family Limited Partnership. Mr. Staton is a general partner and a limited partner of DM Staton Family Limited Partnership. Mr. Staton is deemed to beneficially own and has a pecuniary interest in these shares.
(5)
Includes 1,757 shares held by the Stewart J. Paperin Family Trust. Mr. Paperin is deemed to beneficially own these shares and has a pecuniary interest in the shares held therein.
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(6)
Fractional shares have been rounded to the nearest whole share.
(7)
Based on a Schedule 13G filed with the SEC on January 22, 2024, BlackRock, Inc., a Delaware corporation, which serves as the parent holding company or control person of its subsidiaries, Aperio Group, LLC, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, and Blackrock Fund Managers Ltd., through which it acquired the shares of common stock held directly by BlackRock, Inc., has sole voting and dispositive power with respect to 8,364,397 shares and 8,472,679 shares, respectively, and shared voting and dispositive power with respect to no shares. The address of BlackRock, Inc. is 50 Hudson Yards, New York, NY, 10001.
(8)
Based on a Schedule 13G/A filed with the SEC on February 13, 2024, The Vanguard Group Inc. has sole voting and dispositive power with respect to 0 shares and 5,299,813 shares, respectively, and shared voting and dispositive power with respect to 28,499 shares and 90,233 shares, respectively. The Vanguard Group Inc.’s address is 100 Vanguard Blvd., Malvern, PA, 19355.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Management Agreement
In 2009, we entered into a management agreement with ARRM, which requires ACM, the successor to ARRM, to manage our business affairs in conformity with certain restrictions contained in the Management Agreement, including any material operating policies adopted by us. Messrs. Ulm and Zimmer and members of their families, collectively own directly and indirectly, approximately 70% of the partnership interests in ACM and entities controlled by Messrs. Zimmer and Ulm are the general partners of ACM. Messrs. Staton and Bell and members of their families collectively own approximately 25% of the limited partnership interests in ACM.
Pursuant to the terms of the Management Agreement, ACM, in which we have no ownership interest, is responsible for (i) advising us with respect to, arranging for, and managing the acquisition, financing, management and disposition of, our investments, (ii) evaluating the duration risk and prepayment risk of our investments and arranging borrowing and hedging strategies, and (iii) coordinating our capital raising activities. In conducting these activities, ACM advises us on the formulation of, and implementation of, our operating strategies and policies, arranges our acquisition of assets, monitors the performance of our assets, and provides administrative and managerial services in connection with our day-to-day operations, as may be required from time to time for management of our assets. In addition, ACM provides us with executive personnel along with administrative personnel, office space, and other appropriate services required in rendering ACM’s management services to us.
The expiration date of the Management Agreement is December 31, 2029 (the “Current Term”). The Management Agreement will automatically renew for successive five-year renewal terms (each, a “Renewal Term”), unless either ARMOUR or ACM gives advance notice to the other of its intent not to renew prior to the expiration of a Renewal Term.
The monthly management fees we pay to ACM are calculated as the sum of (1) 1/12th of 1.5% of ARMOUR Gross Equity Raised up to $1 billion, and (2) 0.75% of ARMOUR Gross Equity Raised in excess of $1 billion (the “Base Management Fee”). The term "ARMOUR Gross Equity Raised" means (i) ARMOUR's initial equity capital following the consummation of ARMOUR's merger in 2009, plus (ii) Equity Capital (as defined in the Management Agreement) raised in public or private issuances of ARMOUR's Equity Securities (calculated before underwriting fees and distribution expenses, if any), less capital returned to ARMOUR's stockholders, as adjusted to exclude one-time charges pursuant to changes in generally accepted accounting principles (“GAAP”) and certain non-cash charges after discussion between ACM and the Board and approved by a majority of the Board. ARMOUR Gross Equity Raised is reduced by capital returned to the stockholders of ARMOUR. Capital returned to stockholders includes (i) the purchase price of Equity Securities we repurchase and (ii) liquidation distributions as approved and so designated by a majority of the Board of Directors. Gross Equity Raised as of December 31, 2024 was $4,498,879,778.
See the subsection below titled, "Management Fees" for a further description of the management fees that we pay to ACM pursuant to the Management Agreement and how ACM compensates our named executive officers.
We are also obligated to reimburse certain expenses incurred by ACM and its affiliates. We may not terminate the Management Agreement during the Current Term, except for Cause, as defined in the Management Agreement. In the event of a termination without Cause, we are obligated to pay ACM a termination fee of an amount equal to four (4) times the Base Management Fee paid to ACM in the preceding full twelve (12) months, calculated as of the effective date of the termination.
SBBC provides certain services to ACM to support ACM's performance of services to us, in each case upon reasonable request by ACM, pursuant to a sub-management agreement between ACM, SBBC and us (the “Sub-Management Agreement”). See the subsection below titled, “ARMOUR Sub-Management Agreement” for a description of the sub-management agreement.
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ARMOUR Sub-Management Agreement
On November 6, 2009, we and ARRM entered into a sub-management agreement with SBBC (as amended from time to time, the “ARMOUR Sub-Management Agreement”). Pursuant to the ARMOUR Sub-Management Agreement, SBBC agreed to provide certain services to ACM, the successor to ARRM, to support ACM’s performance of services to us. In exchange for such services, SBBC receives a sub-management fee of 25% of the net management fee earned by ACM under the Management Agreement. The ARMOUR Sub-Management Agreement will continue in effect until it is terminated in accordance with its terms. ACM owns approximately 99% of the equity interests in SBBC and entities owned by Messrs. Staton and Bell own approximately 1% of the equity interests in SBBC.
See the subsection below titled, “Sub-Management Fees” for the sub-management fees that ACM has paid to SBBC pursuant to the Sub-Management Agreements.
Management Fees
We do not directly compensate our named executive officers with salaries or other cash compensation. No portions of the management fees are designated for the payment by ACM of compensation to its employees who are our executive officers, and we are not required to, and do not separately reimburse, ACM for compensation paid by ACM to those persons. The purpose of the management fees are not to provide compensation to our named executive officers, but rather to compensate ACM for the services it provides for the day-to-day management of ARMOUR. The Management Agreement makes ACM solely responsible for determining and paying all employee expenses, including salaries, bonuses, wages, payroll taxes and benefits for the executive officers and other ACM employees that provide services to us. We are not entitled under the Management Agreement or otherwise to review or approve compensation decisions made by ACM or how ACM compensates our named executive officers. ACM does not consult with us to determine such compensation. Rather, ACM independently makes all compensation determinations for its employees without any direction by, or involvement of, our Board of Directors and without reference to any specific policies or programs under the oversight of our Board of Directors. This is due to, among other things, our lack of ownership in ACM and the fact that ACM conducts, and our named executive officers may participate in, business unrelated to us.
The services provided by employees of ACM include not only services in respect of other separate business ventures that directly or indirectly benefit ARMOUR, including BUCKLER Securities LLC (as described below), but also include services in respect of other separate business ventures conducted and/or pursued by ACM that are unrelated to ARMOUR, as well as services for the independent operation of ACM as a stand-alone business entity, such as the hiring, evaluation and compensation of contractors and vendors of ACM, as well as employees of ACM, including those who are not executive officers of ARMOUR. The services performed by ACM’s employees who are ARMOUR’s executive officers are not performed exclusively for ARMOUR, and not all of the value derived by those persons from ACM is specifically compensatory in nature or related to actual services performed.
Effective beginning with the second quarter of 2020, ACM voluntarily waived 40% of the Base Management Fee due and payable to ACM pursuant to the Management Agreement. This previously disclosed voluntary waiver was deemed prudent by ACM to maintain a competitive cost structure for ARMOUR considering the COVID-19 related decline in the stockholders’ equity of ARMOUR. During the year ended December 31, 2024, we incurred approximately $33.1 million, net of fees waived, in management fees and $1.0 million in reimbursable expenses under the Management Agreement. On February 14, 2023, ACM notified ARMOUR that it intended to adjust the fee waiver to the rate of $1,650,000 for the first quarter of 2023 and $550,000 per month thereafter, until further notice. ACM may terminate this waiver for any month by providing notice to ARMOUR on or before the 25th day of the preceding month. This waiver does not constitute a waiver of any other amounts due to ACM from ARMOUR under the Management Agreement or otherwise, including but not limited to any expense reimbursements, any amounts calculated by reference to the contractual Base Management Fee, or any awards under the Plan.
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Sub-Management Fees
During the year ended December 31, 2024, ACM paid an aggregate of approximately $6.2 million of the management fees it received pursuant to the Sub-Management Agreement to SBBC in the form of sub-management fees for services provided to ACM during 2024.
BUCKLER Securities LLC Broker-Dealer
We negotiated and executed a strategic joint venture with ACM for the purpose of facilitating ARMOUR’s access to more stable, reliable and potentially lower priced repurchase agreement financing than what is generally available in the market for comparable securities transactions. The parties formed a Delaware limited liability company, BUCKLER, and our independent directors negotiated a series of transactions with ACM and various affiliates of ARMOUR and ACM, as described more below (the “BUCKLER Transactions”), with the intended purpose of utilizing a regulated broker-dealer platform to facilitate access to repurchase financing for ARMOUR on potentially more attractive terms (considering rate, term, size, haircut, relationship and funding commitment) compared to other suitable repurchase financing counterparties. BUCKLER is a member of FINRA and the Fixed Income Clearing Corporation.
In connection with the BUCKLER Transactions, ARMOUR and ARMOUR TRS Inc., our wholly-owned subsidiary formed for the purpose of facilitating the capitalization of BUCKLER (“ATRS”), ACM and Messrs. Mountain and Gruber, entered in to an operating agreement for BUCKLER (as amended from time to time, the “BUCKLER Operating Agreement”). Pursuant to the BUCKLER Operating Agreement, ACM, ARMOUR (primarily through ATRS), Mr. Mountain and his family and Mr. Gruber each hold equity interests in BUCKLER of 75.39%, 10.77%, 9.31% and 4.53%, respectively. The BUCKLER Operating Agreement contains certain provisions to protect ARMOUR, including that the independent directors of ARMOUR must approve in their sole discretion any third party business engaged by BUCKLER and may, under certain circumstances, cause BUCKLER to wind up and dissolve and promptly return certain subordinated financing we provide to BUCKLER as regulatory capital (as described more below). The board of managers of BUCKLER consists of Messrs. Zimmer, Ulm and Harper and an unaffiliated executive officer of BUCKLER.
Effective March 20, 2023, ARMOUR committed to provide on demand a subordinate loan to BUCKLER in an amount up to $200,000,000 which we agreed to increase to $250,000,000, effective in February 2025. The commitment extends through March 20, 2026 and is collateralized by mortgage backed and/or U.S. Treasury securities owned by ARMOUR and pledged to BUCKLER in an amount equal to at least the amount of the commitment plus regulatory haircuts. The commitment is treated by BUCKLER as capital for regulatory purposes and BUCKLER may pledge the ARMOUR securities to secure its own borrowings.
The Company had outstanding borrowings under repurchase agreements with BUCKLER totaling approximately $4.9 billion at December 31, 2024. During the year ended December 31, 2024, we incurred approximately $249 million in interest payments to BUCKLER on the repurchase agreements we entered into with BUCKLER. We also had approximately $5.7 billion of collateral posted with BUCKLER securitizing the approximately $4.9 billion of repurchase agreements at December 31, 2024.
The securities pledged to secure our subordinated loan commitment and the previous subordinated loan represent redeployed capital that we have historically been required to commit to haircuts in connection with our repurchase transactions. The subordinated loan commitment (if demanded by BUCKLER) and related previous subordinated loan are based on standard, FINRA-prescribed terms and conditions, including those governing prepayment rights, events of acceleration and default, and provisions allowing for the return to us of the loan proceeds, in conjunction with the BUCKLER Operating Agreement and subject to FINRA’s rules and regulations.
Equity Sales Agreements
We have entered into equity sales agreements with BUCKLER and other non-affiliated agents, pursuant to which we may offer and sell shares of our common stock, from time to time, through one or more agents in an “at
52
the market offering” as defined under Rule 415(a)(4) of the Securities Act of 1933, as amended. Each sales agreement provides that the agents are entitled to compensation of up to 2.0% of the gross sales price per share for any of the stock sold under the sales agreement in agency transactions. On July 26, 2023, we entered into the most recent agreement (the Sales Agreement) which increased the cumulative total shares of our common stock registered for sale to 15,000,000 shares. On October 25, 2023, the Sales Agreement was amended to add StockBlock Securities LLC, as a sales agent and on June 20, 2024 it was further amended to add BTIG, LLC as a sales agent. On August 23, 2024, the Sales Agreement was amended to increase by 25,000,000 the number of shares of our common stock that may be offered and sold under the Sales Agreement and on September 20, 2024, it was further amended to add Janney Montgomery Scott LLC, as a sales agent. On February 13, 2025, the Sales Agreement was further amended to increase by 15,000,000 the number of shares of our common stock that may be offered and sold under the Sales Agreement.
With BUCKLER as the sales agent, under the Sales Agreement we sold 11,370,087 common shares for proceeds of $221,472,046, net of issuance costs and commissions of approximately $1,739,977, during the year ended December 31, 2024. From January 1, 2025 through March 18, 2025, we sold 9,777,096 common shares for proceeds of $182,915,044, net of issuance costs and commissions of approximately $1,382,230, using BUCKLER as the sales agent.
We have entered into a separate equity sales agreement, dated as of January 29, 2020 with BUCKLER and other non-affiliated agents, pursuant to which we may offer and sell up to 6,550,000 shares of our Series C Preferred Stock, from time to time, through one or more agents in an “at the market offering” as defined under Rule 415(a)(4) of the Securities Act of 1933, as amended. This sales agreement provides that the agents are entitled to compensation of up to 2.0% of the gross sales price per share for any of the stock sold under the sales agreement in agency transactions. We did not sell any shares under this agreement during the year ended December 31, 2024.
Our Audit Committee is required to review, approve and authorize related party transactions under Item 404 of Regulation S-K and reviewed, approved and authorized the above described agreements and transactions as related party transactions under Item 404 of Regulation S-K, which approval was subject to approval by our independent directors. Our independent directors separately and simultaneously authorized and approved these agreements and transactions.
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PROPOSAL 2 - RATIFICATION OF INDEPENDENT REGISTERED CERTIFIED
PUBLIC ACCOUNTANTS
The Audit Committee of our Board of Directors appointed Deloitte as our independent registered certified public accountants for fiscal years 2023 and 2024 and has appointed Deloitte as our independent registered certified public accountants for fiscal year 2025. The Audit Committee is responsible for the appointment, oversight and termination of our independent registered certified public accountants. We are seeking the ratification of our stockholders of this appointment, although our Audit Committee is not bound by any stockholder action on this matter.
If the appointment of Deloitte as our independent registered certified public accountants is not ratified by our stockholders, the Audit Committee will reconsider its appointment, but may nevertheless retain Deloitte. Also, even if the appointment of Deloitte as our independent registered certified public accountants is ratified by our stockholders, the Audit Committee may direct the appointment of a different independent auditor at any time during the year if the Audit Committee determines, in its discretion, that such a change would be in our best interests. Deloitte has advised us that no partner or employee of Deloitte has any direct financial interest or any material indirect interest in ARMOUR other than receiving payment for its services as our independent certified public accountants. Representatives of Deloitte are expected to attend the annual meeting, will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions.
Fees Paid to Independent Registered Certified Public Accountants
Deloitte served as our independent registered public accountants in fiscal years 2024 and 2023. The following table sets forth the aggregate fees billed to ARMOUR by Deloitte in fiscal years 2024 and 2023, respectively:
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||||||||||||
| Audit Fees | $ | 2,265,000 | $ | 1,056,000 | ||||||||||
| Audit-Related Fees | — | — | ||||||||||||
| Tax Fees | 73,937 | 46,684 | ||||||||||||
| All Other Fees | 1,895 | 1,895 | ||||||||||||
| Total | $ | 2,340,832 | $ | 1,104,579 | ||||||||||
Audit Fees
. “Audit Fees” consist of fees and related expenses billed for professional services rendered for the audit of the financial statements and services that are normally provided by our independent auditors in connection with statutory and regulatory filings or engagements. For example, audit fees included fees for professional services rendered in connection with quarterly and annual reports, and the issuance of consents by our independent auditors to be named in our registration statements and to the use of their audit report in the registration statements. For the year ended December 31, 2024, Audit fees included $900,000 of expenses paid to Deloitte related to a special committee internal investigation in the first quarter of 2024.
Audit-Related Fees
. “Audit-Related Fees” consist of fees and related expenses for products and services other than services described under “Audit Fees”, “Tax Fees” and “All Other Fees.”
Tax Fees
. “Tax Fees” consist of fees and related expenses billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance and tax planning and structuring. Deloitte provided federal and state tax return preparation services during 2024 and 2023.
All Other Fees.
“All Other Fees” consist of fees and related expenses billed for subscriptions.
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Audit Committee Pre-Approvals of Audit, Audit-Related, Tax and Permissible Non-Audit Services
In connection with Deloitte’s audit of our financial statements for fiscal years 2024 and 2023, we had no disagreement with Deloitte on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.
The Audit Committee periodically approved the provision of various audit, audit-related, tax and other permissible non-audit services by Deloitte. The Audit Committee plans to continue to review and pre-approve such services as appropriate. All of the services provided by Deloitte in 2024 and 2023 were approved by our Audit Committee pursuant to these procedures. Our Audit Committee will continue to review and pre-approve such services as appropriate.
Recommendation of the Board of Directors
ARMOUR’s Board of Directors recommends a vote
“FOR”
the ratification of Deloitte as our independent registered certified public accountants for the 2025 fiscal year.
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AUDIT COMMITTEE REPORT
Our Audit Committee oversees our financial reporting process on behalf of the Board, in accordance with the Audit Committee Charter. Management is responsible for our financial statements and the financial reporting process, including the system of internal controls. Our independent registered public accounting firm, Deloitte, is responsible for expressing an opinion on the conformity of our audited financial statements with generally accepted accounting principles (“GAAP”) for the yearly periods ended December 31, 2024, December 31, 2023 and December 31, 2022, respectively.
In fulfilling its oversight responsibilities, our Audit Committee reviewed and discussed with management and Deloitte the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, and discussed with management the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. Our Audit Committee also reviewed and discussed with management and Deloitte the disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Controls and Procedures” included in the Annual Report on Form 10-K for the year ended December 31, 2024.
Our Audit Committee has received the written disclosures and the letter from Deloitte required by applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) regarding the independent registered public accounting firm’s communications with our Audit Committee concerning independence, and our Audit Committee discussed with the independent registered public accounting firm their independence from us. Our Audit Committee has discussed with Deloitte the matters required to be discussed by Auditing Standard No. 1301,
Communications with Audit Committees,
as amended, as adopted by the PCAOB and as required by the SEC. When considering Deloitte’s independence, our Audit Committee considered whether their provision of services to us beyond those rendered in connection with their integrated audit and quarterly review work was compatible with maintaining their independence. Our Audit Committee also reviewed, among other things, the nature of audit-related services provided and the amount of fees paid to Deloitte for its audit and audit-related services, both separately and in the aggregate.
In reliance on the reviews and discussions referred to above, prior to the filing of our Annual Report on Form 10-K for the year ended December 31, 2024 with the SEC, the Audit Committee recommended to the Board (and the Board approved) that the audited financial statements be included in such Annual Report on Form 10-K for filing with the SEC.
The members of our Audit Committee are not professionally engaged in the practice of auditing or accounting. Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and discussions with the independent registered public accountant. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions referred to above do not assure that the audit of our financial statements has been carried out in accordance with the standards of the PCAOB, that the financial statements are presented in accordance with GAAP, or that Deloitte is in fact “independent.”
Submitted by the Audit Committee of the Board of Directors:
Stewart J. Paperin (Chairman)
Z. Jamie Behar
Robert C. Hain
John P. Hollihan, III
56
PROPOSAL 3 - ADVISORY (NON-BINDING) VOTE APPROVING ARMOUR’S
2024 EXECUTIVE COMPENSATION
As described in more detail under the heading, “Executive Officer Compensation” and “Certain Relationships and Related Party Transactions,” we have been managed by ACM, in which we have no ownership interest, since our inception in 2009. We do not have any employees whom we compensate directly in cash. The Management Agreement limits our role in compensating our named executive officers to granting equity compensation. The Management Agreement makes ACM solely responsible for determining and paying all employee expenses, including salaries, bonuses, wages, payroll taxes and benefits for our named executive officers and other ACM employees that provide services to us. We are not entitled under the Management Agreement or otherwise to review or approve compensation decisions made by ACM or how ACM compensates our named executive officers. ACM does not consult with us regarding the compensation of our named executive officers, including how much such officers are paid. This is due to, among other things, our lack of ownership of ACM and the fact that ACM conducts, and our named executive officers participate in, business separate from us.
Notwithstanding the fact that we do not pay cash compensation to our named executive officers, our Compensation Committee may award equity compensation consisting of shares of our common stock to ACM personnel, in addition to the management fees we pay ACM. These compensation-related provisions date to the original Management Agreement from our inception in 2009. In making the determination of whether or not to award equity compensation, our Compensation Committee takes into account, among other things, the management fees we pay to ACM and individual and company performance, both on an absolute basis and relative to our peers.
Our named executive officers’ compensation was derived from the management fees we paid to ACM, pursuant to the terms of the Management Agreement, and vested stock awards granted to our named executive officers in 2023, 2021 and 2020 by the Board of Directors upon the recommendation of the Compensation Committee pursuant to the Plan, plus, in the case of Mr. Harper, the reallocated grants. We did not award any equity compensation to our named executive officers in 2024 based on 2023 performance, other than the reallocated grants to Mr. Harper, or in 2022 based on 2021 performance. As discussed earlier in this proxy statement, we also recently reached out directly to our largest investors about our executive compensation practices, among other Company matters.
The SEC requires public companies to provide stockholders with periodic advisory (non-binding) votes on executive compensation, also referred to as “say-on-pay” proposals. While the vote is advisory and not binding on us, it will provide information to us and our Compensation Committee regarding stockholder sentiment about our executive compensation philosophy, policies and practices described above. Our Compensation Committee will be able to consider the results of this vote when determining equity compensation for our named executive officers in the future.
We are presenting the following proposal, which gives you as a stockholder the opportunity to endorse or not endorse our compensation program for the named executive officers listed under “ARMOUR's Executive Officers” in this proxy statement by voting for or against the following resolution.
“RESOLVED, that the stockholders approve, on an advisory basis, the 2024 compensation of ARMOUR’s named executive officers, as disclosed in the Company’s proxy statement for the 2025 annual meeting of stockholders, pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and the other related disclosure.”
Recommendation of the Board of Directors
ARMOUR’s Board of Directors recommends a vote
“FOR”
the approval of ARMOUR’s 2024 compensation of our named executive officers as disclosed in this proxy statement.
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STOCKHOLDER PROPOSAL DEADLINE
Under our Bylaws, ARMOUR must receive notice of any nomination or other business intended to be presented by an eligible stockholder at the 2026 annual meeting of stockholders not earlier than October 21, 2025 nor later than 5:00 p.m., Eastern Time, on November 20, 2025; provided that in the event that the date of the 2026 annual meeting is advanced or delayed by more than 30 days from May 1, 2026, notice must be delivered not earlier than the 150th day before the date of the 2026 annual meeting nor later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to the date of the 2026 annual meeting, as originally convened, and the tenth day following the day on which public announcement of the date of the 2026 annual meeting is first made. The deadline for any stockholder proposal for inclusion in our proxy materials for the 2026 annual meeting pursuant to Rule 14a-8 under the Exchange Act is November 20, 2025; provided that a proposal will not be considered properly brought before the meeting if notice thereof is provided after the deadline in our Bylaws, regardless of whether the stockholder is seeking to include the proposal in our proxy materials. Any notice regarding any stockholder proposal must include the information specified in Article II, Section 11 of our Bylaws. In addition to satisfying the foregoing advance notice requirements, to comply with the universal proxy rules under the Exchange Act, shareholders who intend to solicit proxies in support of director nominees other than ARMOUR’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act, including a statement that they intend to solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors. Please note that the notice requirement under SEC Rule 14a-19 is the same as the applicable notice requirements under the advance notice provisions of our Bylaws described above.
HOUSEHOLDING
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements, annual reports and Notices of Internet Availability of Proxy Materials with respect to two or more stockholders sharing the same address by delivering a single annual report and proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
A single annual report and proxy statement or Notice of Internet Availability of Proxy Materials will be delivered to multiple street name stockholders sharing an address unless contrary instructions have been received from one or more of the affected stockholders. Once a stockholder has received notification from its broker that it will be “householding” communications to such stockholder’s address, “householding” will continue until such stockholder is notified otherwise or until such stockholder notifies its broker or us that it no longer wishes to participate in “householding.” If, at any time, a stockholder no longer wishes to participate in “householding” and would prefer to receive a separate copy of the 2025 proxy statement and 2024 annual report or Notice of Internet Availability of Proxy Materials, and/or wishes to receive separate copies of proxy statements and annual reports or Notices of Internet Availability of Proxy Materials in the future, or if, at any time, stockholders who share an address and receive separate copies of the 2025 proxy statement and 2024 annual report or Notice of Internet Availability of Proxy Materials, would like to receive a single copy of our proxy statement and annual report or Notice of Internet Availability of Proxy Materials in the future, such stockholder or stockholders may (1) notify its or their broker or brokers or (2) direct its or their written or oral request to: Gordon Harper, ARMOUR Residential REIT, Inc., 3001 Ocean Drive, Suite 201, Vero Beach, Florida 32963, (772) 617-4340.
Upon written or oral request of a stockholder at a shared address to which a single copy of the 2025 proxy statement and 2024 annual report or Notice of Internet Availability of Proxy Materials was delivered, we will deliver promptly separate copies of these documents.
OTHER MATTERS
The Board of Directors knows of no other matters to come before the annual meeting. However, if any other matters properly come before the meeting or any of its adjournments, the person or persons voting the proxies will vote them in accordance with their best judgment on such matters.
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By order of the Board of Directors,
Scott J. Ulm
Chief Executive Officer and Vice Chairman
Chief Executive Officer and Vice Chairman
March 20, 2025
A copy of ARMOUR’s annual report on Form 10-K for the fiscal year ended December 31, 2024, including the financial statements, but excluding exhibits thereto, which has been filed with the SEC, will be made available without charge to interested stockholders upon written request. A copy of any exhibit thereto will be made available upon the payment of our reasonable expenses in furnishing the exhibit. Written requests should be sent to: Gordon Harper, ARMOUR Residential REIT, Inc., 3001 Ocean Drive, Suite 201, Vero Beach, Florida 32963.
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TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS ON MAY 1, 2025NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALSACCESS TO THE 2025 ANNUAL MEETINGPROXY STATEMENTPROPOSAL 1 - ELECTION OF DIRECTORSENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE INFORMATIONARMOURS EXECUTIVE OFFICERSEXECUTIVE OFFICER COMPENSATIONCOMPENSATION COMMITTEE REPORTSECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTCERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONSPROPOSAL 2 - RATIFICATION OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTANTSAUDIT COMMITTEE REPORTPROPOSAL 3 - ADVISORY (NON-BINDING) VOTE APPROVING ARMOURS 2024 EXECUTIVE COMPENSATIONSTOCKHOLDER PROPOSAL DEADLINEHOUSEHOLDINGOTHER MATTERS