DEF 14A of Armour Residential REIT, Inc.
Filed Mar 20, 2025 · FY20240001428205-25-000063
PROPOSAL 1 - ELECTION OF DIRECTORS
PROPOSAL 1 - ELECTION OF DIRECTORS
Director Nominees
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
| 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 |
Director Nominees
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 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,
Director Nominees
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 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.
Director Nominees
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 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. ARMOUR’s Board of Directors unanimously recommends a vote “FOR” each of the eight nominees for director.
Director Compensation
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.
Director Compensation
| | 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 |
Director Compensation
(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. 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 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.
Director Compensation
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
2024 Director Compensation
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 |
2024 Director Compensation
(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 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.
2024 Executive Compensation
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. 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. 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:
2024 Executive Compensation
•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. 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.
2024 Executive Compensation
(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. (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
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 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
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:
Available Shares
(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
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. 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.
2024 Summary Compensation Table
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.
2024 Summary Compensation Table
| 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 |
2024 Summary Compensation Table
(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.
2024 Pay Versus Performance Table
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.
2024 Pay Versus Performance Table
| | | | | | | | 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 | $— | $— | $149,396 | $149,396 | $209,069 | $(184,960) | $44.11 | $90.64 | $(14,393,939) | (2.6)% | | 2023 | $1,660,400 | $1,660,400 | $706,293 | $706,293 | $830,200 | $402,134 | $38.98 | $82.76 | $(67,923,938) | (4.7)% | | 2022 | $— | $— | $(750,654) | $(750,654) | $— | $(142,055) | $46.06 | $77.24 | $(229,930,299) | (32.4)% | | 2021 | $1,986,090 | $1,986,090 | $1,823,636 | $1,823,636 | $184,667 | $170,850 | $67.53 | $97.01 | $15,362,714 | (6.4)% | | 2020 | $1,933,320 | $1,933,320 | $92,429 | $92,429 | $693,702 | $(93,459) | $66.74 | $95.01 | $(215,111,531) | (35.1)% |
2024 Pay Versus Performance Table
(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 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.
2024 Pay Versus Performance Table
| Adjustments made to Determine Compensation Actually Paid | | 2024 | 2023 | 2022 | 2021 | 2020 | | Summary Compensation Table Total | PEO 1 | $— | $1,660,400 | $— | $1,986,090 | $1,933,320 | | | PEO 2 | $— | $1,660,400 | $— | $1,986,090 | $1,933,320 | | | Average Non PEO NEOs | $209,069 | $830,200 | $— | $184,667 | $693,702 | | Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table | PEO 1 | $— | $(1,660,400) | $— | $(1,986,090) | $(1,933,320) | | | PEO 2 | $— | $(1,660,400) | $— | $(1,986,090) | $(1,933,320) | | | Average Non PEO NEOs | $(209,069) | $(830,200) | $— | $(184,667) | $(693,702) | | Increase for year-end fair value of awards granted during year that remain unvested as of year-end | PEO 1 | $— | $927,360 | $— | $1,487,687 | $909,813 | | | PEO 2 | $— | $927,360 | $— | $1,487,687 | $909,813 | | | Average Non PEO NEOs | $27,158 | $463,680 | $— | $137,340 | $374,629 | | 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 | $(24,734) | $(629,491) | $(685,729) | $(233,446) | $(942,490) | | | PEO 2 | $(24,734) | $(629,491) | $(685,729) | $(233,446) | $(942,490) | | | Average Non PEO NEOs | $(9,439) | $(240,176) | $(108,680) | $(43,407) | $(324,642) | | Increase for fair value as of the vesting dates for awards granted during year that vest during the year | PEO 1 | $— | $185,620 | $— | $308,016 | $262,811 | | | PEO 2 | $— | $185,620 | $— | $308,016 | $262,811 | | | Average Non PEO NEOs | $32,396 | $92,810 | $— | $29,760 | $101,706 | | 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 | $(8,059) | $(154,702) | $(309,989) | $(72,677) | $(326,246) | | | PEO 2 | $(8,059) | $(154,702) | $(309,989) | $(72,677) | $(326,246) | | | Average Non PEO NEOs | $(2,102) | $(52,980) | $(76,466) | $(17,862) | $(107,474) | | Deduction for fair value of awards granted prior to year that were forfeited during year | PEO 1 | $— | $— | $— | $— | $— | | | PEO 2 | $— | $— | $— | $— | $— | | | Average Non PEO NEOs | $(266,616) | $— | $— | $— | $(202,527) | | Increase based on dividends or other earnings Paid during year prior to vesting date of award | PEO 1 | $182,189 | $377,506 | $245,064 | $334,056 | $188,541 | | | PEO 2 | $182,189 | $377,506 | $245,064 | $334,056 | $188,541 | | | Average Non PEO NEOs | $33,643 | $138,800 | $43,091 | $65,019 | $64,849 | | Continued | | | | | | |
2024 Pay Versus Performance Table
| Total Adjustments | PEO 1 | $149,396 | $(954,107) | $(750,654) | $(162,454) | $(1,840,891) | | | PEO 2 | $149,396 | $(954,107) | $(750,654) | $(162,454) | $(1,840,891) | | | Average Non PEO NEOs | $(394,029) | $(428,066) | $(142,055) | $(13,817) | $(787,161) | | Compensation Actually Paid | PEO 1 | $149,396 | $706,293 | $(750,654) | $1,823,636 | $92,429 | | | PEO 2 | $149,396 | $706,293 | $(750,654) | $1,823,636 | $92,429 | | | Average Non PEO NEOs | $(184,960) | $402,134 | $(142,055) | $170,850 | $(93,459) |
Important Factors
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.
Relationship Between Compensation Actually Paid and Financial Performance
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. 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
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.
2024 Grants of Plan-Based Awards
| 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) |
2024 Grants of Plan-Based Awards
(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).
Outstanding Equity Awards at December 31, 2024
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:
Outstanding Equity Awards at 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 |
Outstanding Equity Awards at December 31, 2024
(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
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 Vested in 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 |
Stock Vested in 2024
(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. (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
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
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.
Potential Payments Upon Termination or Change in Control
| 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 |
Potential Payments Upon Termination or Change in Control
(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.