Exhibit 10.5

ANNALY CAPITAL MANAGEMENT, INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS

1. PURPOSE.   The Annaly Capital Management, Inc. Deferred Compensation Plan for
Directors (the “Plan”) is designed to provide a method of deferring payment to
non-employee directors of Annaly Capital Management, Inc., a Maryland
corporation (the “Corporation”), of their annual equity grant of deferred stock
units (each deferred stock unit, a “DSU”) covering shares of the Corporation’s
common stock (“Shares”), as fixed from time to time by the Board of Directors
(the “Board”), including any portion thereof otherwise payable in accordance
with the 2010 Equity Incentive Plan of Annaly Capital Management, Inc. or any
successor plan thereto and the terms and conditions of the Board’s program under
which Directors are eligible to receive DSUs (the “Directors Stock Plan”), until
termination of their services on the Board.  It is the intent of the Corporation
that amounts deferred under the Plan by a Director (as defined below) shall not
be taxable to the Director for income tax purposes until the time they are
actually received by the Director and that the Plan shall comply with the
requirements of Section 409A of the Internal Revenue Code (the “Code”).  The
provisions of the Plan shall be construed and interpreted to effectuate such
intent.

2. PLAN PERIOD.   Each Plan Period shall commence upon the election of Directors
at an Annual Meeting of Stockholders and terminate upon the election of
Directors at the next occurring Annual Meeting of Stockholders.

3. ADMINISTRATION.   The Plan shall be administered by the Chief Legal Officer
of the Corporation or his designee (the “Plan Administrator”).  The Plan
Administrator shall have the power to interpret the Plan and, subject to its
provisions, to make all determinations necessary or desirable for the Plan’s
administration.
 
4. PARTICIPATION.

(a) Eligibility.  Each non-employee director serving on the Board (“Director”)
that is eligible to receive DSUs under the Directors Stock Plan shall be
eligible to make a deferral election under the Plan.

(b) Elections to Defer.  A Director may become a participant in the Plan
(“Participant”) by irrevocably electing to defer all or a portion of the DSUs
issued to the Director for the Plan Period commencing during the calendar year. 
A Director may (i) receive any dividends equivalents payable in respect of DSUs
(“Dividend Equivalents”) in cash, payable at the same time cash dividends are
otherwise payable to stockholders, or (ii) elect to defer such Dividend
Equivalents, as additional DSUs, for the same period that the Director deferred
the underlying DSUs.  In order to be effective, a Director’s election to defer
must be in writing on the form attached hereto as Exhibit A (the “Election
Form”), and such form must be executed and returned to the Plan Administrator on
or before the date specified by the Plan Administrator for such purpose.  Such
election must be made prior to the beginning of the calendar year in which the
Plan Period to which the election relates commences, provided that (i) a newly
elected Director who first becomes eligible to participate in the Plan after the
start of the calendar year in which the Plan Period commences may make a
deferral election within thirty (30) days after first becoming eligible to
participate in the Plan, and (ii) for the first Plan Period (commencing with
2013 Annual Meeting of Stockholders), each Director may make a deferral election
within thirty (30) days before such meeting.  If a person ceases to be eligible
to receive DSUs under the Directors Stock Plan but continues to serve as a
Director, the person shall no longer be eligible to make deferral elections
under the Plan but will continue to be a Participant in the Plan with respect to
amounts previously deferred under the Plan while serving as a Director.
 
1

--------------------------------------------------------------------------------

 
5. ESTABLISHMENT OF ACCOUNTS.

(a) Accounts.  The Corporation shall establish and maintain on its books for
each Participant a stock account (the “Stock Account”).  For a Director who
becomes a Participant by electing to defer the portion of his or her annual DSU
grant, a number of units equal to the number of Shares (“Stock Units”) that
would have otherwise been paid to the Participant under the Directors Stock Plan
shall be credited to his or her Stock Account on or about the date on which the
Participant would have become entitled to receive such DSUs if payment had not
been deferred.  Such deferral shall be subject to any applicable terms and
conditions of the Directors Stock Plan.

(b) Account Adjustments Related to Stock Account.  If a Director elects to defer
any Dividend Equivalents, such Director’s Stock Account shall be credited
additional full or fractional Stock Units for cash dividends paid on Shares
based on the number of Stock Units in the Stock Account on the applicable
dividend record date and calculated based on the “Fair Market Value” of a Share
on the applicable dividend payment date (as such term is defined in the
Directors Stock Plan).   In addition, each Stock Account shall be appropriately
adjusted in the event of a stock dividend, split-up, combination of shares,
reclassification, recapitalization, merger, consolidation, reorganization or
liquidation to the same extent such adjustment is made under the Directors Stock
Plan.

6. PAYMENT.

(a) Payment Options.  Upon a Participant’s termination from service as a member
of the Board for any reason that constitutes a “separation from service” (as set
forth in Treasury Regulation Section 1.409A-1(h)) (“Separation from Service”),
the Participant shall be paid pursuant to this Section 6 in accordance with
payment option elected by the Participant.  At the time a Participant first
makes an election to defer a grant of DSUs under the Plan, the Participant shall
be given the opportunity to elect one of the following payment options: (i) a
single payment or (ii) five annual installments.  The election shall be made on
the Election Form.  If a Participant fails to duly elect a payment option, the
method of payment shall be a single payment.  After the initial deferral
election with respect to a grant of DSUs, a Participant may not elect a new
payment option.

(b) Single Payment.  If a Participant to whom the single payment method applies
incurs a Separation from Service, such Stock Account shall continue to be
credited with adjustments under Section 5(b), if applicable, through December 31
of the calendar year in which such Separation from Service occurs.  The number
of Shares equal to the number of Stock Units in the Stock Account as of such
December 31 shall be issued to the Participant (or to the Participant’s
designated beneficiary, if appropriate) between January 1 and January 31 of the
following year.

(c) Annual Installments.  If a Participant to whom the annual installments
method applies incurs a Separation from Service, the amount of such annual
installments shall be calculated and paid as provided in this Section 6(c).  The
Stock Account shall continue to be credited with adjustments under Section 5(b),
if applicable, until the Stock Account is fully paid out.  The first installment
shall be paid between January 1 and January 31 of the calendar year immediately
following the calendar year in which such Separation from Service occurred, and
each subsequent installment shall be paid between January 1 and January 31 of
each subsequent calendar year.  The payment from each Stock Account shall be
equal to (i) the balance in the Stock Account as of December 31 of the calendar
year immediately preceding the calendar year of payment, multiplied by (ii) a
fraction, the numerator of which is one and denominator is the number of
installments remaining, including the current year’s payment.  In the event of
the Participant’s death before all installments have been paid, any remaining
annual installments shall be paid to the Participant’s designated beneficiary.

(d) No Fractional Shares.  No fractional Shares shall be issued, but instead the
number of Shares to be issued as part of each payment shall be rounded to the
nearest whole number of Shares.  Any Shares issued to a Participant shall be
issued in book-entry form, registered in Participant’s name (or in the name of
Participant’s legal representatives, beneficiaries or heirs, as the case may
be).
 
2

--------------------------------------------------------------------------------

 
(e) Payments from Stock Accounts.  Shares to be delivered in payment of all or
part of a Stock Account shall come from the Directors Stock Plan. 
Notwithstanding any other provisions of this Plan, the issuance by the
Corporation of any Shares in payment of all or part of a Stock Account shall be
subject to all applicable laws, rules and regulations and to such approvals by
governmental agencies as may be required.  Shares so issued may not be sold,
transferred or otherwise disposed of except in compliance with such rules, and
the Corporation may require that any certificate evidencing Shares so issued
bear a restrictive legend and be subject to stop-transfer orders or other
actions intended to effect compliance with the Securities Act of 1933, as
amended, or any other applicable regulatory measures.  If, in the Plan
Administrator’s sole and exclusive discretion, issuance of Shares in payment of
all or part of a Stock Account is not practicable, whether due to compliance
with such laws, rules or regulations or otherwise, then the Plan Administrator
(subject to any required Board or other approval for purposes of Section 16
under the Securities Exchange Act of 1934, as amended) can cause the Corporation
to pay cash to the Participant or beneficiary to whom the Shares would otherwise
be issued in an amount equal to the number of Stock Units to be distributed
times the price per Stock Unit equal to the closing price of a Share on December
31 of the calendar year immediately preceding the calendar year of payment as
reported on the consolidated transaction reporting system for New York Stock
Exchange listed issues on that date or, if no sales occurred on that date, on
the most recent prior day on which a sale occurred.

(f) Other Payment Provisions.  Any payment hereunder shall be subject to
applicable withholding taxes.  If any amount becomes payable under the
provisions of the Plan to a Participant, beneficiary or other person who is a
minor or an incompetent, whether or not declared incompetent by a court, such
amount may be paid directly to the minor or incompetent person or to such
person’s legal representative (or attorney-in-fact in the case of an
incompetent) as the Plan Administrator, in its sole discretion, may decide, and
the Plan Administrator shall not be liable to any person for any such decision
or any payment pursuant thereto.  Participants shall designate a beneficiary
under the Plan on the Election Form, and if a Participant does not have a
beneficiary designation in effect, the designated beneficiary shall be the
Participant’s estate.

(g) Withdrawals on Stock Account of Unforeseeable Emergency.  Notwithstanding
any other provision of the Plan, if the Plan Administrator shall determine in
its sole discretion that the time of payment of a Stock Account should be
advanced because of “unforeseeable emergency,” then the Plan Administrator may
advance the time or times of payment (whether before or after the Participant’s
Separation from Service).  A Participant requesting a payment under this Section
6(g) shall have the burden of proof of establishing, to the Plan Administrator’s
satisfaction, the existence of such “unforeseeable emergency,” and the amount of
the payment needed to satisfy the same.  In that regard, the Participant shall
provide the Plan Administrator with such financial data and information as the
Plan Administrator may request.  If the Plan Administrator determines that a
payment shall be made to a Participant under this Section 6(g), such payment
shall be made within a reasonable time after the Plan Administrator’s
determination of the existence of such “unforeseeable emergency” and the amount
of payment so needed.  Withdrawals of amounts because of an “unforeseeable
emergency” shall not exceed an amount reasonably needed to satisfy the emergency
need.  As used herein, the term “unforeseeable emergency” means a severe
financial hardship to a Participant resulting from a sudden and unexpected
illness or accident of the Participant or of a dependent of the Participant (as
defined in Code Section 152), loss of the Participant’s property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant.  The circumstances
that shall constitute an “unforeseeable emergency” shall depend upon the facts
of each case, but, in any case, payment may not be made to the extent that such
hardship is or may be relieved (i) through reimbursement or compensation by
insurance or otherwise, or (ii) by liquidation of the Participant’s assets, to
the extent the liquidation of such assets would not itself cause severe
financial hardship.  Examples that are not considered to be “unforeseeable
emergencies” include the need to send a Participant’s child to college or the
desire to purchase a home.  Amounts to be withdrawn from the Stock Account under
this Section 6(g) shall be payable in cash (subject to any required Board or
other approval for purposes of Section 16 under the Securities Exchange Act of
1934, as amended) based on the closing price of a Share as of the determination
date for the withdrawal.

(h) Statements of Stock Account.  Each Participant shall receive an annual
statement of the balance in the Stock Account.
 
3

--------------------------------------------------------------------------------

 
7. TERMINATION AND AMENDMENT.  The Board may terminate the Plan at any time so
that no further amounts shall be credited to the Stock Account or may, from time
to time, amend the Plan, without the consent of Participants or beneficiaries;
provided, however, that no such amendment or termination shall reduce the amount
actually credited to a Stock Account under the Plan on the date of such
amendment or termination or further defer the due dates for the payment of such
amounts without the consent of the affected Participant or beneficiary.  To the
extent permitted by Code Section 409A, in connection with any termination of the
Plan the Board shall have the authority to cause the Stock Accounts of all
Participants (and beneficiary of any deceased Participants) to be paid in a
single sum payment in Shares as of a date determined by the Board or to
otherwise accelerate the payment of all Stock Accounts in such manner as the
Board shall determine in its discretion.

8. APPLICABLE LAW.  The Plan shall be construed, administered, regulated and
governed in all respects under and by the laws of the United States to the
extent applicable, and to the extent such laws are not applicable, by the laws
of the state of Delaware.
 
9. COMPLIANCE WITH CODE SECTION 409A.  The Plan is intended to comply with Code
Section 409A.  Notwithstanding any provision of the Plan to the contrary, the
Plan shall be interpreted, operated and administered consistent with this
intent.  If any Participant is a “specified employee” within the meaning of Code
Section 409A then, notwithstanding anything to the contrary herein, any amount
that would otherwise be payable to the Participant under the Plan during the
first six months following the Participant’s “separation from service” (within
the meaning of Code Section 409A) shall instead be paid to the Participant on
the earlier of (i) the Participant’s death or (ii) the first day following the
end of such six-month period.
 
10. MISCELLANEOUS.  A Participant’s rights and interests under the Plan may not
be assigned or transferred by the Participant.  The Plan shall be an unsecured,
unfunded arrangement.  To the extent the Participant acquires a right to receive
payments from the Corporation under the Plan, such right shall be no greater
than the right of any unsecured general creditor of the Corporation.  The
Corporation shall not be required to segregate any amounts credited to any Stock
Account, which shall be established merely as an accounting convenience.  No
Shares will be issued in respect of any Stock Account until distribution of such
account and no Participant shall have any rights as a stockholder of the
Corporation with respect to any Stock Units credited to the Participant’s Stock
Account unless and until those Stock Units are paid to the Participant by the
issuance of Shares as provided herein.  Nothing contained herein shall be deemed
to create a trust of any kind or any fiduciary relationship between the
Corporation and any Participant. The Plan shall be binding on the Corporation
and any successor in interest of the Corporation.

4