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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Washington, D.C. 20549</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM 8-K</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CURRENT REPORT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Pursuant to Section 13 or 15(d) of the</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Securities Exchange Act of 1934 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Date of Report (date of earliest event
reported): August 16, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ARLINGTON ASSET INVESTMENT CORP.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Exact name of Registrant as specified in
its charter)</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

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    <TD STYLE="width: 30%; vertical-align: top; border-bottom: windowtext 1pt solid; padding: 0; font-weight: bold; text-align: center; text-indent: 0">Virginia</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0; width: 1%">&nbsp;</TD>
    <TD STYLE="width: 30%; vertical-align: top; border-bottom: windowtext 1pt solid; padding: 0; font-weight: bold; text-align: center; text-indent: 0">54-1873198</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: top; border-bottom: windowtext 1pt solid; padding: 0; font-weight: bold; text-align: center; text-indent: 0; width: 30%"><B>001-34374</B></TD></TR>
<TR>
    <TD STYLE="vertical-align: top; padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(State or Other Jurisdiction</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">of Incorporation
or Organization)&nbsp;</P></TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center; padding: 0; text-indent: 0">(I.R.S. Employer Identification No.)</TD>
    <TD STYLE="vertical-align: bottom; padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center; padding: 0; text-indent: 0">(Commission File Number)</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>1001 Nineteenth Street North</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Arlington, VA 22209 </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Address of principal executive offices)
(Zip code)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(703) 373-0200</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Registrant&rsquo;s telephone number including
area code)</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>N/A</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Former name or former address, if changed
from last report)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:</P>

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    <TD STYLE="width: 4%; font-family: Wingdings; padding: 0; text-indent: 0">&uml;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</TD></TR>
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    <TD STYLE="padding: 0; text-indent: 0">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD></TR>
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    <TD STYLE="width: 4%; font-family: Wingdings; padding: 0; text-indent: 0">&uml;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</TD></TR>
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    <TD STYLE="padding: 0; text-indent: 0">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 5.02. Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers </B></P>

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<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">(e)</TD><TD STYLE="text-align: justify"><B>New Performance Share Unit Program</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On August 13, 2012, the Compensation Committee
(the &ldquo;Committee&rdquo;) of the Board of Directors of Arlington Asset Investment Corp. (the &ldquo;Company&rdquo;) adopted
a performance-based long-term incentive program (the &ldquo;Program&rdquo;) that provides for the issuance of two types of performance
share units (&ldquo;PSUs&rdquo;) from time to time pursuant to the Company&rsquo;s 2011 Long-Term Incentive Plan. The Program is
designed to provide an incentive compensation opportunity that balances the Company&rsquo;s internal financial objectives and external
market performance. Eligible participants in the Program are the Company&rsquo;s named executive officers, Eric F. Billings, J.
Rock Tonkel, Jr. and Kurt R. Harrington. Also, on August 13, 2012, the Committee approved a form of PSU award agreement and an
initial grant of PSUs to the Company&rsquo;s named executive officers, as described in further detail below. The form of PSU award
agreement is attached as Exhibit 10.1 to this report and incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Committee established performance goals
under the Program. It is anticipated that awards under the Program will be comprised of two types of PSUs. The first type of PSU,
deemed &ldquo;Book Value PSUs,&rdquo; will be eligible to vest based on the compound annualized growth in the Company&rsquo;s book
value per share (<I>i.e</I>., book value change plus dividends on a reinvested basis) during the applicable performance period.
The other type of PSU, deemed &ldquo;TSR PSUs,&rdquo; will be eligible to vest based on the Company&rsquo;s compound annualized
total shareholder return (<I>i.e</I>., share price change plus dividends on a reinvested basis) during the applicable performance
period. For the initial grant, the Committee awarded PSUs with an aggregate grant date fair value equal to 75% of the awardee&rsquo;s
base salary, with 50% of the total grant date fair value represented by Book Value PSUs and 50% of the total grant date fair value
represented by TSR PSUs. To facilitate the implementation of the Program, the Committee established both a two-year and three-year
performance period for the initial grant of PSUs. As described in further detail below, a portion of the Book Value PSUs and TSR
PSUs will be eligible for vesting at the end of the second year following the grant date, and a portion of the Book Value PSUs
and TSR PSUs will be eligible for vesting at the end of the third year following the grant date. It is anticipated that subsequent
PSUs grants will have a three-year performance period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">PSUs will be settled following the end of
the applicable performance period by the issuance of shares of the Company&rsquo;s Class A common stock, subject to both continued
employment by the Company and the achievement of performance goals established by the Committee. The actual number of shares of
Class A common stock that will be issued to each participant at the end of the applicable performance period will vary between
0% and 200% of the number of PSUs granted, depending on performance results. If the threshold level of performance goals are not
achieved, no PSUs will be earned. If the initial performance threshold is met, participants will earn 50% of the granted PSUs for
Company performance at the threshold level, 100% of the granted PSUs for Company performance at the target level and 200% of the
granted PSUs for Company performance at the maximum level, with linear interpolation for achievement falling between the performance
levels.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The performance goals and payout schedule
applicable to the Book Value PSUs and TSR PSUs for the initial grant of PSUs is set forth below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 90%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="3" STYLE="padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Book
Value PSUs</B>&nbsp;</P></TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="3" STYLE="padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><B>TSR
PSUs&nbsp;</B></P></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 20%; padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Compound
Annualized Book Value per Share Growth</B>&nbsp;</P></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 20%; padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Percent
of Target<BR>
PSUs Earned&nbsp;</B></P></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 20%; padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Compound
Annualized Total Shareholder Return&nbsp;</B></P></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 20%; padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Percent
of Target PSUs Earned&nbsp;</B></P></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&lt;7.5%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">0%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&lt;7.5%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">0%</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">7.5%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">50%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">7.5%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">50%</TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,255,204)">
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">12.5%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">100%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">12.5%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">100%</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&gt;=20%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">200%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">&gt;=20%</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">200%</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In accordance with the Company&rsquo;s 2011
Long-Term Incentive Plan, the Committee, in its sole discretion, will determine the degree to which any applicable performance
goal has been achieved.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">PSUs do not have any voting rights. No dividends
will be paid on outstanding PSUs during the applicable performance period. Instead, dividend equivalents will accrue on outstanding
PSUs during the applicable performance period, will be deemed invested in shares of Class A common stock and will be paid out in
shares of Class A common stock at the end of the performance period to the extent that the underlying PSUs vest. Upon settlement,
vested PSUs will be converted into shares of the Company&rsquo;s Class A common stock on a one-for-one basis. The PSUs and dividend
equivalents will be settled in whole shares of Class A common stock with a cash payment in lieu of any fractional share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As mentioned above, the right to receive
shares of Class A common stock upon vesting of PSUs at the end of the applicable performance period is subject to both continued
employment and the achievement of Company performance goals established by the Committee. The employment requirement (but not the
performance requirement) is waived in the event the awardee dies, becomes disabled or retires; provided, however, that if the awardee
dies, becomes disabled or retires before the first anniversary of the grant date, the number of PSUs that are earned under the
performance targets will be pro rated. If an awardee is terminated without &ldquo;cause&rdquo; (as defined in the agreement), the
Committee, in the exercise of its discretion, will determine whether any of the PSUs have been earned, provided that the Committee
may not approve a payout that exceeds the number of PSUs earned under the performance targets. In the event of a change of control,
the number of PSUs that are earned for each performance period will be determined immediately prior to the change of control based
on actual performance and will vest subject to continued employment for the remainder of the original performance period, subject
to accelerated vesting in certain circumstances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Except as described above or as the Committee
at any time may otherwise determine, an awardee will forfeit the right to any PSUs if he or she terminates employment before the
payment date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Initial PSU Grants</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The threshold, target and maximum awards
for the PSUs granted to the Company&rsquo;s named executive officers on August 13, 2012 are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-size: 10pt; font-weight: bold">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Book Value PSUs</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="10" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">TSR PSUs</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font: bold 10pt Times New Roman, Times, Serif; border-bottom: Black 1pt solid">Name and Title</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Threshold (#)</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Target <BR>(#)(1)</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Maximum <BR>(#)</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Threshold (#)</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Target <BR>(#)(2)</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD><TD STYLE="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Maximum <BR>(#)</TD><TD STYLE="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%; font: 10pt Times New Roman, Times, Serif; text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Eric F. Billings,</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Chairman and Chief Executive Officer</I></P></TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; font-size: 10pt; text-align: right">6,524.5</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; font-size: 10pt; text-align: right">13,049</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; font-size: 10pt; text-align: right">26,098</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; font-size: 10pt; text-align: right">9,024</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; font-size: 10pt; text-align: right">18,048</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="width: 7%; font-size: 10pt; text-align: right">36,096</TD><TD STYLE="width: 1%; font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">J. Rock Tonkel, Jr.,</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>President and Chief Operating Officer</I></P></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">6,117</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">12,234</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">24,468</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">8,460</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">16,920</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">33,840</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Kurt R. Harrington,</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Executive Vice President, Chief Financial Officer and Treasurer</I></P></TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">2,447</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">4,894</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">9,788</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">3,383.5</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">6,767</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
    <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">13,534</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">___________</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0">(1)</TD><TD STYLE="padding: 0; text-indent: 0">To determine the number of Book Value PSUs to grant to each named executive officer, the Committee identified a target grant
date fair value for the award equal to 37.5% of the officer&rsquo;s base salary, then divided the target grant date fair value
by $22.99, the last reported sale price of the Company&rsquo;s Class A common stock on the New York Stock Exchange on the date
preceding<B> </B>the grant date. For each officer, the number of Book Value PSUs that are eligible for vesting following a two-year
performance period, based on target performance, are as follows: Billings: 6,525; Tonkel: 6,117; and Harrington: 2,447. For each
officer, the number of Book Value PSUs that are eligible for vesting following a three-year performance period are as follows:
Billings: 6,524; Tonkel: 6,117; and Harrington: 2,447. The number of Book Value PSUs allocated between the two- and three-year
performance period will be proportionately decreased for performance between the threshold and target levels and proportionately
increased for performance between the target and maximum levels.</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0; padding: 0; text-indent: 0"></TD><TD STYLE="width: 0.5in; padding: 0; text-indent: 0">(2)</TD><TD STYLE="padding: 0; text-indent: 0">To determine the number of TSR PSUs to grant to each named executive officer, the Committee identified a target grant date
fair value for the award equal to 37.5% of the officer&rsquo;s base salary, then divided that amount by the fair value of a unit
award using a Monte Carlo simulation model. For each officer, the number of TSR PSUs that are eligible for vesting following a
two-year performance period, based on target performance, are as follows: Billings: 8,596; Tonkel: 8,059; and Harrington: 3,223.
For each officer, the number of TSR PSUs that are eligible for vesting following a three-year performance period, based on target
performance, are as follows: Billings: 9,452; Tonkel: 8,861; and Harrington: 3,544. The number of TSR PSUs allocated between the
two- and three-year performance period will be proportionately decreased for performance between the threshold and target levels
and proportionately increased for performance between the target and maximum levels.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The description of the Program contained
herein is a summary of the material terms of the Program, does not purport to be complete, and is qualified in its entirety by
reference to (i) the Company&rsquo;s 2011 Long-Term Incentive Plan, which is filed as Exhibit 10.1 to the Company&rsquo;s Current
Report on Form 8-K filed with the Securities and Exchange Commission on June 6, 2011, and (ii) the form of preferred share unit
award agreement filed as Exhibit 10.1 hereto, each of which is incorporated herein by reference.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 9.01. Financial Statements and Exhibits.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.5in; text-align: left">(d)</TD><TD STYLE="text-align: justify">Exhibits</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in; text-align: left">10.1</TD><TD STYLE="text-align: justify">Form of Performance Share Unit Award Agreement</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; font-weight: bold; text-indent: 0">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="padding: 0; font-weight: bold; text-indent: 0">ARLINGTON ASSET INVESTMENT CORP.</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0; width: 50%">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0; width: 5%">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0; width: 35%">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0; width: 10%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">Date:&nbsp; August 16, 2012</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">By:</TD>
    <TD STYLE="padding: 0; text-decoration: none; text-indent: 0; border-bottom: Black 1pt solid">/s/ Kurt R. Harrington</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Name:</TD>
    <TD STYLE="padding: 0; text-indent: 0">Kurt R. Harrington</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Title:</TD>
    <TD STYLE="padding: 0; text-indent: 0">Executive Vice President, Chief Financial Officer and Treasurer</TD>
    <TD STYLE="padding: 0; text-indent: 0">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXHIBIT INDEX</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: Black 0.5pt solid"><B>Exhibit
No.</B></P></TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 83%; padding: 0; text-indent: 0">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; border-bottom: Black 0.5pt solid"><B>Description</B></P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 0; text-align: center; text-indent: 0">10.1</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="padding: 0; text-indent: 0">Form of Performance Share Unit Award Agreement</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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{"company-data": {"conformed-name": "Arlington Asset Investment Corp.", "cik": "0001209028", "assigned-sic": "6799", "irs-number": "541873198", "state-of-incorporation": "VA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-34374", "film-number": "121040805"}, "business-address": {"street1": "1001 19TH STREET NORTH", "city": "ARLINGTON", "state": "VA", "zip": "22209", "phone": "7033730200"}, "mail-address": {"street1": "1001 19TH STREET NORTH", "city": "ARLINGTON", "state": "VA", "zip": "22209"}, "former-company": [{"former-conformed-name": "FRIEDMAN BILLINGS RAMSEY GROUP INC", "date-changed": "20030331"}, {"former-conformed-name": "FOREST MERGER CORP", "date-changed": "20021205"}]}
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event
reported): August 16, 2012
ARLINGTON ASSET INVESTMENT CORP.
(Exact name of Registrant as specified in
its charter)
Virginia
54-1873198
001-34374
(State or Other Jurisdiction
of Incorporation
or Organization)
(I.R.S. Employer Identification No.)
(Commission File Number)
1001 Nineteenth Street North
Arlington, VA 22209
(Address of principal executive offices)
(Zip code)
(703) 373-0200
(Registrant's telephone number including
area code)
N/A
(Former name or former address, if changed
from last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02. Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
(e)
New Performance Share Unit Program
On August 13, 2012, the Compensation Committee
(the "Committee") of the Board of Directors of Arlington Asset Investment Corp. (the "Company") adopted
a performance-based long-term incentive program (the "Program") that provides for the issuance of two types of performance
share units ("PSUs") from time to time pursuant to the Company's 2011 Long-Term Incentive Plan. The Program is
designed to provide an incentive compensation opportunity that balances the Company's internal financial objectives and external
market performance. Eligible participants in the Program are the Company's named executive officers, Eric F. Billings, J.
Rock Tonkel, Jr. and Kurt R. Harrington. Also, on August 13, 2012, the Committee approved a form of PSU award agreement and an
initial grant of PSUs to the Company's named executive officers, as described in further detail below. The form of PSU award
agreement is attached as Exhibit 10.1 to this report and incorporated herein by reference.
The Committee established performance goals
under the Program. It is anticipated that awards under the Program will be comprised of two types of PSUs. The first type of PSU,
deemed "Book Value PSUs," will be eligible to vest based on the compound annualized growth in the Company's book
value per share (
i.e
., book value change plus dividends on a reinvested basis) during the applicable performance period.
The other type of PSU, deemed "TSR PSUs," will be eligible to vest based on the Company's compound annualized
total shareholder return (
i.e
., share price change plus dividends on a reinvested basis) during the applicable performance
period. For the initial grant, the Committee awarded PSUs with an aggregate grant date fair value equal to 75% of the awardee's
base salary, with 50% of the total grant date fair value represented by Book Value PSUs and 50% of the total grant date fair value
represented by TSR PSUs. To facilitate the implementation of the Program, the Committee established both a two-year and three-year
performance period for the initial grant of PSUs. As described in further detail below, a portion of the Book Value PSUs and TSR
PSUs will be eligible for vesting at the end of the second year following the grant date, and a portion of the Book Value PSUs
and TSR PSUs will be eligible for vesting at the end of the third year following the grant date. It is anticipated that subsequent
PSUs grants will have a three-year performance period.
PSUs will be settled following the end of
the applicable performance period by the issuance of shares of the Company's Class A common stock, subject to both continued
employment by the Company and the achievement of performance goals established by the Committee. The actual number of shares of
Class A common stock that will be issued to each participant at the end of the applicable performance period will vary between
0% and 200% of the number of PSUs granted, depending on performance results. If the threshold level of performance goals are not
achieved, no PSUs will be earned. If the initial performance threshold is met, participants will earn 50% of the granted PSUs for
Company performance at the threshold level, 100% of the granted PSUs for Company performance at the target level and 200% of the
granted PSUs for Company performance at the maximum level, with linear interpolation for achievement falling between the performance
levels.
The performance goals and payout schedule
applicable to the Book Value PSUs and TSR PSUs for the initial grant of PSUs is set forth below:
Book
Value PSUs
TSR
PSUs
Compound
Annualized Book Value per Share Growth
Percent
of Target
PSUs Earned
Compound
Annualized Total Shareholder Return
Percent
of Target PSUs Earned
<7.5%
0%
<7.5%
0%
7.5%
50%
7.5%
50%
12.5%
100%
12.5%
100%
>=20%
200%
>=20%
200%
In accordance with the Company's 2011
Long-Term Incentive Plan, the Committee, in its sole discretion, will determine the degree to which any applicable performance
goal has been achieved.
2
PSUs do not have any voting rights. No dividends
will be paid on outstanding PSUs during the applicable performance period. Instead, dividend equivalents will accrue on outstanding
PSUs during the applicable performance period, will be deemed invested in shares of Class A common stock and will be paid out in
shares of Class A common stock at the end of the performance period to the extent that the underlying PSUs vest. Upon settlement,
vested PSUs will be converted into shares of the Company's Class A common stock on a one-for-one basis. The PSUs and dividend
equivalents will be settled in whole shares of Class A common stock with a cash payment in lieu of any fractional share.
As mentioned above, the right to receive
shares of Class A common stock upon vesting of PSUs at the end of the applicable performance period is subject to both continued
employment and the achievement of Company performance goals established by the Committee. The employment requirement (but not the
performance requirement) is waived in the event the awardee dies, becomes disabled or retires; provided, however, that if the awardee
dies, becomes disabled or retires before the first anniversary of the grant date, the number of PSUs that are earned under the
performance targets will be pro rated. If an awardee is terminated without "cause" (as defined in the agreement), the
Committee, in the exercise of its discretion, will determine whether any of the PSUs have been earned, provided that the Committee
may not approve a payout that exceeds the number of PSUs earned under the performance targets. In the event of a change of control,
the number of PSUs that are earned for each performance period will be determined immediately prior to the change of control based
on actual performance and will vest subject to continued employment for the remainder of the original performance period, subject
to accelerated vesting in certain circumstances.
Except as described above or as the Committee
at any time may otherwise determine, an awardee will forfeit the right to any PSUs if he or she terminates employment before the
payment date.
Initial PSU Grants
The threshold, target and maximum awards
for the PSUs granted to the Company's named executive officers on August 13, 2012 are as follows:
Book Value PSUs
TSR PSUs
Name and Title
Threshold (#)
Target
(#)(1)
Maximum
(#)
Threshold (#)
Target
(#)(2)
Maximum
(#)
Eric F. Billings,
Chairman and Chief Executive Officer
6,524.5
13,049
26,098
9,024
18,048
36,096
J. Rock Tonkel, Jr.,
President and Chief Operating Officer
6,117
12,234
24,468
8,460
16,920
33,840
Kurt R. Harrington,
Executive Vice President, Chief Financial Officer and Treasurer
2,447
4,894
9,788
3,383.5
6,767
13,534
___________
(1)
To determine the number of Book Value PSUs to grant to each named executive officer, the Committee identified a target grant
date fair value for the award equal to 37.5% of the officer's base salary, then divided the target grant date fair value
by $22.99, the last reported sale price of the Company's Class A common stock on the New York Stock Exchange on the date
preceding
the grant date. For each officer, the number of Book Value PSUs that are eligible for vesting following a two-year
performance period, based on target performance, are as follows: Billings: 6,525; Tonkel: 6,117; and Harrington: 2,447. For each
officer, the number of Book Value PSUs that are eligible for vesting following a three-year performance period are as follows:
Billings: 6,524; Tonkel: 6,117; and Harrington: 2,447. The number of Book Value PSUs allocated between the two- and three-year
performance period will be proportionately decreased for performance between the threshold and target levels and proportionately
increased for performance between the target and maximum levels.
(2)
To determine the number of TSR PSUs to grant to each named executive officer, the Committee identified a target grant date
fair value for the award equal to 37.5% of the officer's base salary, then divided that amount by the fair value of a unit
award using a Monte Carlo simulation model. For each officer, the number of TSR PSUs that are eligible for vesting following a
two-year performance period, based on target performance, are as follows: Billings: 8,596; Tonkel: 8,059; and Harrington: 3,223.
For each officer, the number of TSR PSUs that are eligible for vesting following a three-year performance period, based on target
performance, are as follows: Billings: 9,452; Tonkel: 8,861; and Harrington: 3,544. The number of TSR PSUs allocated between the
two- and three-year performance period will be proportionately decreased for performance between the threshold and target levels
and proportionately increased for performance between the target and maximum levels.
3
The description of the Program contained
herein is a summary of the material terms of the Program, does not purport to be complete, and is qualified in its entirety by
reference to (i) the Company's 2011 Long-Term Incentive Plan, which is filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K filed with the Securities and Exchange Commission on June 6, 2011, and (ii) the form of preferred share unit
award agreement filed as Exhibit 10.1 hereto, each of which is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits
10.1
Form of Performance Share Unit Award Agreement
4
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
ARLINGTON ASSET INVESTMENT CORP.
Date:  August 16, 2012
By:
/s/ Kurt R. Harrington
Name:
Kurt R. Harrington
Title:
Executive Vice President, Chief Financial Officer and Treasurer
EXHIBIT INDEX
Exhibit
No.
Description
10.1
Form of Performance Share Unit Award Agreement