EQUITY RESIDENTIAL (EQR)

Assessment of Company and Individual Performance

A series of performance measures form the basis of annual performance assessments of the Company, Mr. Neithercut and each of the executive officers. At the beginning of each year, Mr. Neithercut and the other named executive officers develop corporate, business unit and individual goals for that year. Once approved by Mr. Neithercut, the goals are provided to the Compensation Committee for consideration, as well as a series of metrics to assess Company and executive performance towards the goals. Certain performance goals and objectives are meant to deliver current-year results, while others move the Company forward over a longer period. Some of these goals and objectives are quantitative, while others are assessed subjectively.

For 2008, the following categories of performance goals and relative weightings were approved:

At regular meetings during the year, Mr. Neithercut updated the Compensation Committee on the progress of the corporate, business unit and individual goals. At the end of 2008, Mr. Neithercut presented the Compensation Committee with an assessment of the performance on corporate, business unit and department goals and objectives, with both objective metrics and subjective reviews.

Individual performance reviews of Mr. Neithercut’s direct reports are conducted by Mr. Neithercut in consultation with the Compensation Committee by assessing the shared corporate, relevant business unit and individual goals. Mr. Neithercut’s performance is determined by an assessment of the Compensation Committee, in consultation with independent members of the Board, of the achievement of the corporate, business unit and his individual goals. After making its own assessment of Company and executive performance against the 2008 goals, the Compensation Committee makes recommendations for the bonus and long-term compensation award for Mr. Neithercut and the other executives. The Compensation Committee approves the bonus and long-term compensation awards for the other executive officers, and then submits them to the Board for ratification by the independent trustees. The Compensation Committee also submits its recommendation regarding Mr. Neithercut’s bonus and long-term compensation award to the independent trustees of the Board for their approval.

A detailed description of the performance against the Company’s goals is included in “Evaluation of Company Performance in 2008” and performance against the individual goals is included in “Compensation for Our Chief Executive Officer in 2008” and “Compensation for Our Other Named Executives in 2008”.