EQUITY RESIDENTIAL (EQR)

Benchmarking

To measure the Company’s executive compensation for competitiveness in the industry, the Compensation Committee engaged an outside consultant, FPL Associates L.P. (“FPL”), to provide an annual competitive benchmarking analysis. This analysis utilizes data from a peer group of public real estate companies across a variety of asset classes (i.e., multifamily, office, industrial, hotel, and retail). The Compensation Committee and the Company used this information as context for decisions about compensation practices and about pay levels for individual executive officers.

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Table of Contents

In 2008, the peer group consisted of 19 public REITs and one public real estate operating company that were of the largest size (by total market capitalization) within the public real estate industry. Total market capitalization of this peer group ranged from approximately $2.8 billion to $43.8 billion, with a median of approximately $10.6 billion (as of June 30, 2008). The Company’s total capitalization at that time ranked it in the top 10 of this 20 entity peer group.

The peer group members included: AMB Property Corporation, Apartment Investment and Management Company, AvalonBay Communities, Inc., Boston Properties, Inc., Brandywine Realty Trust, Brookfield Properties Corporation, Camden Property Trust, Developers Diversified Realty Corporation, Douglas Emmett, Inc., Duke Realty Corporation, Forest City Enterprises, Inc., General Growth Properties, Inc., Host Hotels & Resorts, Inc., Kimco Realty Corporation, Liberty Property Trust, ProLogis, Simon Property Group, Inc., UDR, Inc., and Vornado Realty Trust.

FPL compared the individual components and total compensation of the Company’s top executives to the compensation of executives in comparable positions within the peer group. The tables provided to the Company’s Compensation Committee highlighted the 25th percentile, median, average, 75th percentile and 90th percentile market practices, and then displayed each of the Company’s listed executive’s compensation as a percentage of the variance from the market median, average and 75th percentile. Finally, FPL examined the level of compensation provided to the Company’s top four executive officers over the past three years as it relates to “shareholder value,” as defined by FPL, created over such period for both the Company and its peer group. Based upon FPL’s analysis and the overall performance assessment process described above, the Compensation Committee believes the total compensation of the named executive officers is fair and reasonable.

Benchmarking

To measure the Company’s executive compensation for competitiveness in the industry, the Compensation Committee has, from time to time, engaged an outside consultant to provide an annual competitive benchmarking analysis for the executive officers. This analysis utilizes data from a peer group of real estate companies across a variety of asset classes, i.e., multi-family, office, industrial and retail. The Committee and the Company use this information as context for decisions about compensation practices and about pay levels for individual executive officers.

The peer group consists of 19 public REITs and one public real estate operating company that are of the largest size (by total market capitalization) within the public real estate industry across a variety of asset classes. The total market capitalization of this peer group ranges from approximately $5 billion to $46 billion, with a median of approximately $14 billion (as of December 1, 2007). The Company’s total capitalization at that time ranked it in the top 8 of this 20 entity peer group.

The peer group members included: AMB Property Corporation, Apartment Investment and Management Company, Archstone-Smith Trust, Avalon Bay Communities Inc., Boston Properties, Inc., Brandywine Realty Trust, Brookfield Properties Corporation, Camden Property Trust, Developers Diversified Realty Corporation, Duke Realty Corporation, Equity Office Properties Trust, Forest City Enterprises, Inc., General Growth Properties, Inc., Host Hotels & Resorts, Inc., Kimco Realty Corporation, Liberty Property Trust, ProLogis, Simon Property Group, Inc., United Dominion Realty Trust, Inc., and Vornado Realty Trust. (Archstone-Smith Trust and Equity Office Properties Trust were acquired by private interests during 2007.)

The Company retained a consultant, FPL Associates Compensation (“FPL”), to assist in the benchmarking process. FPL compared the Company’s performance against that of the peer group using metrics of: (a) year-to-date total shareholder return (as of December 1, 2007); (b) 2006 total shareholder return; (c) 3-year annualized total shareholder return; and (d) 2006 FFO per share growth and estimated 2007 FFO per share growth.

FPL also compared the individual components and total compensation of the Company’s top executives to the compensation of executives in comparable positions within the peer group. The tables provided to the Company’s Compensation Committee highlighted the 25th percentile, median, average, 75th percentile and 90th percentile market practices, and then displayed each of the Company’s listed executives’ compensation as a percentage of the variance from the market median, average and 75th percentile.

Finally, FPL examined the level of compensation provided to the Company’s top four executive officers over the past three years as it relates to “shareholder value,” as defined by FPL, created over such period for both the Company and its peer group. FPL noted that while the Company was in the 65^th percentile of shareholder value created, it was only in the 29^th percentile of total remuneration of its executives as a percentage of shareholder value created.

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Benchmarking

      To measure the Company’s executive compensation for competitiveness in the industry, the Compensation Committee has, from time to time, engaged an outside consultant to provide an annual competitive benchmarking analysis for the Executive Officers. For 2005 and 2006, the Committee engaged FPL Associates Compensation (FPL) to provide this analysis. The analysis utilizes data from a peer group of twenty large public real estate investment trusts across a variety of asset classes, i.e., multi-family, office, industrial and retail. The Committee and the Company use this information as context for decisions about compensation practices and about pay levels for individual Executive Officers.