This excerpt taken from the EQR DEF 14A filed Apr 17, 2006.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
Employment Contracts. The Company entered into an Employment Agreement with Mr. Duncan, our former Chief Executive Officer, in January 2003 in connection with his appointment as Chief Executive Officer. Under Mr. Duncans employment agreement, his target annual compensation was $6,330,000, comprised of a base annual salary of $750,000, a target cash bonus of $1,080,000 and a long-term incentive grant of $4,500,000 of options, restricted shares and performance shares. The term of the agreement was four years from January 1, 2003 until December 31, 2006.
In March 2005 (as further amended in June 2005), the Company entered into an Amended and Restated Employment Agreement to reflect the changes required in view of Mr. Duncans retirement as Chief Executive Officer and Trustee on December 31, 2005. This amended agreement essentially treats Mr. Duncans retirement from the Company in December 2005 as a retirement effective as of December 31, 2006, the original termination date of his employment agreement.
As a result of Mr. Duncans retirement as Chief Executive Officer and Trustee on December 31, 2005, he received the following benefits:
The Company entered into an Amended and Restated Compensation Agreement with Mr. Zell, effective January 1, 2003, as modified in February 2005 and April 2005, for services performed by Mr. Zell as Chairman of the Board. The agreement, which expired following the February 2006 grant, entitled Mr. Zell to an annual long-term incentive grant of $3,250,000 of options and restricted shares. Mr. Zell is responsible for his own business related expenses.
This annual grant was issued on the same terms and conditions, including vesting and option valuation, as approved by the Board for the annual long-term incentive grants to the Companys executive officers and as further described in Executive Compensation above. The February 2006 grant was allocated 25% to options and 75% to restricted shares. At such time, Mr. Zell was granted 192,545
options at an exercise price of $42.80 per share and 56,950 restricted shares. As of December 31, 2005, Mr. Zell held 263,583 restricted shares.
Any unvested options and restricted shares held by Mr. Zell shall be forfeited upon Mr. Zells voluntary retirement from the Board, or his voluntary decision not to stand for re-election to the Board, in each case for any reason other than disability or death prior to reaching the age of 70. The Company is not required to nominate Mr. Zell for re-election as a trustee or as Chairman of the Board, nor is Mr. Zell contractually obligated to serve if so nominated.
The Company also entered into a Retirement Benefits Agreement with Mr. Zell in October 2001. The Retirement Benefits Agreement provides Mr. Zell with a cash retirement benefit after the termination of his service as Chairman of the Board. If Mr. Zells employment as Chairman is terminated for any reason, other than by the Company for cause, he (or his estate in the event of his death) will be entitled to an annual retirement benefit of $500,000 (as increased by a CPI index from January 2002 through the termination date) over a ten-year period commencing on the termination date. Should Mr. Zell be terminated for cause, he would not be entitled to any retirement benefit.
The Company entered into an Amended and Restated Deferred Compensation Agreement with Mr. Spector in January 2002 which provides him with a salary benefit after the termination of his employment with the Company. If Mr. Spectors employment is terminated by the Company without cause at any time or Mr. Spector resigns for any reason on or after January 1, 2009, he would be entitled to annual deferred compensation for a ten-year period commencing on the employment termination date in an amount equal to $550,000 (increased by a CPI Index from January 2002 through the employment termination date), multiplied by a percentage equal to 6.67% for each year Mr. Spector was employed by the Company since December 31, 1993, but not to exceed 100%. In the event Mr. Spectors employment is terminated as a result of his death, permanent disability or incapacity, he would be entitled to the full annual amount of $550,000 (as increased by a CPI Index from January 2002 through the date of death, permanent disability or incapacity). Should Mr. Spector be terminated for cause or should he choose to leave voluntarily, without good reason, prior to January 1, 2009, he would not be entitled to any deferred compensation.
Change in Control/Severance Agreements. The Company has Change in Control/Severance Agreements (the CIC Agreements) with the persons named in the Summary Compensation Table (excluding Mr. Duncan) that become effective upon either a Change in Control or termination of employment within three years following the hiring of a new Chief Executive Officer. A Change in Control will generally be deemed to have occurred upon a third partys acquisition of 30% or more of the Companys common shares or assets, whether through purchase, merger or consolidation. In the event that an employee is dismissed without Cause or resigns for Good Reason (as such terms are defined in the CIC Agreements) during the three-year period following the effective date of the Change in Control or, for all named executives other than the Chief Executive Officer, the hiring of a new Chief Executive Officer, he will be entitled to all accrued but unpaid compensation, a prorated bonus and long-term compensation grant through the date of termination, and a lump sum cash severance payment equal to a multiple (ranging from 2.5 for the Chief Executive Officer and the Chief Operating Officer to 2.25 for other named executive officers) of the executives annual base salary plus the average of the executives annual bonus for the last two fiscal years. In addition, all options, restricted shares and performance shares would immediately vest. The executive would also be entitled to continued medical, dental, life and disability benefits for the remainder of the applicable time period. If any payments made to an executive would result in an excise tax imposed by Section 4999 of the IRC, the executive would become entitled to receive a tax reimbursement that would put the executive in the same financial position after-tax that he would have been in if the excise tax did not apply to such amounts. Several of the Companys
employment benefit plans also provide for enhanced employee benefits upon a Change in Control of the Company.
Retirement Benefits Agreements. The Company has entered into Executive Retirement Benefits Agreements with the persons named in the Summary Compensation Table (excluding Mr. Duncan). These agreements provide that, if either the named executive retires from the Company after reaching age 62 or is terminated as a result of a Change in Control after reaching age 62, the executive will be eligible to receive health and life insurance benefits for the remainder of his life in the same amounts as any regular active employee. These benefits will be offered at the same rates as would be paid by an active employee for like coverage and subject to increase as any other active employee.