EQUITY RESIDENTIAL (EQR)

Performance Management

The Company’s compensation program rewards executives and employees based on their contributions to our success. The Company’s performance management program links compensation to both individual and Company results for approximately 1,500 corporate and property-level executives, managers, and supervisors. The program rates participants’ annual achievement against both financial goals and non-financial performance objectives. In addition to aligning pay with performance, the program is designed to make the Company’s performance expectations clear to employees and to measure and reward performance consistently throughout the organization. Under the program, supervisors and managers prepare an annual performance assessment for each participant.

Assessment of Company Performance. Each year, the Company establishes a set of Company goals and department goals for senior executives to align their goals with the Company’s. These include financial goals as well as objectives that move the Company forward in terms of our Mission and Vision and our commitments to shareholders, customers and employees. In December 2006, Chief Executive Officer and President, Mr. Neithercut, presented 2007 Company and department goals to the Compensation Committee for review and discussion, and summarized the Company’s goals for the Board of Trustees. Management reviewed progress on the goals and objectives with the Compensation Committee periodically in 2007. Also, the goals and objectives were posted on the Company’s intranet for access by all employees.

At 2007 year-end, Mr. Neithercut presented an assessment of Company performance against the Company’s goals and department goals to the Compensation Committee with both relevant metrics and subjective measures. The Chairman of the Compensation Committee presented a summary of performance against the Company’s goals to the Board. For compensation purposes, the Compensation Committee made its own assessment of performance against the Company’s goals and department goals. The Compensation Committee discussed this assessment with the other independent members of the Board.

Assessment of Individual Executive Performance. 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 both Company financial goals and objectives, as well as department goals and objectives.

Individual performance of all other Executive Officers is determined by the assessment of the Company’s goals, as well as relevant department goals and objectives. That assessment is conducted by Mr. Neithercut in consultation with the Compensation Committee.

For the purpose of compensation decisions, these assessments are considered along with other relevant factors, including Company financial performance, by the Compensation Committee and the other independent members of the Board.

Performance Management

      The Company’s compensation program rewards executives and employees based on their contributions to our success. The Company’s performance management program links compensation to both individual and Company results for approximately 1,600 corporate and property-level executives, managers, and supervisors. The program rates participants’ annual achievement against both financial goals and non-financial performance objectives. In addition to aligning pay with performance, the program is designed to make the Company’s performance expectations clear to employees and to measure and reward performance consistently throughout the organization. Under the program, supervisors and managers prepare an annual performance assessment for each participant.

      Assessment of Company Performance. Each year, the Company establishes a set of Company goals and department goals for senior executives to align their goals with the Company’s. These include financial goals as well as objectives that move the Company forward in terms of our Mission and Vision and our commitments to shareholders, customers and employees. In December 2005, our Chief  Executive Officer and President, Mr. Neithercut, reviewed the 2006 Company and department goals with the Compensation Committee, and summarized the Company’s goals for the Board of Trustees. Management reviewed progress on the goals and objectives with the Compensation Committee periodically in 2006. Also, the goals and objectives were posted on the Company’s intranet for access by all employees.

      At 2006 year-end, Mr. Neithercut presented an assessment of Company performance against the Company’s goals and department goals to the Compensation Committee, and a summary of performance against the Company’s goals to the Board, with both relevant metrics and subjective measures. For compensation purposes, the Compensation Committee made its own assessment of performance against the Company’s goals and department goals. The Compensation Committee discussed this assessment with the other independent members of the Board.

      Assessment of Individual Executive Performance. Performance of the Chief Executive Officer and President is determined by an assessment of the achievement of both the Company’s goals and department goals. Performance of the Chief Operating Officer is determined by an assessment of achievement of the Company’s goals and those department goals for which he has functional responsibility. Individual performance of all other Executive Officers is determined by an assessment of relevant department goals conducted by the Chief Executive Officer and President in consultation with the Chief Operating Officer. For the purpose of compensation decisions, that assessment is considered – along with other relevant factors – by the Compensation Committee and the other independent members of the Board.

      The assessments of Company and individual executive performance are factors in determining each of the elements of executive compensation below, along with such factors as Company financial results and shareholder returns.

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