EQUITY RESIDENTIAL (EQR)

Pricing and Dates of Share Awards and Option Awards

The Company has a detailed procedure for establishing the grant date and valuation for its annual issuance of Share Awards and Option Awards. The Company’s Chief Financial Officer and/or Chief Accounting Officer provide the Compensation Committee with management’s recommendation for the valuation methodology of each option to be used in the Option Award. The Company generally uses the same valuation methodology for the value of each option as it uses to determine the accounting expense for Option Awards in accordance with Statement of Financial Accounting Standards No. 123, Share-Based Payment, as revised (“SFAS 123 (R)”). The Board, after reviewing the Compensation Committee’s recommendation, then approves the grant date (which must be on or after the approval date and typically follows the Company’s release of its fourth quarter earnings), the option valuation methodology, the allocation between Share Awards and Option Awards and the dollar amount of Share Awards and Option Awards for all employees. The Share Award value (for purposes of determining the number of Share Awards granted) and the exercise price of the Option Awards are equal to the price of the Company’s common shares at the close of business on the grant date. Any grant date for out-of-cycle grants (i.e., an initial award to a new hire or an award to an existing employee in the case of a mid-year promotion) to the Company’s executive officers requires the approval of the Compensation Committee. In 2008, there were no out-of-cycle grants to any executive officers. This year, due to the recent volatility in the stock market, the Board delegated authority to set the grant date to the Company’s Chief Executive Officer, within certain parameters: the grant date would be a business day during the period of February 6, 2009 – February 12, 2009 (five business days after the February 5, 2009 fourth quarter earnings call), and the Chief Executive Officer was required to send notice of the selection of the grant date to the Chair of the Compensation Committee within one hour following the close of business on such grant date. Mr. Neithercut sent the requisite notice on February 6, 2009, one business day after the fourth quarter earnings call, consistent with the Company’s past practice.