SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Equity Residential Properties Trust
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
[EQUITY RESIDENTIAL LOGO]
---------------------------------------
NOTICE OF THE 2001
ANNUAL MEETING OF SHAREHOLDERS
---------------------------------------
Dear Equity Residential Shareholder:
The trustees and officers of Equity Residential Properties Trust
cordially invite you to attend our 2001 Annual Meeting of Shareholders. This
year's meeting will be held on Tuesday, May 15, 2001, at 10:00 a.m., at One
North Franklin Street, Third Floor, Chicago, Illinois, at which time we will
consider the following matters:
(1) Election of five trustees to the Board of Trustees to terms
expiring in 2004; and
(2) Any other business properly before the meeting.
Your Board of Trustees recommends that you vote for each of the
nominees for trustee. Shareholders of record at the close of business on March
16, 2001 are entitled to vote at the meeting.
Your vote is very important. In addition to voting by signing, dating
and mailing the enclosed proxy card, you may vote by using a toll-free telephone
number or the Internet. If you attend the meeting and prefer to vote in person,
you may do so. Whether you plan to attend the meeting or not, we encourage you
to vote as soon as possible so that your shares will be represented at the
meeting.
Sincerely,
/s/ Bruce C. Strohm
Bruce C. Strohm
Executive Vice President, General Counsel
and Secretary
Two North Riverside Plaza
Chicago, Illinois
March 30, 2001
EQUITY RESIDENTIAL PROPERTIES TRUST
TWO NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
- -------------------------------------------------------------------------------
PROXY STATEMENT
- -------------------------------------------------------------------------------
This Proxy Statement contains information related to the Annual Meeting
of Equity Residential Properties Trust ("Equity Residential" or the "Company"),
which will be held on Tuesday, May 15, 2001, at 10:00 a.m., at One North
Franklin Street, Third Floor, Chicago, Illinois.
ABOUT THE ANNUAL MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Annual Meeting, shareholders will vote on the proposal regarding
the election of trustees. We sent you these proxy materials because our Board of
Trustees is requesting that you allow your common shares to be represented at
the meeting by the proxies named in the enclosed proxy card. This Proxy
Statement contains information that we are required to provide you under the
rules of the Securities and Exchange Commission ("SEC") and that is designed to
assist you in voting your shares. On March 30, 2001, we began mailing these
proxy materials to all shareholders of record at the close of business on March
16, 2001. Equity Residential has hired MacKenzie Partners, Inc. to assist in
distributing and soliciting proxies and will pay $7,000 plus expenses for these
services.
WHO IS ENTITLED TO VOTE?
You will be entitled to vote your shares on any proposal if you held
your shares as of the close of business on March 16, 2001. Each of the shares
outstanding on that date is entitled to one vote on the proposal.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the common shares outstanding on the record date of March 16, 2001,
will constitute a quorum, permitting the meeting to conduct its business. As of
the record date, a total of 132,733,863 common shares were outstanding and
entitled to vote. If you have returned valid proxy instructions (whether in
writing, by phone or by Internet) or attend the meeting in person, your shares
will be counted for the purpose of determining whether there is a quorum.
Abstentions and broker non-votes count for quorum purposes, but we do not count
abstentions or broker non-votes as votes for or against any proposal.
HOW DO I VOTE?
YOUR VOTE IS IMPORTANT. Shareholders can vote in person at the Annual
Meeting or by proxy. If you are a registered shareholder (that is, if you hold
your shares in your own name and not through a broker or other nominee), there
are three ways to vote by proxy:
- BY TELEPHONE: You can vote by touch-tone telephone using the
toll-free number 1-877-PRX-VOTE (1-877-779-8683) and following the
instructions on the proxy card;
- BY INTERNET: You can vote by Internet by going to the website at
HTTP://WWW.EPROXYVOTE.COM/EQR and following the instructions
provided; or
- BY MAIL: You can vote by mail by signing, dating and mailing the
enclosed proxy card in the envelope provided.
If you vote by proxy, the individuals named on the proxy card as
representatives will vote your shares in the manner you indicate. You may
specify whether your shares should be voted for all, some or none of the
nominees for trustee. If your shares are held in "street name" through a broker
or other nominee, you will need to contact your broker or other nominee to
determine whether you will be able to vote by telephone or Internet.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
If no instructions are indicated on your properly voted proxy, the
representatives holding proxies will vote in accordance with the recommendations
of the Board of Trustees. In summary, the Board recommends a vote for the
election of the nominated slate of trustees. With respect to any other matter
that properly comes before the meeting, the representatives holding proxies will
vote as recommended by the Board, or if no recommendation is given, in their own
discretion.
CAN I REVOKE OR CHANGE MY PROXY?
Yes, you may change or revoke your proxy at any time before the
meeting. To do so, you must advise the Secretary of Equity Residential in
writing before your shares are voted by the representatives at the meeting,
deliver later proxy instructions, or attend the meeting and vote your shares in
person. The powers of the proxy holders will be suspended if you attend the
meeting in person and so request, but attendance at the meeting will not by
itself revoke a previously granted proxy.
WHAT VOTE IS REQUIRED TO APPROVE THE ELECTION OF TRUSTEES?
The affirmative vote of a plurality of all the votes cast at the
meeting is required for the election of trustees, meaning that the five nominees
for trustee with the most votes will be elected. A properly voted proxy marked
"WITHHELD" with respect to the election of one or
2
more trustees will not be voted with respect to the trustee or trustees
indicated, although it will be counted for purposes of whether there is a
quorum.
HOW DO I DISCONTINUE FUTURE DUPLICATE COPIES OF ANNUAL REPORTS?
Our 2000 Annual Report has been mailed to shareholders with this Proxy
Statement. If more than one copy of the Annual Report is sent to your address,
we will discontinue the mailing of reports on the account you select if you mark
the designated box on the appropriate proxy card(s), or if you are a shareholder
of record, if you call our transfer agent, EquiServe, toll-free at
1-800-733-5001, or follow the instructions if you are voting by Internet.
PROPOSAL 1
ELECTION OF TRUSTEES
BOARD OF TRUSTEES. The business and affairs of Equity Residential are
managed under the direction of the Board, which consists of fourteen trustees.
The Board has responsibility for establishing broad corporate policies and for
the overall performance of Equity Residential rather than day-to-day operating
details.
Our Declaration of Trust provides that our trustees are to be divided
into three classes as nearly equal in number as possible, with each class having
three-year terms that expire in successive years. The current term of five of
our trustees expires at the 2001 Annual Meeting. The Board has nominated Douglas
Crocker II, James D. Harper, Jr., Sheli Z. Rosenberg, Gerald A. Spector and
Michael N. Thompson for election to serve as trustees of Equity Residential
until our 2004 annual meeting of shareholders.
GENERAL INFORMATION ABOUT THE NOMINEES. All of the nominees are
presently trustees and each of them has consented to be named in this Proxy
Statement and to serve if elected. In 2000 each of the nominees attended at
least 94% of the meetings of the Board and at least 75% of the meetings of the
committees on which the nominees served in that year. Biographical information
for each nominee is set forth below.
VOTE REQUIRED. The affirmative vote of a plurality of all votes cast in
person or by proxy at the meeting is required for the election of trustees. This
means the five nominees for trustee with the most votes will be elected. An
abstention will have no effect on the outcome of the election of trustees.
Although we know of no reason why any nominee would not be able to serve, if any
nominee should become unavailable for election, the persons named as proxies
will vote your common shares to approve the election of any substitute nominee
proposed by the Board.
BOARD RECOMMENDATION. THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES. PROXIES SOLICITED BY THE BOARD WILL BE VOTED "FOR" THE NOMINEES UNLESS
INSTRUCTIONS TO WITHHOLD OR TO THE CONTRARY ARE GIVEN.
3
BIOGRAPHICAL INFORMATION
Set forth below are biographies of each of the trustee nominees, our
trustees and executive officers as of March 1, 2001.
NOMINEES FOR ELECTION TO TERMS EXPIRING IN 2004
Douglas Crocker II, 60, has been Chief Executive Officer, President and
a Trustee of the Company since March 1993. Mr. Crocker has been a director of
Wellsford Real Properties, Inc. ("WRP"), a publicly traded real estate merchant
banking firm, since its formation in June 1997 and Ventas, Inc. ("Ventas"), a
real estate company focusing on the ownership and acquisition of health care
properties, since November 1998. Mr. Crocker has been president and chief
executive officer of First Capital Financial Corporation, a sponsor of public
limited real estate partnerships ("First Capital"), since December 1992, and a
director of First Capital since January 1993. He was an executive vice president
of Equity Financial and Management Company, a subsidiary of Equity Group
Investments, Inc., an owner, manager and financier of real estate and
corporations ("EGI"), providing strategic direction and services for EGI's real
estate and corporate activities from November 1992 until March 1997. Mr. Crocker
chairs and serves on boards or committees of various multi-family housing
associations, including the National Multi-Housing Council and the Multifamily
Council of the Urban Land Institute, and is a member of the Board of Governors
of the National Association of Real Estate Investment Trusts ("NAREIT").
James D. Harper, Jr., 67, has been a Trustee of the Company since May
1993. Mr. Harper is the president of JDH Realty Co., a real estate development
and investment company, and is the principal partner in AH Development, S.E., a
special limited partnership formed to develop over 400 acres of land in Puerto
Rico. He is a trustee of Equity Office Properties Trust ("EOP"), a public office
building company.
Sheli Z. Rosenberg, 59, has been a Trustee of the Company since March
1993. Ms. Rosenberg has been vice chairman of Equity Group Investments, LLC, an
investment company ("EGI LLC") from January 1, 2000 and chief executive officer
and president of EGI LLC from January 1, 1999 to January 1, 2000. From November
1994 until 1999, Ms. Rosenberg had been chief executive officer, president and a
director of EGI. Ms. Rosenberg had been a principal of the law firm of Rosenberg
& Liebentritt, P.C. ("R&L"), from 1980 to 1997. Ms. Rosenberg is a trustee of
EOP and is a director of Capital Trust, Inc., a specialized finance company
("Capital Trust"), Manufactured Home Communities, Inc. ("MHC"), a public
manufactured home community company, Ventas, Anixter International Inc., a
provider of integrated network and cabling systems ("Anixter"), CVS Corporation,
a drugstore chain, Dynergy Inc., a supplier of electricity and natural gas, and
Cendant Corporation, a provider of business and consumer services primarily
within the real estate and travel sectors.
Gerald A. Spector, 54, has been a Trustee and Executive Vice President
of the Company since March 1993 and Chief Operating Officer of the Company since
February 1995.
4
Michael N. Thompson, 52, has been a Trustee of the Company since
October 19, 1998, the date of the merger of Merry Land & Investment Company,
Inc. ("Merry Land"), a public multifamily property company, into the Company
(the "Merry Land Merger"). Mr. Thompson has been president, chief operating
officer and a director of Merry Land Properties, Inc. ("MRYP"), a publicly
traded diversified real estate company, since its formation as part of the Merry
Land Merger. Prior to the Merry Land Merger, Mr. Thompson served as executive
vice president and chief operating officer of Merry Land since December 1996,
and as a vice president of Merry Land from August 1992 until December 1996.
INCUMBENT TRUSTEES WITH TERMS EXPIRING IN 2002
John W. Alexander, 53, has been a Trustee of the Company since May 1993
and is the president of Mallard Creek Capital Partners, Inc., an investment
company with interests in real estate and development entities. He is also a
partner of Meringoff Equities, a real estate investment and development company,
and is a member of the International Council of Shopping Centers and the Urban
Land Institute.
Henry H. Goldberg, 62, has been a Trustee of the Company since January
1995. Mr. Goldberg is chairman of the board, chief executive officer and founder
of The Artery Group, L.L.C., a diversified real estate company. Mr. Goldberg is
also an honorary director of the University of Maryland Foundation.
Errol R. Halperin, 60, has been a Trustee of the Company since May
1993. Mr. Halperin has been an attorney at the law firm of Piper Marbury Rudnick
& Wolfe and its predecessor since 1979, serving as a senior partner and a member
of the firm's executive committee since 1981 and co-chairman of the firm's
Business and Technology Group since 1999, and a director of Elkay Manufacturing
Company, a plumbing fixtures manufacturer, since 1980. Mr. Halperin specializes
in federal income tax counseling, international and real estate and corporate
transactions.
Boone A. Knox, 64, has been a Trustee of the Company since October 19,
1998, the date of the Merry Land Merger. Mr. Knox has been a director of MRYP
since its formation as part of the Merry Land Merger. Prior to the Merry Land
Merger, Mr. Knox had been chairman of the board of Merry Land since December
1996. Mr. Knox has served as chairman of the board of directors of Regions Bank,
Central Georgia since January 1997, and has been a director of Cousins
Properties, Incorporated, a public retail and office building company, since
1969, and of The InterCept Group, Inc., a technology products and services
provider to financial institutions, since February 1998.
Samuel Zell, 59, has been Chairman of the Board of the Company since
March 1993. Since January 1999, Mr. Zell has been chairman of EGI LLC. For more
than five years prior to 1999, Mr. Zell had been chairman of the board of
directors of EGI. He is also chairman of the board of directors of American
Classic Voyages Co., an owner and operator of cruise lines, Anixter, MHC, Chart
House Enterprises, Inc., an owner and operator of restaurants, Capital Trust,
and EOP.
5
INCUMBENT TRUSTEES WITH TERMS EXPIRING IN 2003
Stephen O. Evans, 55, has been a Trustee of the Company since December
23, 1997, the date of the merger of Evans Withycombe Residential, Inc.
("Evans"), a public multifamily property company founded by Mr. Evans, into the
Company ("Evans Merger"), and is President of Evans Realty Associates, a real
estate investment company. Mr. Evans has also served as an Executive Vice
President of Equity Residential from December 1997 to December 1999. Prior to
the Evans Merger, Mr. Evans served as the chairman of the board and chief
executive officer of Evans since its formation in May 1994. Mr. Evans is a
member of Lambda Alpha, a national land economics fraternity, and the Urban Land
Institute.
Edward Lowenthal, 56, has been a Trustee of the Company since June
1997, shortly after the merger of Wellsford Residential Property Trust
("Wellsford"), a public multifamily property company, and the Company on May 30,
1997 (the "Wellsford Merger"). Mr. Lowenthal has been the president, chief
executive officer and a director of WRP since its formation in January 1997, and
had been the president and chief executive officer and a trustee of Wellsford
since its formation in July 1992 until the Wellsford Merger. Mr. Lowenthal is a
director of Omega Healthcare, Inc., a public healthcare company, Great Lakes
REIT, Inc., a public office building company, and Reis, Inc., a real estate
marketing information firm. He is a member of the New York bar.
Jeffrey H. Lynford, 53, has been a Trustee of the Company since June
1997, shortly after the Wellsford Merger. Mr. Lynford has been the chairman of
the board and secretary of WRP since its formation in January 1997, and had been
the chairman of the board and secretary of Wellsford since its formation in July
1992 until the Wellsford Merger. Mr. Lynford currently serves as a trustee
emeritus of the National Trust for Historic Preservation. He is also a trustee
of Polytechnic University, a trustee for Caramoor Center for Music and the Arts,
a director of the Eos Orchestra, and a member of the New York bar.
B. Joseph White, 53, has been a Trustee of the Company since May 1993.
Mr. White has been a professor at the University of Michigan Business School
since 1987 and has served as the dean since 1991. Mr. White is a director of
Kelly Services, Inc., a temporary services firm, Gordon Food Service, Inc., a
midwestern food distribution company, Kaydon Corporation, a manufacturer of
precision engineered metal products, and five mutual funds managed by Alger
Management, Inc.
EXECUTIVE OFFICERS
Douglas Crocker II, Chief Executive Officer, President and a Trustee of
the Company. See biographical information above.
Gerald A. Spector, Chief Operating Officer, Executive Vice President
and a Trustee of the Company. See biographical information above.
6
Leslie B. Fox, 42, has been Executive Vice President of the Company
since October 1, 1999, the date of the merger of Lexford Residential Trust
("Lexford") into the Company (the "Lexford Merger"). From October 1999 to
December 2000, Ms. Fox was President - Lexford Division of the Company and was
named Chief Information Officer of the Company in January 2001. Prior to the
Lexford Merger, Ms. Fox had been executive vice president and chief operating
officer of Lexford since December 1997, and executive vice president -
investment management since June 1997. Ms. Fox was president of Asset Investors
Corporation ("AIC") and Commercial Assets, Incorporated ("CAI"), both publicly
traded real estate companies, from October 1996 through May 1997, and held
senior management positions with AIC and CAI from November 1993 through
September 1996.
Alan W. George, 43, has been Executive Vice President -
Acquisitions/Dispositions and Strategic Business Development of the Company
since February 1997 and was Senior Vice President - Acquisitions of the Company
from December 1995 until February 1997.
Edward J. Geraghty, 51, has been Executive Vice President of the
Company since March 1998 and President - Eastern Division since April 1999. Mr.
Geraghty was a managing director - real estate of The Travelers Investment
Group, Inc. from June 1995 to March 1998.
Michael J. McHugh, 45, has been an Executive Vice President of the
Company since January 1998, and Chief Accounting Officer and Treasurer of the
Company since February 1995. Mr. McHugh was Senior Vice President of the Company
from February 1995 until January 1998.
David J. Neithercut, 45, has been Executive Vice President and Chief
Financial Officer of the Company since February 1995.
Gregory H. Smith, 49, has been Executive Vice President of the Company
since December 1994 and President - Central Division since April 1999.
Bruce C. Strohm, 46, has been Executive Vice President and General
Counsel of the Company since March 1995 and Secretary of the Company since
November 1995.
Frederick C. Tuomi, 46, has been Executive Vice President of the
Company since January 1994 and President - Western Division since April 1999.
MEETINGS AND COMMITTEES OF THE BOARD OF TRUSTEES
MEETINGS. The Board held 16 meetings during 2000. All of the trustees
attended at least 75% of the meetings of the Board and committees on which he or
she served. The Board has standing Executive, Compensation, Audit and Corporate
Governance Committees, all of which are described below.
EXECUTIVE COMMITTEE. The Executive Committee is comprised of Mr. Zell,
Chair, and Messrs. Alexander, Crocker and Thompson. The Executive Committee has
the authority within certain parameters to acquire, develop, dispose of and
finance investments for the Company,
7
including the issuance of additional limited partnership and membership
interests in subsidiaries of the Company. The Executive Committee held six
meetings in 2000.
COMPENSATION COMMITTEE. During 2000, the Compensation Committee, which
is comprised entirely of trustees who are not officers or employees of the
Company, was comprised of Mr. Harper, Chair, Mr. Halperin and Ms. Rosenberg. The
Compensation Committee reviews and makes recommendations concerning proposals by
management regarding compensation, bonuses, loans, employment agreements and
other benefits and policies respecting such matters for the executive officers
of the Company. The Compensation Committee held six meetings in 2000. As of
March 22, 2001, the Compensation Committee is comprised of Mr. Halperin, Chair,
Mr. Harper and Ms. Rosenberg.
AUDIT COMMITTEE. The Audit Committee, which is comprised entirely of
trustees who are not officers or employees of the Company, is comprised of Mr.
White, Chair, Messrs. Alexander and Harper and Ms. Rosenberg. The Audit
Committee makes recommendations concerning the engagement of independent public
accountants, reviews the plans and results of the audit engagement with the
independent public accountants and management, approves all related party
transactions, and evaluates significant matters relating to the audit and
internal controls of the Company. The Audit Committee held four meetings in
2000.
CORPORATE GOVERNANCE COMMITTEE. During 2000, the Corporate Governance
Committee, which is comprised entirely of trustees who are not officers or
employees of the Company, was comprised of Ms. Rosenberg, Chair, and Messrs.
Evans, Goldberg, Lowenthal and White. The Corporate Governance Committee
recommends candidates for election to the Board, considers issues and makes
recommendations concerning the size, composition and organization of the Board,
including committee assignments, makes recommendations on the Board's practices
and considers other issues relating to corporate governance. The Corporate
Governance Committee held five meetings in 2000. As of March 22, 2001, the
Corporate Governance Committee is comprised of Ms. Rosenberg, Chair, and Messrs.
Evans and White.
COMPENSATION OF TRUSTEES
Trustees who are not employees of the Company each received an annual
fee in 2000 of $40,000 for serving as trustees. In addition, trustees who serve
on the Executive Committee, the Compensation Committee, the Audit Committee or
the Corporate Governance Committee receive an additional $1,000 per year for
each committee on which they serve. Committee chairs for the Audit Committee and
the Compensation Committee receive an additional $4,000 per year, the committee
chair of the Executive Committee receives an additional $500 per year and the
committee chair of the Corporate Governance Committee receives an additional
$1,500 per year. The Company also reimburses the trustees of each committee for
travel expenses incurred in connection with their activities on behalf of the
Company. Each trustee is also granted options to purchase 5,000 common shares at
the current market price as of each annual meeting of shareholders. These
options vest in approximately equal installments of six months, one year and two
years from the date of grant.
8
In addition, in January 2000 Mr. Zell and Ms. Rosenberg were granted
options to purchase 142,433 and 23,742 common shares, respectively, at the
current market price as of the grant date. These options vest in equal
installments over three years. In January 2000 Mr. Zell and Ms. Rosenberg were
also awarded 28,486 and 4,747 restricted common shares, respectively. These
shares vest in full upon the third anniversary of the share grant.
The Company has adopted an optional deferred compensation plan for its
non-employee trustees pursuant to which these trustees may take any percentage
of their annual trustees' compensation they desire in the form of cash, which is
placed in a Supplemental Retirement Savings Plan on a tax deferred basis and
used to purchase common shares under the Company's 1996 Non-Qualified Employee
Share Purchase Plan. Each trustee is immediately 100% vested in his or her
common shares and is allowed to begin withdrawals over a one to ten year period
following termination of his or her trusteeship. The majority of the trustees
have elected to join the deferred compensation plan and defer the taxation of
all fees received.
SHARE OWNERSHIP OF TRUSTEES AND MANAGEMENT
The following table sets forth information as of March 1, 2001,
concerning the beneficial ownership of the Company's common shares by each
trustee, its five most highly compensated executive officers at year end, and
the trustees and all executive officers as a group.
NUMBER OF SHARES UPON PERCENT OF
COMMON EXERCISE OF COMMON
NAME SHARES(1) OPTIONS(2) TOTAL(1) SHARES(1)
---- --------- ---------- -------- ---------
Samuel Zell 3,279,355(3) 682,478 3,961,833 2.72%
Douglas Crocker II 365,171(4) 939,246 1,304,417 *
John W. Alexander 14,134 35,001 49,135 *
Stephen O. Evans 1,087,175(5) 125,501 1,212,676 *
Henry H. Goldberg 335,618(6) 25,001 360,619 *
Errol R. Halperin 9,441(7) 35,001 44,442 *
James D. Harper, Jr. 9,080 35,001 44,081 *
Boone A. Knox 1,614,466(8) 5,001 1,619,467 1.11%
Edward Lowenthal 107,847(9) 5,001 112,848 *
Jeffrey H. Lynford 52,471 10,000 62,471 *
Sheli Z. Rosenberg 118,457(10) 134,581 253,038 *
Gerald A. Spector 247,631(11) 366,862 614,493 *
Michael N. Thompson 104,339(12) 5,001 109,340 *
B. Joseph White 8,167 30,001 38,168 *
Edward J. Geraghty 34,282 74,635 108,917 *
David J. Neithercut 42,836(13) 218,128 260,964 *
Frederick C. Tuomi 49,240 104,495 153,735 *
Trustees and Executive
Officers as a
Group (22 persons) 7,702,836 3,324,713 11,027,549 7.57%
- -----------------------
* Less than 1%.
(1) Calculated in accordance with applicable SEC rules.
9
(2) Reflects common shares which may be acquired within 60 days after
March 1, 2001 through the exercise of share options.
(3) Includes 2,437,626 limited partnership interests ("OP Units") in ERP
Operating Limited Partnership (the "Operating Partnership"). OP Units
are exchangeable on a one-for-one basis into common shares. Also
includes 30,000 common shares beneficially owned by the Zell Family
Foundation. Mr. Zell disclaims beneficial ownership of 570,994 common
shares (including the 30,000 common shares held by the Zell Family
Foundation and assuming the exchange of 540,994 OP Units) because the
economic benefits with respect to such common shares are attributable
to other persons. EGIL Investments, Inc. has beneficial ownership of
537,256 OP Units. Under a stockholder's agreement dated December 31,
1999 among certain Zell family trusts and certain Robert Lurie family
trusts, the Zell trusts have the power to vote and to dispose of the
common shares and OP Units beneficially owned by EGI Holdings, Inc. and
the Lurie trusts have the power to vote and to dispose of the common
shares and OP Units beneficially owned by EGIL Investments, Inc.
(4) Includes 8,825 common shares beneficially owned by Mr. Crocker's
spouse, as to which Mr. Crocker disclaims beneficial ownership. Also
includes 175,000 common shares beneficially owned by MWC Partners, L.P.
("MWC"), of which Mr. Crocker is the sole general partner. The sole
limited partner of MWC is a trust created for the benefit of Mr.
Crocker's spouse and Mr. Crocker's children.
(5) Includes 50,000 common shares and 67,775 OP Units beneficially owned by
The Evans Family Limited Liability Company, of which Mr. Evans serves
as the manager. Also includes 5,300 common shares beneficially owned by
The Evans Charitable Foundation, a not-for-profit corporation, of which
Mr. Evans serves as chairman. Also includes 89,149 OP Units
beneficially owned by The Evans Family Revocable Trust, of which Mr.
Evans serves as the trustee. As such, Mr. Evans may be deemed the
beneficial owner of all the foregoing common shares and OP Units. Also
includes 866,687 OP Units beneficially owned by limited partnerships,
(collectively, the "EW LPs"), of which Mr. Evans serves as a general
partner and has a 50% ownership interest. As such, Mr. Evans may be
deemed the beneficial owner of approximately 50% of the common shares
and OP Units beneficially owned by the EW LPs. Mr. Evans disclaims
beneficial ownership of the other 50% interest in such common shares
and OP Units, which are beneficially owned by other persons.
(6) Includes 122,268 OP Units. Also includes 14,460 Junior Convertible
Preference Units which are exchangeable into 29,509 common shares, and
6,047 Junior Convertible Preference Units which are exchangeable into
12,340 common shares.
(7) Includes 1,000 common shares beneficially owned by Mr. Halperin's
spouse, as to which Mr. Halperin disclaims beneficial ownership.
(8) Includes 1,173,949 common shares beneficially owned by Knox, Ltd., of
which Mr. Knox is the general partner, and includes 3,387 common shares
beneficially owned by BT Investments, of which Mr. Knox is the managing
partner. Mr. Knox disclaims beneficial ownership of the common shares
owned by Knox, Ltd. and BT Investments, except to the extent of his
pecuniary interest in 151,116 common shares. Also includes 3,114 common
shares beneficially owned by Mr. Knox's spouse and 424 common shares
beneficially owned by Mr. Knox, not individually, but as custodian for
his niece and nephew, as to all of which Mr. Knox disclaims beneficial
ownership. Also includes 167,881 common shares beneficially owned by
the Knox Foundation,
10
of which Mr. Knox is the trustee. Mr. Knox disclaims beneficial
ownership of the common shares owned by the Knox Foundation. Also
includes 173,274 common shares beneficially owned by Folkstone Limited
Partnership ("FLP"), of which Mr. Knox became a general partner on
August 23, 2000. Mr. Knox disclaims beneficial ownership of the common
shares owned by FLP except to the extent of his pecuniary interest
therein.
(9) Includes 49,178 common shares beneficially owned by Mr. Lowenthal's
spouse, as to which Mr. Lowenthal disclaims beneficial ownership. Also
includes 4,900 common shares beneficially owned by The Lowenthal Family
Foundation. Mr. Lowenthal is the chairman of The Lowenthal Family
Foundation and disclaims beneficial ownership of the common shares.
(10) Includes 16,200 common shares beneficially owned by Ms. Rosenberg's
spouse, as to which Ms. Rosenberg disclaims beneficial ownership. Also
includes 1,528 OP Units.
(11) Includes 123,147 common shares beneficially owned by Mr. Spector's
spouse, and 2,337 common shares beneficially owned by Mr. Spector as
custodian for his minor children, as to all of which Mr. Spector
disclaims beneficial ownership. Also includes 1,683 OP Units.
(12) Includes 419 common shares beneficially owned by Mr. Thompson's
children and 2,117 common shares beneficially owned by Mr. Thompson's
spouse, as to all of which Mr. Thompson disclaims beneficial ownership.
Also includes 530 common shares beneficially owned in joint tenancy by
Mr. Thompson and his spouse.
(13) Includes 3,875 common shares and an additional 1,112 common shares,
assuming the conversion of 2,000 Series E Convertible Preferred Shares,
all of which are beneficially owned by Mr. Neithercut's children, and
as to all of which Mr. Neithercut disclaims beneficial ownership.
SHARE OWNERSHIP OF PRINCIPAL SHAREHOLDERS
This table sets forth information with respect to persons who are known
to own more than 5% of the Company's outstanding common shares.
NUMBER OF PERCENTAGE OF
COMMON SHARES COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) SHARES (1)
- ------------------------------------ ---------------------- ------------
FMR Corp.(2)
82 Devonshire Street
Boston, MA 02109 15,052,196 11.434%
- ------------------------
(1) The number of common shares beneficially owned is calculated as of
December 31, 2000 and is based on SEC regulations governing the
determination of beneficial ownership of securities.
(2) Amendment No. 8 to Schedule 13G of the reporting persons filed with the
SEC on February 14, 2001 states that FMR Corp. has sole power to vote
or direct the vote of 973,800 common shares and has the sole power to
dispose or direct the disposition of 15,052,196 common shares. Of these
shares, Fidelity Management & Research Company, a wholly owned
subsidiary of FMR Corp., is reported as the beneficial owner of
14,032,596 shares as a result of its acting as an investment advisor to
various Fidelity funds, and Edward C. Johnson 3d, FMR Corp.'s chairman,
and FMR Corp., through its control of Fidelity Management, each is
reported as having sole power to dispose
11
of the 14,032,596 shares owned by the Fidelity funds, but no power to
vote or direct the voting of the shares. Fidelity Management Trust
Company, a wholly owned subsidiary of FMR Corp., is the beneficial
owner of 1,019,600 shares as a result of its serving as investment
manager of certain institutional accounts. Mr. Johnson 3d and FMR
Corp., through its control of Fidelity Management Trust Company, each
are reported as having sole dispositive power over 1,019,600 of these
shares and sole power to vote or direct the voting of 973,800 of such
shares. The Schedule 13G also states that Mr. Johnson 3d owns 12% of
the outstanding voting stock of FMR Corp. and that Abigail P. Johnson,
a director, owns 24.5% of the outstanding voting stock of FMR Corp.
EXECUTIVE COMPENSATION
The following tables show the compensation for Douglas Crocker II, the
Chief Executive Officer, and the other four most highly compensated executive
officers of Equity Residential.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------- ----------------------- -------
LONG-
RESTRICTED NUMBER TERM
NAME AND CASH SHARE OF OPTIONS INCENTIVE ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) AWARDS (3) GRANTED(4) PAYOUTS COMPENSATION(5)
------------------ ---- --------- -------- ---------- ---------- ------- ---------------
Douglas Crocker II 2000 $700,000 $1,500,000 $1,699,997 165,237 $0 $9,600
President & Chief 1999 700,000 1,250,000 1,619,275 175,000 0 9,600
Executive Officer 1998 650,000 625,000 624,996 165,000 0 9,600
Gerald A. Spector 2000 445,000 800,000 699,991 88,086 0 9,600
Executive Vice President & 1999 425,000 600,000 744,634 90,000 0 9,600
Chief Operating Officer 1998 400,000 300,000 300,000 80,000 0 9,600
David J. Neithercut 2000 300,000 450,000 274,992 32,641 0 63,600
Executive Vice President & 1999 280,000 280,000 0 74,623 0 63,108
Chief Financial Officer 1998 245,000 132,500 132,500 45,000 0 63,108
Frederick C. Tuomi 2000 300,000 400,000 239,986 28,487 0 63,600
Executive Vice President & 1999 275,000 275,000 273,396 30,000 0 204,566
President - Western 1998 260,000 125,000 125,000 40,000 0 66,384
Division
Edward J. Geraghty 2000 310,000 350,000 224,990 26,706 0 65,400
Executive Vice President & 1999 310,000 275,000 178,513 47,000 0 253,871
President - Eastern 1998 240,000(6) 150,000 576,767 50,000 0 148,357
Division
- -----------------------
(1) Compensation deferred at the election of named officers is included in the
category and year it would have otherwise been reported had it not been
deferred.
(2) Cash bonuses for 1999 and 2000 and restricted shares issued as one-half of
the annual bonuses for 1998 are reported in the year earned, even if paid
or issued in a subsequent year.
(3) The named executives received restricted common shares as one-half of
their annual bonuses for 1998. The dollar amount shown for 1998 equals the
number of restricted common shares granted in January 1999 for one-half of
the total 1998 bonus, multiplied by the fair market value of the common
shares
12
($40.1875) on the grant date and, in the case of Mr. Geraghty, reflects
the additional value of 8,985 restricted common shares issued on March
2, 1998 at a price of $47.50 to induce Mr. Geraghty to join Equity
Residential. These common shares vest upon completion of two years of
continuous employment following the date of grant, except for Mr.
Geraghty's 8,985 restricted common shares, which vest as follows: 4,080
on January 24, 1999; 2,500 on January 22, 2000; and 2,405 on January
22, 2001, assuming his continued employment as of such dates. For 1999
and 2000, the named executives received all of their annual bonus in
cash, and were granted restricted common shares which vest upon
completion of three years of continuous employment following the grant
date. The dollar amount shown for 1999 and 2000 equals the number of
restricted common shares granted in January 1999 and January 2000
multiplied by the fair market value of the common shares on the grant
date (1999 - $40.1875 and 2000 - $42.125). The valuations do not take
into account the diminution in value attributable to the restrictions
applicable to the common shares. Distributions are paid on all
restricted common shares at the same rate as on unrestricted common
shares. The total number of restricted common shares awarded to each
named executive officer for the years of 2000, 1999 and 1998,
respectively, were: Mr. Crocker - 40,356, 40,293 and 15,552; Mr.
Spector - 16,617, 18,529 and 7,465; Mr. Geraghty - 5,341, 4,442 and
12,717; Mr. Neithercut - 6,528, 0 and 3,297; and Mr. Tuomi, 5,697,
6,803, and 3,110.
The number and value of the restricted share holdings of each executive
officer listed above at December 31, 2000 were as follows:
NUMBER OF RESTRICTED VALUE AT
NAME COMMON SHARES DECEMBER 31, 2000
---- ------------- -----------------
Douglas Crocker II 96,201 $5,321,839
Gerald A. Spector 42,611 2,357,241
David J. Neithercut 9,825 543,519
Frederick C. Tuomi 15,610 863,545
Edward J. Geraghty 15,920 880,694
(4) Shares underlying options are reported in the year granted.
(5) Principally includes employer matching and profit-sharing contributions to
the Company's 401(k) Plan, and for Mr. Geraghty, $63,357 in reimbursements
related to his relocation to Chicago in 1998 and $168,871 in
reimbursements related to his relocation to Atlanta in 1999, and for Mr.
Tuomi, $138,182 in reimbursements related to his relocation from Chicago
to Southern California in 1999. This column also reflects the dollar value
of life insurance premiums paid for the purchase of split-dollar life
insurance policies for the following executive officers: Mr. Geraghty:
2000 - $55,800, 1999 - $85,000 and 1998 - $85,000; Mr. Neithercut: 2000 -
$54,000, 1999 - $53,508 and 1998 - $53,508; and Mr. Tuomi: 2000 - $54,000,
1999 - $56,784 and 1998 - $56,784. While the executive is the owner of
such policy, upon the executive's death, the Company will receive from the
death benefits all premiums paid by it on the executive's behalf, plus 10%
interest per annum on such premium payments for up to 10 years of such
premium payments (collectively, "Company Premiums"), and the executive's
beneficiary will receive the balance of the death benefits. In addition,
the executive is entitled to 50% of the cash surrender value of the policy
at age 62, and 50% at age 65. Upon the executive's termination of
employment prior to age 62, the executive must borrow against the policy
or partially surrender the policy in an amount sufficient to repay the
Company Premiums to the Company.
(6) Reflects the salary paid between March 2, 1998 (Mr. Geraghty's hire date)
and December 31, 1998. Mr. Geraghty's annualized salary in 1998 was
$300,000.
13
OPTION GRANTS IN 2000
% OF TOTAL
OPTIONS
NUMBER OF GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE PER EXPIRATION GRANT DATE
NAME GRANTED(1) IN 2000 SHARE DATE PRESENT VALUE(2)
---- ---------- ------- ----- ---- ----------------
Douglas Crocker II 160,237 14.90% $42.125 1/24/10 $ 773,945
5,000 0.46 45.9375 5/16/10 26,350
Gerald A. Spector 83,086 7.73 42.125 1/24/10 401,305
5,000 0.46 45.9375 5/16/10 26,350
David J. Neithercut 32,641 3.03 42.125 1/24/10 157,656
Frederick C. Tuomi 28,487 2.65 42.125 1/24/10 137,592
Edward J. Geraghty 26,706 2.48 42.125 1/24/10 128,990
- --------------------------------
(1) All options are granted at the fair market value of the common shares
at the date of grant. Options granted are for a term of not more than
ten years from the date of grant and vest in equal amounts over three
years, with the exception of the 5,000 options granted annually to each
trustee, which vest as follows: 1,667 shares six months after the grant
date, 1,667 shares one year after the grant date and 1,666 shares two
years after the grant date.
(2) The estimated present value at grant date of options granted in 2000
has been calculated using the Black-Scholes option pricing model, based
on the following assumptions: an estimated time until exercise of 7
years, a volatility of 21%, a risk-free interest rate of 6.22% and a
dividend yield of 6.83%. The real value of the options in this table
depends upon the actual performance of the Company's shares during the
applicable period and upon when they are exercised. No gain to the
optionee is possible without an increase in common share price, which
would benefit all shareholders as well.
OPTION EXERCISES IN 2000
AND DECEMBER 31, 2000 OPTION VALUES
NUMBER OF VALUE OF
NUMBER OF UNEXERCISED UNEXERCISED
SHARES VALUE OPTIONS AT OPTIONS AT
ACQUIRED REALIZED DEC. 31, 2000 DEC. 31, 2000(2)
UPON UPON -------------------------- --------------------------
NAME EXERCISE EXERCISE(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
Douglas Crocker II 0 $ 0 775,833 331,904 $11,458,366 $4,121, 973
Gerald A. Spector 48,250 1,001,562 285,834 169,752 3,447,512 2,115,195
David J. Neithercut 13,000 258,531 167,374 97,390 3,241,381 1,253,012
Frederick C. Tuomi 0 0 71,666 61,821 869,805 740,306
Edward J. Geraghty 15,600 110,175 33,399 74,707 261,663 956,883
- --------------------
(1) Represents the market value of a common share on the exercise date less
the exercise price of the option.
(2) Represents the fair market value of a common share at December 31, 2000
($55.32) less the exercise price of in-the-money options.
14
LONG-TERM INCENTIVE PLAN AWARDS IN 2000
NAME NUMBER OF UNITS PERFORMANCE PERIOD
---- --------------- ------------------
Douglas Crocker II 21,281 1-01-2001 - 12-31-2003
Gerald A. Spector 15,477 1-01-2001 - 12-31-2003
David J. Neithercut 3,869 1-01-2001 - 12-31-2003
Frederick C. Tuomi 3,386 1-01-2001 - 12-31-2003
Edward J. Geraghty 2,902 1-01-2001 - 12-31-2003
This table identifies the target number of performance units awarded
under the Company's Performance Based Restricted Share Grant Agreement (the
"Performance Based Plan") in January 2001 for services rendered during 2000. The
executive officers have the opportunity to earn an amount in common shares,
which will be issued under the Share Option and Share Award Plan, of up to 225%
of the target number of performance units. The owners of performance units have
no right to vote, receive dividends or transfer the units until common shares
are issued in exchange for the units. The number of common shares the executive
receives on the third anniversary of the grant date will depend on the excess,
if any, by which the Company's average annual return (i.e., common share
dividends declared during each year as a percentage of the common share price as
of January 1st of each year, and the percentage increase in funds from
operations ("FFO") for each calendar year on a per share basis over the prior
year) for the three performance years ("Average Annual Return") exceeds the
average of the 10-year Treasury Note interest rate as of January 1st of each
performance year (the "T-Note Rate").
If the Company's Average less greater
Annual Return exceeds than than
the T-Note Rate by: 0.99% 1-1.99% 2% 3% 4% 5% 6% 7%
Then the executive will receive
Common shares equal to the
target number of units times the
following payment percentage: 0% 50% 100% 115% 135% 165% 190% 225%
Fifty percent of the common shares to which an executive under the
Performance Based Plan may be entitled will vest on the third anniversary of the
award; twenty-five percent will vest on the fourth anniversary and the remaining
twenty-five percent will vest on the fifth anniversary. The executive's rights
under the common shares will also fully vest upon the employee's death,
disability or upon a change in control of the Company.
15
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), THAT MIGHT
INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART,
THE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION PRESENTED BELOW AND
THE PERFORMANCE GRAPH FOLLOWING SUCH REPORT SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FUTURE FILINGS.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board consists of the independent
trustees of the Company listed below. The Compensation Committee's functions
include the review and approval of the Company's executive compensation
structure and overall benefits program. The purpose of the Company's executive
compensation program is to establish and maintain a performance and achievement
oriented environment so that the interests of its executives are aligned with
the interests of the Company's shareholders. The program is designed so that
executives may earn higher than average total compensation for above-average job
performance. There are four major components of the Company's executive
compensation program: (1) base salary, (2) bonus, (3) performance based shares
and (4) restricted share and share option awards. Each of these components is
further discussed below.
BASE SALARY. The Company's overall salary structure is reviewed
annually, using outside executive compensation surveys of the real estate
industry in general and public real estate companies in particular, to ensure
that it remains competitive. Positions are classified within the salary
structure on the basis of assigned responsibilities and on an evaluation of the
latest survey information available, as to appropriate compensation levels.
Individual base salaries are reviewed at least annually. Salary increases are
granted based on each executive's performance as well as such executive's
position in the applicable salary range.
BONUS. Annual bonuses are awarded based on the executive's achievement
of Company and individual performance goals and objectives. The Company's
overall bonus structure is also reviewed annually, taking into account data and
general trends in the real estate industry and public real estate companies in
particular. The long-term incentives for executive officers are in the form of
performance-based restricted share awards and restricted share and share option
awards.
PERFORMANCE BASED SHARES. The Performance Based Restricted Share Plan
is designed to focus the Company's executive officers eligible under this plan
on achieving a high level of financial performance (i.e., common share dividends
and FFO growth), and to encourage such executive officers to continue their
employment with the Company. Under this plan, awards are made to certain
executive officers on an annual basis by setting a target number of common
shares for each executive. The executive will be eligible to receive from 0% to
225% of the target number of common shares, based on the Company's Average
Annual Return (as described above) during the three-year period following the
award. The number of common shares an executive will receive will be fixed and
determined and then issued (subject to the five-year vesting formula previously
discussed) to the executive beginning on the third anniversary of the
16
grant of the award. It is anticipated that awards will be made on an annual
basis so that by the fifth year of an award, each executive may have vested and
unvested rights in each of the previous five awards.
RESTRICTED SHARE AND SHARE OPTION AWARDS. The Compensation Committee
recognizes that the interests of shareholders are also served by giving key
employees the opportunity to participate in the appreciation of the Company's
common shares through the granting of share options and/or share awards. The
Compensation Committee believes that over an extended period of time, share
performance will, to a meaningful extent, reflect executive performance and that
such arrangements further reinforce management goals and incentives to achieve
shareholder objectives by aligning the interests of the Company's key personnel
with the interests of the Company and its shareholders. The share options vest
over a period of three years of continuous employment at a rate of one-third of
such grant each year, thereby encouraging the retention of key employees who
receive awards. The restricted common shares vest in full upon completion of
three years of continuous employment from the date of the share grant. The
amount of restricted shares or share options awarded each executive was
determined utilizing the aforementioned executive compensation surveys and an
assessment of the executive officer's achieved performance goals and objectives.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. Based on the executive
compensation surveys and the Company's financial performance in 2000, the
Compensation Committee believes that the salary, bonus, restricted share awards
and share option grants of Mr. Crocker, the Chief Executive Officer and
President of the Company, are fair and competitive. During Mr. Crocker's tenure
as Chief Executive Officer and President, the Company has become the largest
owner and operator of multifamily properties and has the largest market
capitalization of all public multifamily property companies, as well as one of
the largest market capitalizations of all public real estate companies. The
Compensation Committee believes that the Company's overall executive
compensation ranks in the upper quartile among the general real estate industry
and among public real estate companies. The Compensation Committee has
determined that this ranking correlates with the Company's excellent financial
performance in 2000. The Compensation Committee further notes that third-party
analysts have consistently pointed to the strength of the Company's management
team as a reason for their positive view of the Company and its future
prospects.
Section 162(m) of the Internal Revenue Code of 1986, as amended
("Code"), generally disallows a Federal income tax deduction for compensation in
excess of $1 million paid in any year to any of the Company's executive officers
listed in the Summary Compensation Table who are employed by the Company on the
last day of a taxable year. Section 162(m), however, does allow a deduction for
payments of "performance based" compensation, the material terms of which have
been approved by shareholders. Awards under the Company's award plans may, but
need not, satisfy the requirements of Section 162(m). The Company believes that
because it qualifies as a real estate investment trust ("Reit") under the Code
and therefore is not subject to Federal income taxes, the payment of
compensation that does not satisfy the requirements of Section 162(m) will not
affect the Company's taxable income, although to the extent that
17
compensation does not qualify for deduction under Section 162(m), a larger
portion of shareholder distributions may be subject to Federal income taxation
as dividend income rather than return of capital.
RESPECTFULLY SUBMITTED,
James D. Harper, Jr., Chairman
Errol R. Halperin
Sheli Z. Rosenberg
AUDIT COMMITTEE REPORT
The Audit Committee consists of four independent members (as
independence is defined by the listing standards of the New York Stock
Exchange). In accordance with its written charter, which was approved in its
current form by the Board of Trustees on March 22, 2001, the Audit Committee
assists the Board in fulfilling its responsibility for oversight of the quality
and integrity of the accounting, auditing and financial reporting practices of
the Company. A copy of the Audit Committee charter is included in this Proxy
Statement as Appendix A.
In performing its oversight function, the Audit Committee reviewed and
discussed the audited consolidated financial statements of the Company as of and
for the year ended December 31, 2000 with management and the Company's
independent accountants. The Audit Committee also discussed and reviewed with
the Company's independent accountants all matters required by generally accepted
auditing standards, including those described in Statement on Auditing Standards
No. 61, as amended, "Communication with Audit Committees" and, with and without
management present, discussed and reviewed the results of the independent
accountants' examination of the financial statements.
The Audit Committee obtained from the independent accountants a formal
written statement describing all relationships between the accountants and the
Company that might bear on the accountants' independence consistent with
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees." The Audit Committee discussed with the auditors any
relationships that may impact their objectivity and independence and satisfied
itself as to the accountants' independence. The Audit Committee also determined
that the provision of non-audit services by the Company's independent
accountants is compatible with maintaining the accountants' independence.
DISCLOSURE OF AUDITOR FEES
The following is a description of the fees billed to the Company by the
Company's principal accounting firm, Ernst & Young LLP ("Ernst & Young"), during
the year ended December 31, 2000.
18
AUDIT FEES
Audit fees paid by the Company to Ernst & Young in connection with the
review and audit of the Company's annual financial statements for the year ended
December 31, 2000 and Ernst & Young's review of the Company's interim financial
statements included in the Company's Quarterly Reports on Form 10-Q during the
year ended December 31, 2000 totaled approximately $590,000.
FINANCIAL INFORMATION SYSTEMS AND DESIGN IMPLEMENTATION FEES
Ernst & Young did not render any services related to financial
information systems design and implementation during the year ended December 31,
2000.
ALL OTHER FEES
Aggregate fees paid by the Company to Ernst & Young for all other
services rendered during the year ended December 31, 2000 (including
approximately $845,000 for audit related services, such as individual
partnership and employee benefit plan audits, comfort letters related to SEC
registration statements and due diligence related to mergers and acquisitions)
totaled approximately $1,650,000.
Based on the above-mentioned review and discussions with management and
the independent accountants, the Audit Committee recommended to the Board of
Trustees that the Company's audited consolidated financial statements be
included in its Annual Report on Form 10-K for the fiscal year ended December
31, 2000, for filing with the SEC.
RESPECTFULLY SUBMITTED,
B. Joseph White, Chairman
John W. Alexander
James D. Harper, Jr.
Sheli Z. Rosenberg
19
PERFORMANCE GRAPH
Set forth below is a graph that compares the cumulative total returns
of the Company, the Standard and Poor's ("S&P") 500 Stock Index and the index of
equity Reits prepared by NAREIT for the last five calendar years. The
performance graph assumes an investment of $100 in each of the Company and the
two indexes on December 31, 1995, and the reinvestment of all dividends. The
NAREIT equity index includes all tax qualified equity Reits listed on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq Stock Market.
CUMULATIVE TOTAL SHAREHOLDER RETURN
[GRAPH]
DEC-95 DEC-96 DEC-97 DEC-98 DEC-99 DEC-00
--- --- --- --- --- ---
EQR 100 142 186 157 179 248
S & P 500 100 122 163 210 255 231
NAREIT 100 135 161 130 122 154
20
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
DEFERRED COMPENSATION AGREEMENTS. To encourage Mr. Crocker and Mr.
Spector to remain employed by the Company, the Company has entered into Deferred
Compensation Agreements with each of them. Mr. Crocker's Deferred Compensation
Agreement, entered into in 1996, provides Mr. Crocker with a salary benefit
after the termination of his employment with the Company. If Mr. Crocker's
employment is terminated by the Company without cause prior to January 1, 2003,
or for any reason by either Mr. Crocker or the Company (including voluntary
termination) on or after January 1, 2003, he would be entitled to annual
deferred compensation for a ten year period commencing on the termination date
in an amount equal to $600,000 (as increased by a CPI index from January 1999),
multiplied by a percentage equal to 10% per each year since December 31, 1992.
In the event Mr. Crocker's employment is terminated as a result of his death,
permanent disability or incapacity, he would be entitled to a similar amount
except that the annual percentage would be 15%, not 10%. Should Mr. Crocker be
terminated for cause or should he choose to leave voluntarily, without good
reason, prior to January 1, 2003, he would not be entitled to any deferred
compensation.
Mr. Spector's Deferred Compensation Agreement, entered into in 1997,
provides Mr. Spector with a salary benefit after the termination of his
employment with the Company. If Mr. Spector's employment is terminated by the
Company without cause prior to January 1, 2012 or for any reason by either Mr.
Spector or the Company (including voluntary termination) on or after January 1,
2012, he would be entitled to annual deferred compensation for a 15-year period
commencing on the termination date in an amount equal to 75% of his average
annual base compensation (before bonus) for the prior five calendar years,
multiplied by a percentage equal to 6.67% per each year since December 31, 1996.
In the event Mr. Spector's employment is terminated as a result of his death,
permanent disability or incapacity, he would be entitled to a similar amount
except that the annual percentage would be 10%, not 6.67%. Should Mr. Spector be
terminated for cause or should he choose to leave voluntarily, without good
reason, prior to January 1, 2012, he would not be entitled to any deferred
compensation.
SHARE DISTRIBUTIONS AGREEMENT. In January 1996, Mr. Crocker was issued
options to purchase 100,000 common shares, which options vested over a
three-year period and are effective for ten years. The Company also entered into
a Share Distributions Agreement with Mr. Crocker with respect to such options in
1996. Pursuant to the terms of this agreement, upon the exercise of any of these
options, Mr. Crocker is entitled to a cash payment in an amount equal to the
total amount of common share distributions that would have been paid upon the
exercise of such common shares had he owned them for the period from January 18,
1996 until the date of the exercise of the options. This agreement is not
affected by Mr. Crocker's death or termination of employment with the Company.
EMPLOYMENT AGREEMENT. Mr. Geraghty had a three year employment
agreement with the Company, which expired on March 9, 2001. Pursuant to the
agreement, Mr. Geraghty received compensation of at least $300,000 per year, and
the initial bonus, restricted share awards and share options, performance based
units and one-time relocation expense reimbursements described in "Executive
Compensation."
21
CONSULTING AGREEMENTS. In connection with the Wellsford Merger, Messrs.
Lynford and Lowenthal each executed a consulting agreement with the Operating
Partnership. Each consulting agreement has a term of five years from May 30,
1997, the closing date of the Wellsford Merger. Pursuant to the consulting
agreements, each of Messrs. Lynford and Lowenthal will serve as a senior
management consultant to the Operating Partnership and will receive compensation
at the rate of $200,000 per year plus reimbursement for reasonable out-of-pocket
expenses.
CHANGE IN CONTROL AGREEMENTS. The Company has Change in Control
Agreements (the "Agreements") with the persons named in the Summary Compensation
Table and other key employees of the Company that become effective only upon a
"Change in Control." A Change in Control will generally be deemed to have
occurred upon a third party's acquisition of 30% or more of the Company's stock,
whether through purchase, merger or consolidation or a sale of all or
substantially all of the assets of the Company. In the event that an employee is
dismissed following the effective date of the Change of Control without Cause or
resigns for Good Reason (as such terms are defined in the Agreements), he or she
will be entitled to all accrued but unpaid compensation and benefits in a lump
sum cash payment consisting of the employee's base salary through the date of
termination, and a severance payment equal to a multiple (ranging from 3.0 for
the CEO to 2.0 times for other executive officers) times the employee's annual
base salary plus the average of the employee's annual bonus for the last three
fiscal years. The employee is also entitled to continued employee welfare
benefits for the remainder of the applicable time period. The resignation from
employment by any of these individuals during the three year period following
the effective date of the Change in Control is deemed to be for Good Reason.
Several of the Company's employment benefit plans also provide for enhanced
employee benefits upon a "Change in Control" of the Company. In general, upon a
Change in Control, all share options, restricted shares and performance based
shares become immediately vested.
RETIREMENT BENEFITS AGREEMENTS. The Company has entered into Executive
Retirement Benefits Agreements with the persons named in the Summary
Compensation Table and other Executive Vice Presidents of the Company. These
agreements provide that, if after reaching age 62 or older, either the executive
retires from the Company or is terminated as a result of a Change in Control,
the executive will be eligible to receive health and life benefits for the
remainder of his or her life 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.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The Compensation Committee members are Messrs. Harper and Halperin and
Ms. Rosenberg. For a description of certain transactions between the Company and
Compensation Committee members or their affiliates, see "Certain Relationships
and Related Transactions."
22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has engaged Seyfarth, Shaw, Fairweather & Geraldson, a law
firm in which Ms. Rosenberg's husband is a partner, and Piper Marbury, Rudnick &
Wolfe, a law firm in which Mr. Halperin is a partner, to perform legal services
for the Company from time to time.
The Operating Partnership leases its corporate headquarters from an
entity controlled by Mr. Zell. Amounts incurred for such office space in 2000
were approximately $1.195 million. Certain other entities controlled by Mr. Zell
also provide office facility and other services to the Company. Fees paid for
such services were approximately $100,000 for 2000. The Company believes these
amounts equal market rates for such space and services.
Multifamily residential communities owned by various affiliates of Mr.
Zell, Mr. Goldberg and Mr. Evans were managed by the Company's management
company on terms equivalent to third-party transactions. The property and asset
management fees received from such affiliates was approximately $1.7 million for
2000.
In 1995, the Operating Partnership purchased from an unrelated third
party the debt collateralized by two properties owned by partnerships that Mr.
Goldberg controls and of which he is a greater than 10% beneficial owner. The
outstanding loan balance as of December 31, 2000 was approximately $121 million
with a fixed interest rate of 10.5% and a maturity date of January 2003. The
Operating Partnership's management company manages these properties under a
contract with a term continuing through December 2002.
Mr. Goldberg also controls and is a greater than 10% beneficial owner
of four other partnerships that own four properties securing indebtedness held
in part by the Operating Partnership. The outstanding principal balance of the
bonds is approximately $77 million, and has various interest rates between 8.87%
and 13.38% and a maturity date of May 2026. A capital loan from the Operating
Partnership to the four partnerships, as joint and several borrowers, of
approximately $4.3 million is also outstanding with an 8% interest rate and a
maturity date of January 2003. The Operating Partnership's management company
manages the properties under a contract with a term continuing through April
2006.
Mr. Goldberg is a two-thirds owner and chairman of the board of Artery
Property Management, Inc., a real estate property management company ("APMI").
In connection with the acquisition of certain properties from Mr. Goldberg and
his affiliates during 1995, the Operating Partnership made a secured loan to Mr.
Goldberg and APMI. The largest principal amount owed in 2000 was $6,167,117. The
loan was repaid in full in November 2000. The loan bore interest equal to
approximately $97,141 in 2000, plus the amount of distributions payable on the
OP units and common shares pledged as collateral.
Mr. Tuomi borrowed $100,000 from the Company in 1994 related to his
purchase of a home. The loan bears interest at the 30-day London Interbank
Offered Rate ("LIBOR") plus 2% with interest due quarterly. The largest
principal amount owed in 2000 was $36,000 and the principal balance at December
31, 2000 was $36,000. The loan is payable in equal principal installments of
$18,000 over the next two years.
23
Mr. Crocker borrowed $564,000 from the Company in August 1996 related
to various personal obligations. The loan bears interest at 30-day LIBOR plus 2%
with interest due quarterly. The largest principal amount owed in 2000 was
$322,280 and the principal balance at December 31, 2000 was $241,710. Payment is
secured by a pledge of Mr. Crocker's common shares. The loan is payable in equal
principal installments of $80,570 over seven years commencing March 15, 1997.
Mr. Crocker borrowed $100,000 from the Company in August 1998 related
to the payment of a tax liability. The loan bears interest at 30-day LIBOR plus
2%. The largest principal amount owed in 2000 was $100,000. The loan was repaid
in full in February 2000.
Mr. Crocker borrowed $600,000 from the Company in May 1999 related to
various personal obligations. The loan bears interest at 30-day LIBOR plus 2%.
The largest principal amount owed in 2000, and the principal balance due at
December 31, 2000, was $600,000. The loan is due in full in September 2001.
Mr. George borrowed $100,000 from the Company in December 1997 related
to home improvements. The loan bears interest at 30-day LIBOR plus 2% with
interest due monthly beginning in January 1998. The largest principal amount
owed in 2000 was $69,657, and the principal balance due at December 31, 2000,
was $34,657. Payment is secured by a pledge of Mr. George's common shares and
share options and a second mortgage on Mr. George's home. The remaining
principal payment of $34,657 is due on April 1, 2001.
The executive officers listed below are indebted to the Company as a
result of purchasing common shares from the Company in 1994. The loans accrue
interest, payable quarterly in arrears, at the applicable federal rate, as
defined in the Code in effect at the date of each loan. The loans are due and
payable on the first to occur of the date in which the individual leaves the
Company, other than by reason of death or disability, or the respective loan's
due date. The due dates of the loans range from August 2003 to March 2005. The
loans are recourse to the respective individuals and are collateralized by a
pledge of the common shares purchased. All distributions paid on pledged common
shares in excess of the then marginal tax rate on the taxable portion of such
distributions are used to pay interest and principal on the loans.
Largest Principal
Amount Owed Principal Balance at Maturity
Name in 2000 December 31, 2000 Date Interest Rate
- ----------------------------------------------------------------------------------------------------------------------
Douglas Crocker II $716,504 $651,524 8/10/03 6.21%
Douglas Crocker II 847,486 790,321 1/27/04 6.15%
Douglas Crocker II 909,391 882,142 8/2/04 7.26%
Douglas Crocker II 1,734,509 1,637,936 3/9/05 7.93%
Frederick C. Tuomi 312,843 312,843 8/2/04 7.26%
Alan W. George 74,287 71,647 8/2/04 7.26%
24
CERTAIN AGREEMENTS BETWEEN THE COMPANY AND WRP
The following describes certain aspects of the agreements entered into
by the Company and WRP in connection with the Wellsford Merger on the effective
date of the Wellsford Merger. Each of Messrs. Lynford and Lowenthal are officers
and directors of WRP.
PREFERRED STOCK PURCHASE AGREEMENT. The Operating Partnership agreed to
purchase from WRP up to 1,000,000 shares of WRP Series A Preferred Stock at
$25.00 per share as requested by WRP over the three-year period commencing on
the date of the Wellsford Merger. This agreement was terminated in May 2000. In
May 2000, the Operating Partnership acquired $25 million of 8.25% preferred
securities of WRP Convertible Trust I, an affiliate of WRP. These preferred
securities are indirectly convertible into WRP common shares under certain
circumstances.
WRP BOARD MEMBER ELECTED BY THE OPERATING PARTNERSHIP. Upon
consummation of the Wellsford Merger, the Operating Partnership, as the holder
of WRP Class A Common Stock, was entitled to elect, and did so elect, Mr.
Crocker to the WRP board of directors. Mr. Crocker is also a member of WRP's
compensation committee. In the event Mr. Crocker (or another person subsequently
elected by the Operating Partnership to the WRP board of directors) becomes
unable or unwilling to serve as a director or is no longer employed by the
Operating Partnership, the Operating Partnership and WRP will agree to the
election of another member of senior management of the Operating Partnership to
the WRP board of directors.
AGREEMENT REGARDING PALOMINO PARK. Upon consummation of the Wellsford
Merger, WRP and the Operating Partnership became the shareholders in Wellsford
Park Highland Corp. ("WPHC"). WPHC owns certain membership interests in limited
liability companies which own Palomino Park, a master planned five phase
multifamily development project located in suburban Denver, Colorado. As of
December 31, 2000, the Operating Partnership owned 14.15% of the shares of WPHC,
and has no further obligations to contribute capital to WPHC.
The Operating Partnership entered into a credit enhancement agreement
with WRP with respect to certain tax-exempt bonds issued to finance certain
public improvements at the Palomino Park development project. Under this
agreement, the Operating Partnership has agreed to provide credit enhancement in
the form of a guaranty in respect of a letter of credit issued for the account
of WRP for a period of eight years from the date of the Wellsford Merger. WRP
has agreed to pay an annual credit enhancement fee to the Operating Partnership
for such enhancement and has agreed to reimburse the Operating Partnership for
any amounts it pays under the guaranty, together with interest on such amounts.
As of December 31, 2000, this enhancement was still in effect at a commitment
amount of $12.7 million. The fee paid to the Operating Partnership in 2000 was
approximately $64,800.
CERTAIN AGREEMENTS BETWEEN THE COMPANY AND MRYP
The following describes certain aspects of the agreements entered into
by the Company and MRYP in connection with the Merry Land Merger on the
effective date of the merger. Mr. Knox is a director and Mr. Thompson is an
officer and a director of MRYP.
25
DEVELOPMENT AND MANAGEMENT AGREEMENTS. Pursuant to a Development
Agreement between MRYP and the Operating Partnership, MRYP agreed to manage the
completion of a development program for five new apartment communities in
exchange for an aggregate fee of approximately $2.4 million payable in monthly
installments based on the progress of development until all development is
complete using the services of third party developers. The Operating Partnership
and MRYP also entered into property management agreements under which MRYP
provided lease-up property management services with respect to these development
properties in exchange for a management fee of 4% of gross revenues, with a
minimum of $4,000 per month per project, until an occupancy level of 85% was
reached.
During 1999 and 2000, the Operating Partnership or other affiliates of
the Company acquired fee simple title to, and took over management of, all of
these properties. Development and management fees paid to MRYP amounted to
approximately $1.2 million in 2000. Effective December 15, 2000, all development
and/or property management agreements with MRYP have been terminated.
OFFICE LEASE AGREEMENT. MRYP and the Operating Partnership entered into
an Office Lease Agreement pursuant to which the Operating Partnership leases a
portion of the MRYP office at 624 Ellis Street in Augusta, Georgia. The term of
the lease is three years from the date of the Merry Land Merger with annual rent
equal to the amount of all operating expenses attributable to the leased space.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company to report, based
on its review of reports to the SEC about transactions in its common shares
furnished to the Company and written representations of its trustees, executive
officers and 10% common shareholders, that for 2000:
Mr. Goldberg filed a Form 4 late to report the sale of 37,500 common
shares. Mr. Alexander filed a Form 4 late to report the acquisition of 2,500
common shares. Mr. Knox filed a Form 4 late to report the gift of 8,260 common
shares to the Knox Foundation and to report the acquisition of an interest in
173,274 common shares through his interest in Folkstone Limited Partnership as a
general partner.
AUDITORS
Ernst & Young has served as our independent auditors since 1996 and has
been engaged to serve as our independent auditors for the fiscal year ending
December 31, 2001. Representatives of Ernst & Young are expected to be available
at the Annual Meeting. Such representatives will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
26
SHAREHOLDER PROPOSALS FOR THE 2002 MEETING
Shareholder proposals intended to be presented at the 2002 Annual
Meeting of Shareholders must be received by the Secretary of the Company no
later than November 30, 2001, in order to be considered for inclusion in our
2002 Proxy Statement.
2000 ANNUAL REPORT
Shareholders are concurrently being furnished with a copy of Equity
Residential's 2000 Annual Report which contains its audited financial statements
at December 31, 2000. Additional copies of our Annual Report and Form 10-K for
the year ended December 31, 2000, as filed with the SEC, may be obtained without
charge by contacting Equity Residential Properties Trust - Investor Relations,
at Two North Riverside Plaza, Chicago, Illinois 60606.
OTHER MATTERS
The Board knows of no other matters to be presented for shareholder
action at the Annual Meeting. If any other matters are properly presented at the
meeting for action, it is intended that the persons named in the proxies will
vote upon such matters in accordance with their best judgment.
By Order of the Board of Trustees
/s/ Bruce C. Strohm
Bruce C. Strohm,
Executive Vice President, General Counsel
and Secretary
Chicago, Illinois
March 30, 2001
27
APPENDIX A
EQUITY RESIDENTIAL PROPERTIES TRUST
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the Board of Trustees of Equity Residential
Properties Trust (the "Company") to be known as the Audit Committee. The Audit
Committee shall be composed of at least three trustees who shall be appointed by
the Board on recommendation of the Corporate Governance Committee. The members
of the Audit Committee shall meet the independence and experience requirements
of the New York Stock Exchange. Trustees who are not members of the Audit
Committee are welcome to attend and participate in the committee's deliberations
unless otherwise specified by the chair. The Audit Committee may also request
any officer or employee of the Company or the Company's outside counsel or
independent auditors to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
STATEMENT OF POLICY
The Audit Committee, through regular or special meetings with management, the
internal auditors and the Company's independent auditors, shall provide
oversight on matters relating to: corporate accounting and reporting practices
of the Company, the quality and integrity of the financial reports of the
Company, the performance and independence of the Company's independent auditors,
the integrity of the internal auditing department, and the adequacy of any
financial disclosure.
In doing so, the Audit Committee will contribute to maintaining open
communication among the trustees, the independent auditors, the internal
auditors, and the senior financial management of the Company.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes that its
agendas, reviews and procedures should be flexible in order to adapt to changing
conditions and to ensure that the corporate accounting and reporting practices
are in accordance with requirements and of high quality.
The Audit Committee will:
- - Review and recommend to the Board the independent auditors to be
selected to audit the financial statements of the Company, which firm
shall be ultimately accountable to the Audit Committee and the Board.
The Audit Committee and the Board shall have the ultimate authority and
responsibility to select, evaluate and, when appropriate, replace the
independent auditors.
A-1
- - Meet with the independent auditors and senior financial management of
the Company to review the scope of the proposed audit for the current
year, the audit procedures to be utilized, the proposed cost of the
audit and, at the conclusion thereof, review such audit, including any
comments or recommendations of the independent auditors and the actual
fees and expenses to be paid to the independent auditors for both audit
and non-audit services.
- - Ensure that the independent auditors submit to the Audit Committee on a
periodic basis written statements regarding their independence and
delineating all relationships between the independent auditors and the
Company, including the written disclosures required by INDEPENDENCE
STANDARDS BOARD STANDARD NO. 1 (INDEPENDENCE DISCUSSIONS WITH AUDIT
COMMITTEES), and actively engage in a dialogue with the independent
auditors with respect to such statements and any disclosed
relationships or services that may impact the objectivity and
independence of the independent auditors and, if so determined by the
Audit Committee, recommend that the Board take appropriate action to
satisfy itself of the independence of the independent auditors.
- - Review with the independent auditors, the Company's internal auditors,
and senior financial and accounting personnel, the adequacy and
effectiveness of the accounting and financial controls of the Company,
and elicit any recommendations for the improvement of such internal
controls and procedures or particular areas where new or more detailed
controls or procedures are desirable.
- - Ensure that the Company has a conflict of interest policy and that
responsibility for dissemination and monitoring of adherence to such
policy is assigned.
- - Review the internal audit function of the Company, including the
independence and authority of its reporting obligations, the proposed
audit plans, and coordination of internal audit's work with that of the
independent auditors.
- - Review from time to time the results of internal audits and special
issues brought to the Audit Committee's attention by the internal
auditors.
- - Review the annual audited financial statements with management,
including major issues regarding accounting principles and practices
and ensure that the independent auditors are satisfied with the
disclosure and content of the annual audited financial statements.
- - Meet at least annually with the Chief Financial Officer, the senior
internal auditing executive and the independent auditors in separate
executive sessions. Also provide the opportunity from time to time for
the internal and independent auditors to meet with the members of the
Audit Committee without members of management present. In these annual
meetings and any other such meetings, the Audit Committee shall invite
comment about the Company's financial, accounting and auditing
personnel, the cooperation the independent auditors receive during the
course of the audit and any other matters about which such person(s)
believe should be brought to the Audit Committee's attention.
A-2
- - Review with the independent auditors any problems or difficulties the
independent auditors may have encountered and any management letter
provided by the independent auditors and the Company's response to that
letter. Such review should include:
(a) any difficulties encountered in the course of the audit
work, including any restrictions on the scope of
activities or access to required information;
(b) any changes required in the planned scope of the internal
audit; and
(c) the internal audit department's responsibilities and
staffing.
- - Discuss with the independent auditors the matters required by STATEMENT
ON AUDITING STANDARDS NO. 61 (COMMUNICATION WITH AUDIT COMMITTEES)
relating to the quality of the accounting principles adopted by the
Company and the conduct of the audit.
- - Annually provide the Audit Committee Report to shareholders as required
by the Securities and Exchange Commission, which report is to be
included in the Company's annual proxy statement.
- - Invite and hear from time to time a report from the General Counsel on
legal issues and actions involving the Company's and any material
reports or inquiries received from regulators or governmental agencies
that may have a material impact on the financial statements.
- - Investigate any matter within the scope of the Audit Committee's
duties, which is brought to its attention if, in the Committee's
judgment, such matter warrants investigation. The Audit Committee shall
have the power to retain outside legal, accounting or other expert
advice for this purpose if, in its judgment, such action is
appropriate, or to otherwise advise the Committee in the performance of
its duties.
- - Ensure that minutes of the Audit Committee are kept and retained as
records of the Company.
- - Review and reassess the adequacy of this charter annually and
recommend any proposed changes to the Board for approval.
A-3
[EQUITY RESIDENTIAL LOGO]
EQR-PS-01
DETACH HERE
PROXY
EQUITY RESIDENTIAL PROPERTIES TRUST
TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 15, 2001
The undersigned shareholder of Equity Residential Properties Trust, a
Maryland real estate investment trust (the "Company") hereby appoints SAMUEL
ZELL and BRUCE C. STROHM, or either of them (the "Representatives"), with full
power of substitution, as proxies for the undersigned to represent the
undersigned at the Annual Meeting and to vote all Common Shares of the Company
which the undersigned may be entitled to vote at the Annual Meeting of
Shareholders of the Company to be held in Chicago, Illinois, on May 15, 2001,
and any adjournment thereof. The undersigned hereby acknowledges receipt of the
Notice of the Annual Meeting of Shareholders and of the accompanying Proxy
Statement and revokes any proxy heretofore given with respect to such Common
Shares.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
ON THE REVERSE SIDE. IF YOU DO NOT MARK ANY BOXES, YOUR PROXY WILL BE VOTED IN
ACCORDANCE WITH THE BOARD OF TRUSTEES' RECOMMENDATIONS. THE REPRESENTATIVES
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
Note: If you plan to attend the Annual Meeting in person, please let us
know by marking the enclosed proxy card in the space provided.
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ----------- -----------
EQUITY RESIDENTIAL
PROPERTIES TRUST
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
- ----------------- ----------------
VOTE BY TELEPHONE VOTE BY INTERNET
- ----------------- ----------------
It's fast, convenient, and immediate! It's fast, convenient, and your vote
Call Toll-Free on a Touch-Tone Phone is immediately confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).
- --------------------------------------- ------------------------------------
FOLLOW THESE FOUR EASY STEPS: FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY 1. READ THE ACCOMPANYING PROXY
STATEMENT AND PROXY CARD. STATEMENT AND PROXY CARD.
2. CALL THE TOLL-FREE NUMBER 2. GO TO THE WEBSITE
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/eqr
3. ENTER YOUR 14-DIGIT VOTER CONTROL 3. ENTER YOUR 14-DIGIT VOTER CONTROL
NUMBER LOCATED ON YOUR PROXY CARD NUMBER LOCATED ON YOUR PROXY CARD
ABOVE YOUR NAME. ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS. 4. FOLLOW THE INSTRUCTIONS PROVIDED.
- --------------------------------------- ------------------------------------
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/eqr
anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET.
DETACH HERE
/ X / PLEASE MARK
VOTES AS IN
THIS EXAMPLE
1. Authority to vote for the election as trustees of the five
nominees listed below to terms expiring in 2004:
NOMINEES: (01) Douglas Crocker II, (02) James D. Harper, Jr., In their discretion, the Representatives are authorized
(03) Sheli Z. Rosenberg, (04) Gerald A. Spector, and to vote upon such other matters as may properly come
(05) Michael N. Thompson before the meeting.
/ / FOR / / WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER.
IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR
AUTHORITY TO VOTE FOR THE ELECTION AS TRUSTEES OF THE
/ / -------------------------------------------------------- FIVE NOMINEES TO TERMS EXPIRING IN 2004 AND OTHERWISE
For all nominees, except vote withheld from the nominees IN THE DISCRETION OF THE REPRESENTATIVES.
noted on the line above.
MARK HERE
TO DISCONTINUE / /
EXTRA ANNUAL
REPORT
MARK HERE MARK HERE
FOR ADDRESS / / IF YOU PLAN / /
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
Note: Please sign as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title under signature.
Signature: Date: Signature: Date:
---------------------------------- ---------- ------------------------------- -----------------