Exhibit 10.14

 

AMENDED AND RESTATED COMPENSATION AGREEMENT

 

 

THIS AMENDED AND RESTATED COMPENSATION AGREEMENT (“Agreement”) is entered into
this 5th day of March, 2003, but effective as of January 1, 2003, by and between
Samuel Zell (“Chairman”) and Equity Residential (“Company”), a Maryland real
estate investment trust.

 

RECITALS

 

WHEREAS, the Chairman has served as Chairman of the Company’s Board of Trustees
since 1993; and

 

WHEREAS, in recognition of the extraordinary services previously rendered by
Chairman and to give Chairman incentive to continue rendering such services, the
Company and the Chairman entered into a Executive Compensation Agreement dated
October 18, 2001 (the “2001 Agreement”);

 

WHEREAS, the Company and the Chairman desire to amend the 2001 Agreement to
provide for the relative mix and pricing of share options and restricted shares
for the February 2003 long-term compensation grant and all subsequent grants.

 

WHEREAS, the Company and the Chairman desire to amend and restate in its
entirety the 2001 Agreement effective as of January 1, 2003, with the 2001
Agreement remaining in effect for the period prior to January 1, 2003;

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, and for other good and valuable consideration, the payment and adequacy
of which is hereby acknowledged, the parties agree to amend and restate the 2001
Agreement in its entirety as follows:

 

I.              Executive’s Compensation

 

Chairman’s compensation for each full calendar year that this Agreement is in
effect shall be as follows:

 

A.    In each of the months of February 2003 and January 2004, for services
rendered during the calendar year preceding the date of grant, the Company shall
grant Chairman share options in the Company (the “Share Options Grant”) and
restricted common shares of Company stock (the “Restricted Shares Grant”) having
a combined total dollar value of $3,250,000. The February 2003 grant of
$3,250,000 shall be allocated 25% to the Share Options Grant and 75% to the
Restricted Shares Grant. The January 2004 grant of $3,250,000 shall be allocated
between the Share Options Grant and the Restricted Shares Grant in the same
ratio as approved by the Company’s Board of Trustees for the annual long-term
incentive grants to the Company’s executive officers; provided, however, if the
Chief Executive Officer and the other executive officers do not all receive the
same relative allocation of Share Options Grant and Restricted Shares Grant,
Chairman’s relative allocation shall be the same as that of the Chief Executive
Officer.

 

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B.    The number of options in each Share Options Grant will be determined using
the same value per option and same exercise price that the Company’s
Compensation Committee uses in pricing the annual share option grants to the
Company’s employees. For example, if the Company’s Compensation Committee values
one share option at $1.90 and if the total value allocated to share options is
25%, or  $812,500, Chairman would receive a grant of 427,632 Share Options
($812,500/$1.90).  Each Share Options Grant will vest over a three year period,
with one-third of each grant vesting on each of the first, second, and third
anniversary dates of said grant, subject to Chairman’s continuous service as the
Company’s Chairman of the Board of Trustees on each vesting date, unless such
grant is otherwise vested pursuant to the terms and conditions of the Company’s
Share Option and Share Award Plan, as amended, or any successor plan thereto
(the “Plan”).

 

C.    The number of restricted shares in each Restricted Shares Grant will be
determined using the closing price of the Company’s common shares on the date
that the Company issues its annual share option and restricted share grants to
the Company’s employees.  For example, assuming the price of one Company common
share on the date of grant is $23.55, if the total value allocated to the
Restricted Shares Grant is 75%, or $2,437,500, Chairman would receive 103,503
Restricted Shares ($2,437,500/$23.55).  Each Restricted Shares Grant will vest
in full on the third anniversary date of said grant, subject to Chairman’s
continuous service as Company’s Chairman of the Board of Trustees on said
vesting date, unless such grant is otherwise vested pursuant to the terms and
conditions of the Plan.

 

D.                   (i)            Each Share Options Grant and Restricted
Shares Grant shall be subject to the terms and conditions of the Plan, including
but not limited to, the vesting conditions of the Plan.  Any capitalized words
used herein and not defined shall have the meaning ascribed to them in the Plan.

 

(ii)            Notwithstanding paragraph 6(f) of the Plan, the termination of
Chairman’s trusteeship shall be deemed the equivalent of an employee’s
termination of employment under the Plan for purposes of the lapse of
restrictions on Restricted Shares and the accelerated vesting of Share Options.

 

(iii)           Pursuant to the Company’s Compensation Committee’s authority
under the Plan to establish guidelines for determining whether a grantee’s
service has terminated for “good cause,” the Company agrees, with the Chairman’s
approval thereof, that for purposes of this Agreement, “good cause” under the
Plan shall have the same definition as the word “Cause” in the Retirement
Benefits Agreement dated October 18, 2001 entered into by the Company and the
Chairman.

 

(iv)          The Company agrees that any decisions under the Plan relating to
this Agreement shall be made by the Committee and not by the Plan Administrator
or the Company’s General Counsel.

 

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(v)           The Company represents to Chairman that there shall always be
sufficient Shares under the Plan available for issuance to cover the potential
awards to Chairman, and that prior to January 1, 2004, it shall enact a
successor stock option and share award plan to ensure the granting of the awards
to Chairman required after May 21, 2003 (the last date awards can be made under
the 1993 Plan).  Any such successor stock option and share award plan shall be,
insofar as it affects Chairman, be substantially equivalent to the existing Plan
and not inconsistent with any provision of this Agreement.  The Company further
represents to Chairman that in the unlikely event the Plan is terminated, it
shall be required to provide Chairman with substantially equivalent substitute
awards.

 

E.     The parties agree that Chairman is not and shall not be deemed an
employee of Company and that, Company will not make any withholdings or
deductions from any taxable income realized in connection with the Share Options
or Restricted Shares and will issue, if required by law, to Chairman each year a
standard Internal Revenue Service Form 1099.

 

II.            Term and Compensation Upon Termination

 

A.    This Agreement shall become effective on January 1, 2003 and shall
continue in effect until the earlier to occur of (i) the death of Chairman; (ii)
Chairman’s resignation or removal as Chairman of the Board of Trustees of
Company; or (iii) the issuance of the Share Options Grant and Restricted Shares
Grant in January 2004.

 

B.    Should this Agreement terminate for any reason prior to the end of any
calendar year during the term hereof, other than for “Cause” (as such word is
defined in the Retirement Benefits Agreement of even date herewith entered into
by Company and Chairman), Chairman shall receive as his sole compensation for
the calendar year in which this Agreement terminates a prorated Share Options
Grant and a prorated Restricted Shares Grant, equal to the full dollar amount of
each such Grant for said calendar year, multiplied by a fraction, the numerator
of which is the number of days in said calendar year that this Agreement was in
effect before it terminated, and the denominator of which is 365; provided,
however, that any such prorated Share Options Grant or Restricted Shares Grant
shall be subject to the vesting terms and conditions described above in this
Agreement and in the Plan (i.e., said Grants would be fully vested upon their
grant unless Chairman resigned without good reason prior to age 62 or was
removed for Cause).

 

III.           Chairman’s Duties

 

Chairman shall perform such duties as are consistent with the office of Chairman
of the Board of Trustees and consistent with the services historically performed
by Chairman.

 

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IV.           Expenses

 

Chairman shall be personally responsible for his office rent and office related
expenses and all business related expenses which would otherwise be customarily
reimbursed as travel and entertainment expenses incurred in connection with
Company business and/or his responsibilities as Chairman of the Board of
Trustees and will not be reimbursed by Company for any such expenses.

 

V.            Arbitration

 

Any controversy or claim arising out of, or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in Chicago, Illinois in
accordance with the rules of the American Arbitration Association, and judgment
upon any award so rendered may be entered in any court having jurisdiction
thereof.

 

VI.           Notices

 

Any notice or other communication required or permitted to be transmitted under
this Agreement shall be in writing, and personally delivered or mailed, return
receipt requested, postage prepaid, addressed to the parties hereto at their
addresses following their signatures below, or at such other addresses as may be
hereafter designated by a party by notice delivered in accordance herewith.  Any
notice delivered personally shall be effective on the date of delivery and any
notice mailed, as aforesaid, shall be effective on the second day following
posting.

 

VII.         Waiver of Breach

 

The waiver by one party of a breach of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any subsequent
breach by the one party.

 

VIII.        Assignment

 

The rights and obligations of Company and Chairman under this Agreement shall
inure to the benefit of, and shall be binding upon, Company and its successors
and assigns and Chairman and his heirs and personal representatives.

 

IX.           Entire Agreement

 

This Agreement contains the entire agreement between the parties with respect to
the subject matter hereof.  It may not be changed orally but only by agreement
in writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.

 

X.            Governing Law and Severability

 

This Agreement shall be construed and enforced, and all questions concerning
compliance by any person with its terms shall be determined under the laws of
the State of Illinois.  All provisions of this Agreement are severable and this
Agreement shall be interpreted and enforced as if all completely invalid or
unenforceable provisions were not contained herein, and partially valid and
enforceable provisions shall be enforced to the extent valid and enforceable.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

 

 

EQUITY RESIDENTIAL, a Maryland real estate
investment trust

 

 

 

By:

/s/ Bruce W. Duncan

 

 

Bruce W. Duncan, President & CEO

 

 

 

Address:

 

 

 

Two North Riverside Plaza

 

Suite 400

 

Chicago, Illinois 60606

 

 

 

 

 

CHAIRMAN:

 

 

 

/s/ Samuel Zell

 

SAMUEL ZELL, Chairman

 

 

 

Address:

 

 

 

Two North Riverside Plaza

 

Suite 600

 

Chicago, Illinois 60606

 

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