Exhibit 10.1








Exhibit 10.1




Colonial Properties Trust

2010 Annual Incentive Plan




On January 26, 2010, the Executive Compensation Committee (“Compensation Committee”) of the
Board of Trustees of Colonial Properties Trust (the “Company”) adopted an annual incentive plan for
2010 and set the specific performance goals and business criteria for the award of 2010 incentive
payments to each of the Company’s executive officers. Such incentives are expected to be paid in
the first quarter of 2011. The intent of the performance goals and business criteria of this plan
is to align the Company’s executive management team with the interests of the Company’s
shareholders. The performance goals and business criteria for 2010 are based on the following:




	 	•	 	The “total return” for the Company for the year (the “absolute performance
measure”);






	 	•	 	One-year “total return” for the Company as compared to an index of comparable
real estate investment trusts, or REITs (a “relative performance measure”);






	 	•	 	Two-year “total return” for the Company as compared to an index of comparable
REITs (a “relative performance measure”); and






	 	•	 	Three-year “total return” for the Company as compared to an index of comparable
REITs (a “relative performance measure”).





For purposes of the 2010 annual incentive plan, “total return” is equal to the share price of
the Company (or the companies in the index of comparable REITs, as the case may be) plus any
dividends reinvested in the Company (or the companies in the index of comparable REITs, as the case
may be) calculated based on reinvestment on the ex-dividend pay date.



The Company’s absolute performance measure must be positive for the plan year for any payout
to occur; however, (1) if the absolute performance measure is negative but the Company’s total
return is at least at the “median” level of performance when compared to the one-year “total
return” relative performance measure, the Compensation Committee has discretion to pay up to 20% of
the payout calculated based on the relative performance measures’ results, and (2) if the absolute
performance measure is positive and the Company’s total return is at least at the “median” level of
performance when compared to the one-year “total return” relative performance measure, the
Compensation Committee has the discretion to increase the award amount up to 20% of the payout
calculated based on the relative performance measures’ results.



The first 75% of each annual incentive award will automatically be payable to the applicable
participant in time-vested restricted common share awards that will vest in three equal annual
installments beginning on the first anniversary of the grant date. In addition, 50% of all shares
received by a participant with respect to the first 75% of each annual incentive award (after the
payment of taxes, including, if applicable by the forfeiture of shares) must be held by the
participant for five years or until such participant retires.



With respect to the remaining 25% of his or her approved 2010 annual incentive award, each
participant will receive such portion of his or her award in cash unless he or she elects to
receive any or all of such remaining 25% in restricted common shares. Each participant who elects
to receive between 25% and 50% of such remaining amount in restricted common shares will receive
shares having a market value on the grant date equal to 125% of the amount received in restricted
common shares (i.e., an additional 25% in restricted common shares), and each participant who
elects to receive more than 50% of such remaining 25% in restricted common shares will receive
shares having a market value on the grant date equal to 140% of the elected amount (i.e., an
additional 40% in restricted common shares). These restricted common share awards are subject to a
three-year vesting period— 50% will vest on the first anniversary of the grant date and 25% will
vest on each of the second and third anniversaries of the grant date. In the event, however, that
the Compensation Committee grants a discretionary annual incentive award to a participant and the
absolute performance measure was negative, then the entire remaining 25% of the participant’s
annual incentive award will solely be payable by the Company in restricted common shares that will
vest 100% on the third anniversary of the grant date.


 


66









 





The amounts actually payable to the participants are determined based upon whether Company
performance meets the “threshold,” “median,” “target” or “maximum” level for the relative
performance measures. For each relative performance measure, the “threshold” level is the 25th
percentile, the “median” level is the 50th percentile, the “target” level is the 75th percentile
and the “maximum” level is the 90th percentile. The relative performance measures are weighted
equally, i.e., 33.3%
of any payout is based on the one-year relative performance measure; 33.3% of any payout is based
on the two-year relative performance measure, and 33.3% of any payout is based on the three-year
relative performance measure. For the 2010 annual incentive plan, the performance payout thresholds
were set as follows:




	 	•	 	for the Chairman and Chief Executive Officer, the “threshold” level pays at a
maximum of 1% of base salary, the “median” level pays at a maximum of 100% of base
salary, the “target” level pays at a maximum of 200% of base salary, and the “maximum”
level pays at a maximum of 300% of base salary;






	 	•	 	for the President and Chief Financial Officer and the Chief Operating Officer,
the “threshold” level pays at a maximum of 1% of base salary, the “median” level pays
at a maximum of 100% of base salary, the “target” level pays at a maximum of 150% of
base salary, and the “maximum” level pays at a maximum of 225% of base salary; and






	 	•	 	for the other executive officer participants, the “threshold” level pays at a
maximum of 1% of base salary, the “median” level pays at a maximum of 50% of base
salary, the “target” level pays at a maximum of 100% of base salary, and the “maximum”
level pays at a maximum of 150% of base salary.





With the Company’s shift to a multifamily-focused REIT, the Compensation Committee adopted a
peer group comprised solely of Multifamily REITs for purposes of calculating the relative
performance measures under the 2010 annual incentive plan. The following peer group was selected by
the Compensation Committee for calculating the relative performance measures:




Apartment Investment & Management

Associated Estates Realty Corp.

Avalon Bay Communities, Inc.

BRE Properties, Inc.

Camden Property Trust

Equity Residential

Essex Property Trust, Inc.

Home Properties, Inc.

Mid-America Apartment Communities, Inc.

Post Properties, Inc.

United Dominion Realty Trust, Inc.



For 2010, the Compensation Committee determined that long-term incentive compensation for the
participants would continue to be provided through a combination of share options and restricted
common share awards. Amounts awarded are expected to equal 100% of each participant’s actual annual
incentive award for the year (if any) in an equal split between option shares (which will vest 100%
on the third anniversary of the grant date) and restricted common shares (which will vest in five
equal annual installments beginning on the first anniversary of the grant date and which will be
subject to a five-year holding period). All shares issued under the 2010 annual incentive plan and
options or restricted common shares issued as long-term incentive awards are expected to be issued
under the Company’s 2008 Omnibus Incentive Plan.


 


67