Document:

exv10w31

 

Exhibit 10.31

Certain Compensation Arrangements

Named Executive Officers

     The Compensation Committee of the Company’s Board of Directors has for recent years, including
2005, structured the compensation of the executive officers who will be named in the Summary
Compensation Table of the Company’s proxy statement for its 2006 Annual Meeting of Stockholders
(the “Named Executive Officers”) as follows:

     Base Salary. The Company establishes base salary for its key executives annually after
reviewing their duties and making an evaluation of recent performance, periodically
reviewing base salary levels and total compensation for key executives of comparable REITs,
and after determining the appropriate level of total compensation in a year when target
performance is achieved. The Compensation Committee approved (for Board ratification, as
described below) revised base salaries for 2006 for the Named Executive Officers. The base
salaries for the Named Executive Officers will be as follows (effective as of March 1,
2006): Bryce Blair — $761,250; Timothy J. Naughton —
$500,000; Thomas J. Sargeant —
$425,000; Leo Horey — $350,000; and Lili F. Dunn — $300,000.

     Cash Bonus. Under the Company’s corporate (cash) bonus plan, the Compensation
Committee may award annual cash bonuses to officers for the achievement of specified
performance goals by the Company, the individual and the individual’s business unit, with
varying weightings applied to each category of goals based on the individual’s position
within the Company. Each year, the Compensation Committee sets for each officer the
threshold, target or maximum cash bonuses that may be awarded to that officer if threshold,
target or maximum goals are achieved. For bonuses awarded in 2006 with respect to 2005, the
Company-wide goals used in determining cash bonuses were (i) the achievement of a targeted
level of Funds from Operations (“FFO”) per share, (ii) the achievement of growth in FFO per
share as compared to a peer group of apartment REITs, (iii) the achievement of a targeted
average fixed charge coverage ratio, (iv) the operating performance of development and
construction activities as compared to the original budgeted performance, and (v)
management’s effectiveness at achieving various corporate initiatives. The same categories
of goals will be used to determine cash bonus awards to be granted in 2007 with respect to
2006, except that (A) relative growth in FFO will be measured by reference to “Operating FFO
(Excluding Non-Routine Items)”, which excludes items such as gains on land sales which can
affect FFO in a manner not contemplated by an annual budget and (B) the weighting previously
given to achievement of a targeted average fixed charge coverage ratio has been allocated to
the other items. The Compensation Committee approved (for Board ratification, as described
below) the following cash bonus awards in respect of 2005 performance: Bryce Blair -
$1,099,075; Timothy J. Naughton — $592,687; Thomas J. Sargeant — $544,823; Leo S. Horey -
$344,125; and Lili F. Dunn — $260,056. Cash bonus awards for 2006 performance will be
determined and paid in early 2007.

     Long-Term Incentive Awards. Stock options and restricted stock granted under the
Company’s Stock Incentive Plan are designed to provide long-term performance incentives and
rewards tied to the price of the Company’s Common Stock. Generally, options will vest over a
period of three years and shares of restricted stock will vest over a
period of four years. Each year, the Compensation Committee sets in
advance for each executive officer the threshold, target and maximum
number or value of restricted shares and options that may be granted
to that officer if threshold, target of maximum goals are achieved by
the Company and the individual’s business unit. The Company goals for 2005 were (a) total shareholder return as
measured on both an absolute basis (based on a three-year average) and a relative basis as
measured against a peer group of apartment REITs, (b) the multiple that the price of the
Common Stock represents to the Company’s FFO per share, as measured against a peer group of
apartment REITs, and (c) the effectiveness of management and progress on various corporate
initiatives. For awards to be granted in 2007 with respect to 2006, the same categories of
goals will be used. The weightings applicable to each goal have been set in advance. The
business unit goals for long-term incentive awards are the same

 

 

as the business unit goals for determining cash bonuses, but with a different
weighting. The Compensation Committee views stock options and restricted stock as a means of
aligning management and stockholder interests and expanding management’s long-term
perspective. The Compensation Committee approved (for Board ratification, as described
below) the following awards of stock options and restricted shares for the Named Executive
Officers in respect of 2005 performance:

	 	 	 	 	 
	 	 	Stock Options	 	Restricted Shares
	 
	 	 	 	 
	Bryce Blair
	 	189,264	 	18,912
	Timothy J. Naughton
	 	112,680	 	10,830
	Thomas J. Sargeant
	 	91,722	 	8,984
	Leo S. Horey
	 	43,328	 	4,555
	Lili F. Dunn
	 	19,838	 	2,132

The Board’s practice is that annual compensation arrangements affecting senior executive
officers be approved by the Compensation Committee but not finalized until ratified by the
full Board (or, in the case of the Chief Executive Officer, until ratified by the
independent directors). Full Board (or independent director) ratification of the
determinations made above were given.

In March 2005, the Company closed the formation of the AvalonBay Valued Added Fund, L.P.
(the “Fund”), a private institutional investment fund. The aggregate capital commitments to
the Fund equal $330,000,000 (consisting of capital commitments from eight institutional
investors and a $50,000,000 capital commitment from the Company). As a consequence of the
closing of the Fund, management’s effectiveness in managing the Fund will be measured and
considered by the Compensation Committee of the Board in its review of management’s
effectiveness at achieving various corporate initiatives for purposes of determining annual
bonuses under the Company’s existing corporate bonus (cash) program and existing long-term
incentive award (equity) program. For those officers directly involved in the management of
the Fund as a full or major part of their employment with the Company, Fund performance will
be an important element in determining their annual bonuses. While the amount of promoted
distributions earned by the Company, net of estimated Company costs associated with the
Fund, will be one factor measured by the Compensation Committee, this performance review
will be done in the context of the Company’s existing bonus and long-term incentive award
programs so that no officer will be eligible to receive in any year a cash bonus or long
term incentive award that exceeds the maximum award then allowed under the existing
corporate bonus or long-term incentive award programs.

Directors

Compensation arrangements for the Company’s non-employee directors were described in The
Company’s Form 8-K filed on February 13, 2006, which is incorporated herein by reference.
In addition to the arrangements described in that Form 8-K, the Board has approved the
payment of $2,500 per month to the Lead Independent Director for serving in that capacity.exv10w32

 

Exhibit 10.32

AVALONBAY COMMUNITIES, INC.

Secretary’s Certificate

     The undersigned, Edward M. Schulman, hereby certifies that he is the Secretary of AvalonBay
Communities, Inc., a Maryland corporation (the “Company”), and does further certify as follows:

On February 9, 2006, at a duly called and held meeting of the Board of Directors of the Company,
the Board adopted the following resolution amending the Company’s 1994 Stock Incentive Plan, as
amended and restated on December 8, 2004, to adjust the manner in which the number of shares
granted to non-employee directors will be calculated each year:

	 	 	 
	Resolved:

	 	That paragraph 6(b)(i) of the Company’s 1994 Stock Incentive Plan, as amended and
restated on December 8, 2004, is hereby amended in its entirety to read as follows:

Each Non-Employee Director who is serving as a Director of the Company on the fifth
business day after the 2006 annual meeting of stockholders shall automatically be
granted on such day 1,327 shares of Restricted Stock, which is determined in
accordance with the methodology used for determining this automatic grant as in
effect under this Plan immediately after the 2005 Annual Meeting of Stockholders
(i.e., $100,000 divided by $75.35, the closing price of shares of the Company’s
Common Stock as reported by the New York Stock Exchange on May 18, 2005, five
business days after the 2005 Annual Meeting of Stockholders). Thereafter, each
Non-Employee Director who is serving as a Director of the Company on the fifth
business day after each annual meeting of stockholders, beginning with the 2007
Annual Meeting of Stockholders, shall automatically be granted on such day a number
of shares of Restricted Stock equal to $100,000 based upon the closing price of
shares of the Company’s Common Stock as reported by the New York Stock Exchange on
such date (such number to be rounded to the nearest whole number). Except as
otherwise provided in the award agreement, such shares of Restricted Stock shall vest
twenty percent (20%) on the date of issuance and twenty percent (20%) on each of the
first four anniversaries of the date of issuance.

     IN WITNESS WHEREOF, the undersigned has signed this certificate as of March 1, 2006.

	 	 	 	 	 
	 	 	AVALONBAY COMMUNITIES, INC.
	 
	 	 	 	 
	 	 	/s/ Edward M. Schulman
	 	 	 
	 

	 	Name:
	 	Edward M. Schulman
	 

	 	Title:
	 	Secretaryexv10w1

 

Exhibit 10.1

SUNRISE SENIOR LIVING, INC.

2003 STOCK OPTION AND RESTRICTED STOCK PLAN

STOCK UNIT AGREEMENT

     Sunrise Senior Living, Inc., a Delaware corporation (the “Company”), hereby grants stock units
relating to shares of its common stock, $.01 par value (the “Stock”), to the Grantee named below,
subject to the vesting conditions set forth in the attachment. Additional terms and conditions of
the grant are set forth in this cover sheet, in the attachment and in the Company’s 2003 Stock
Option and Restricted Stock Plan (the “Plan”).

Grant Date:

         
            __________________________________________________

Name of Grantee:

         
            __________________________________________________

Number of Units Covered by Grant:    ____________ Base Units

      
                  
                  
                      ____________ Supplemental Units

Purchase Price per Share of Stock: $0.01

     By signing this cover sheet, you agree to all of the terms and conditions described in the
attached Agreement and in the Plan, a copy of which is available from the Company upon request.
You acknowledge that you have carefully reviewed the Plan, and agree that the Plan will control in
the event any provision of this Agreement should appear to be inconsistent.

Grantee:

         
            __________________________________________________

         
                     
                     
            (Signature)

Company:

         
            __________________________________________________

         
                     
                     
            (Signature)

Title:

         
            __________________________________________________

Attachment

This is not a stock certificate or a negotiable instrument.

 

 

SUNRISE SENIOR LIVING, INC.

2003 STOCK OPTION AND RESTRICTED STOCK PLAN

STOCK UNIT AGREEMENT

	 	 	 
	Stock Unit/

Nontransferability

	 	This grant is an award of stock units in the total
number of Base Units and Supplemental Units set
forth on the cover sheet at the purchase price set
forth on the cover sheet, and subject to the
vesting conditions described below (collectively,
the “Stock Units”). The purchase price for the
Stock is deemed paid by your services to the
Company. Your Stock Units may not be transferred,
assigned, pledged or hypothecated, whether by
operation of law or otherwise, nor may the Stock
Units be made subject to execution, attachment or
similar process.
	 
	Vesting

	 	Base Units shall be 100% vested as of the Grant
Date. Supplemental Units shall become 100% vested
on the ___anniversary of the Grant Date (the
“Vesting Date”); provided you have been
continuously employed by the Company or a
Subsidiary from the Grant Date until the Vesting
Date.
	 
	 

	 	Notwithstanding the vesting schedule in the
preceding paragraph, to the extent not previously
vested, your Supplemental Units shall become 100%
vested upon the earlier of (i) a Change in Control
(as defined below), (ii) your termination of
employment with the Company or a Subsidiary due to
your death or disability, (iii) your termination
of employment by the Company or a Subsidiary other
than for Cause (as defined in the Company’s Senior
Executive Severance Plan dated February 25, 2000
(the “Severance Plan”)), or (iv) termination of
employment by you for Good Reason (as defined in
the Severance Plan), if you have been continuously
employed by the Company or a Subsidiary from the
Grant Date.
	 
	 

	 	ALTERNATIVE 1:
	 
	 

	 	For purposes of this Agreement, “Change in
Control” means any of the following events:
	 
	 

	 	(a) any person (as such term is used in Rule 13d-5
under the Securities Exchange Act of 1934
(“Exchange Act”) or group (as such term is defined
in Section 3(a)(9) and 13(d)(3) of the Exchange
Act), other than a subsidiary or any employee
benefit plan (or any related trust) of the Company
or a Subsidiary, becomes, after the Grant Date,
the beneficial owner of Stock or of other
securities of the Company that are entitled to
vote generally in the election of directors of the
Company (“Voting Securities”) representing 50% or
more of the combined voting power of all Voting
Securities of the Company;

 

 

	 	 	 
	 

	 	(b) individuals who, as of the Grant Date,
constitute the Board (the “Incumbent Board”) cease
for any reason to constitute a majority of the
members of the Board; provided that any individual
who becomes a director after the Grant Date whose
election or nomination for election by the
Company’s shareholders was approved by a majority
of the members of the Incumbent Board (other than
an election or nomination of an individual whose
initial assumption of office is in connection with
an actual or threatened “election contest”
relating to the election of the directors of the
Company (as such terms are used in Rule 14a-11
under the Exchange Act), “tender offer” (as such
term is used in Section 14(d) of the Exchange Act)
or a proposed Merger (as defined below)) shall be
deemed to be members of the Incumbent Board; or

	 
	 

	 	(c) approval by the stockholders of the Company of
either of the following: (i) a merger,
reorganization, consolidation or similar
transaction (any of the foregoing, a “Merger”) as
a result of which the persons who were the
respective beneficial owners of the outstanding
Stock and Voting Securities of the Company
immediately before such Mergers are not expected
to beneficially own, immediately after such
Merger, directly or indirectly, more than 60% of
the Stock and 60% of the combined voting power of
the Voting Securities of the Company resulting
from such Merger in substantially the same
proportions as immediately before such Merger or
(ii) a plan of liquidation of the Company or a
plan or agreement for the sale or other
disposition of all or substantially all of the
assets of the Company.

	 
	 
	 	***********************************
	 
	 

	 	ALTERNATIVE 2:
	 

	 	For purposes of this Agreement, “Change in
Control” means any of the following events:
	 
	 

	 	(A) any person, other than Paul J. Klaassen,
Teresa M. Klaassen or their respective affiliates,
associates or estates, becomes, after the date of
grant, the beneficial owner, directly or
indirectly, of securities of the Company
representing 40% or more of the combined voting
power of the Company’s then outstanding
securities;

	 
	 

	 	(B) during any two-year period, individuals who at
the beginning of such period constitute the Board
(including, for this purpose, any director who
after the beginning of such

 

 

	 	 	 
	 

	 	period filled a vacancy on the Board caused by the resignation,
mandatory retirement, death, or disability of a
director and whose election or appointment was
approved by a vote of at least two-thirds of the
directors then in office who were directors at the
beginning of such period) cease for any reason to
constitute a majority thereof;
	 
	 

	 	(C) notwithstanding clauses (A) or (E) of this
paragraph, the Company consummates a merger or
consolidation of the Company with or into another
corporation, the result of which is that the
persons who were stockholders of the Company at
the time of the execution of the agreement to
merge or consolidate own less than 80% of the
total equity of the corporation surviving or
resulting from the merger or consolidation or of a
corporation owning, directly or indirectly, 100%
of the total equity of such surviving or resulting
corporation;

	 
	 

	 	(D) the sale in one or a series of transactions of
all or substantially all of the assets of the
Company;

	 
	 

	 	(E) any person, other than Paul J. Klaassen,
Teresa M. Klaassen or their respective affiliates,
associates or estates, has commenced a tender or
exchange offer, or entered into an agreement or
received an option, to acquire beneficial
ownership of securities of the Company
representing 40% or more of the combined voting
power of the Company’s then outstanding
securities, unless the Board has made a
determination that such action does not constitute
and will not constitute a material change in the
persons having control of the Company;

	 
	 

	 	(F) the consummation by the Company or a
Subsidiary of a merger (including a triangular
merger involving a Subsidiary) or other business
combination transaction in which the Company
issues equity securities representing 20% or more
of its then outstanding common stock in such
merger or other transaction; or

	 
	 

	 	(G) there is a change of control in the Company of
a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Exchange Act
other than in circumstances specifically covered
by clauses (A) through (F) above.

	 
	 

	 	***********************************

 

 

	 	 	 
	 

	 	No Stock Units will vest after you have ceased to
be employed by the Company or any Subsidiary for
any reason.
	 
	Delivery of Shares

	 	Unless you previously elected in writing to
further defer the payment of the Stock Units until
either (i) a specified date that is permissible
payment date pursuant to Section 409A of the
Internal Revenue Code of 1986, as amended or (ii)
Retirement (as such term is defined in the
Company’s Executive Deferred Compensation Plan),
which election, in either case, provides for the
payment of only the vested portion of the Stock
Units if employment terminates earlier than the
specified payment date, a certificate for all of
the shares of Stock represented by your Base Units
and Supplemental Units shall be delivered to you
on the Vesting Date; provided, that, if the
Vesting Date occurs during a window period in
which you are restricted from selling Stock in the
open market because a trading window is not
available, delivery of such shares will be delayed
until the date immediately following the opening
of a trading window. If you previously elected in
writing to further defer the payment of the Stock
Units as contemplated above, a certificate for all
of the shares of Stock represented by your Base
Units and Supplemental Units shall be delivered to
you on the specified payment date, subject to the
same window period restrictions set forth in the
preceding sentence (or, if your employment
terminates earlier than the specified payment
date, such certificate shall be delivered, as to
the vested portion of the Stock Units only, within
10 days after such termination date).
	 
	 

	 	In the event that your employment with the Company
or a Subsidiary terminates prior to the time at
which your Supplemental Shares become vested, upon
your termination of employment the Company will
deliver to you your Base Units and you will
forfeit your unvested Supplemental Units.
	 
	Withholding Taxes

	 	You agree, as a condition of this grant, that you
will make acceptable arrangements to pay any
withholding or other taxes that may be due as a
result of the vesting and/or delivery of Stock
pursuant to this grant. In the event that the
Company determines that any federal, state, local
or foreign tax or withholding payment is required
relating to the vesting and/or delivery of shares
arising from this grant, the Company shall have
the right to require such payments from you,
withhold such amounts from other payments due to
you from the Company or any Affiliate or cause an
immediate forfeiture of shares Stock subject to
the Stock Units granted pursuant to this Agreement
in an amount equal to the withholding or other
taxes due.
	 
	Retention Rights

	 	This Agreement does not give you the right to be
retained by the

 

 

	 	 	 
	 

	 	Company in any capacity. The Company reserves the right to terminate your
service with the Company at any time and for any
reason.
	 
	Shareholder Rights

	 	You do not have the rights of a shareholder with
respect to the Stock Units unless and until the
Stock relating to the Stock Units has been
delivered to you. You will, however, be entitled
to receive an amount equal to any dividends
declared or paid on such Stock. Any distributions
you receive as a result of any stock split, stock
dividend, combination of shares or other similar
transaction shall be deemed to be a part of the
Stock Units and subject to the same conditions and
restrictions applicable thereto. The Company may
in its sole discretion require that any amounts
paid as dividend equivalents in connection with
the Stock Units be treated as reinvested in Stock
Units and subject to the same conditions and
restrictions applicable thereto.
	 
	Adjustments

	 	In the event of a stock split, a stock dividend or
a similar change in the Stock, the number of Stock
Units covered by this grant may be adjusted (and
rounded down to the nearest whole number) pursuant
to the Plan. Your Stock Units shall be subject to
the terms of the agreement of merger, liquidation
or reorganization in the event the Company is
subject to such corporate activity.
	 
	Applicable Law

	 	This Agreement will be interpreted and enforced
under the laws of the State of Delaware, other
than any conflicts or choice of law rule or
principle that might otherwise refer construction
or interpretation of this Agreement to the
substantive law of another jurisdiction.
	 
	The Plan

	 	The text of the Plan is incorporated in this
Agreement by reference. Certain capitalized terms
used in this Agreement are defined in the Plan,
and have the meaning set forth in the Plan.
	 
	 

	 	This Agreement, the Plan and the further deferral
election referenced under “Delivery of Shares”
hereunder constitute the entire understanding
between you and the Company regarding this grant
of Stock Units. Any prior agreements, commitments
or negotiations concerning this grant are
superseded.

     By signing the cover sheet of this Agreement, you agree to all of the terms and conditions
described above and in the Plan.

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