Document:

EX-10.2

Exhibit 10.2

Board of Directors

Compensation Policy

Effective as of the March 2005 quarterly Board and Board Committee Meetings, the independent
director compensation is as follows:

A. Annual Retainer and Annual Stock Option Award

	 	•	 	independent directors shall be paid an annual retainer of $40,000; and

	 	•	 	independent directors shall receive additional compensation in the form of an annual
stock option grant, given in either stock options, stock appreciation rights, or
restricted shares or units, of approximately 5,500 shares;

B. Fees for Specific Services as a Director

Each independent director shall also be entitled to receive up to $80,000 in additional fees for
specific services as a director, which shall be earned and become payable according to the
following schedule:

	 	•	 	the independent directors shall continue to receive the fees currently in effect for
attendance at board committee meetings—$1,500 for a meeting of under 3 hours in duration
and $3,000 for a meeting longer than 3 hours in duration;

	 	•	 	the independent director serving as “presiding director” shall be paid an annual fee of
$6,000 ($1,500 to be paid quarterly) for the lead director’s additional responsibilities;

	 	•	 	the chairman of each board committee shall continue to receive the fees currently in
effect for such position—$3,000 for a meeting under 3 hours in duration and $6,000 for a
meeting longer than 3 hours in duration;

	 	•	 	the independent/non-employee directors shall continue to receive $1,500 for each Board
meeting actually attended;

	 	•	 	the independent/non-employee directors shall receive $1,500 per day for attendance in
their capacity as directors at formal meetings in their capacity as directors with Company
officers not held on the same day as a board meeting or board committee meeting,
including, without limitation but by way of example, Executive Committee meetings and
strategic planning meetings; and

	 	•	 	the independent directors shall receive $1,500 per day for each day on which they
attend “extraordinary meetings” or perform “extraordinary services” in their capacity as
members of a Board committee, in each case as determined to be extraordinary and approved
for payment by the applicable Board committee following submission of a request for
payment by the independent director.

C. Director Stockownership

	 	•	 	the independent directors shall have up to five years to acquire the greater of

(i) 3,000 shares of Company stock or (ii) the number of shares equal to $160,000, which is
four-times their current retainer fee of $40,000; these shares may be acquired in the form of
exercised vested options, vested restricted stock or units, or phantom stock in connection with
their Deferred Compensation Plan.

The Corporate Governance and Nominating Committee shall annually review the policy of independent
director compensation and stock ownership requirements.EX-10.3

Exhibit 10.3

FOREST CITY ENTERPRISES, INC.

2005 DEFERRED COMPENSATION PLAN FOR EXECUTIVES

Forest City Enterprises, Inc. hereby establishes, effective as of January 1, 2005, the Forest
City Enterprises, Inc. 2005 Deferred Compensation Plan For Executives on the terms and conditions
hereinafter set forth. Such Plan provides a select group of management or highly compensated
employees of the Company with the opportunity to defer base salary, or incentive compensation
payments which may be paid to such executives under any plan which the Committee (as defined below)
may designate from time to time, in accordance with the provisions of the Plan.

ARTICLE I

DEFINITIONS

For the purposes hereof, the following words and phrases shall have the meanings set forth
below, unless their context clearly requires a different meaning:

1. “Account” shall mean the bookkeeping account maintained by the Committee on behalf of each
Participant pursuant to Section 4 of Article II that is credited with Base Salary or Incentive
Compensation which is deferred by a Participant, and the interest on such amounts as determined in
accordance with Section 4 of Article II.

2. “Base Salary” shall mean the annual fixed or base compensation, payable monthly or
otherwise to a Participant.

3. “Beneficiary” or “Beneficiaries” shall mean the person or persons, including one or more
trusts, designated by a Participant in accordance with the Plan to receive payment of the remaining
balance of the Participant’s Account in the event of the death of the Participant prior to receipt
of the entire amount credited to the Participant’s Account.

4. “Board” shall mean the Board of Directors of the Company.

5. “Change in Control” shall mean that:

(i) The Company is merged or consolidated or reorganized into or with another
corporation or other legal person, and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting power of the securities of such
corporation or person that are outstanding immediately following the consummation of such
transaction is held in the aggregate by either (a) the holders of Voting Stock (as
hereinafter defined) of the Company immediately prior to such transaction or (b) Permitted
Holders;

(ii) The Company sells or otherwise transfers all or substantially all of its assets to
any other corporation or other legal person, and as a result of such sale or transfer less
than a majority of the combined voting power of the securities of such corporation or person
that are outstanding immediately following the consummation of such sale or transfer is held
in the aggregate by either (a) the holders of Voting Stock (as hereinafter defined) of the
Company immediately prior to such sale or transfer or (b) Permitted Holders;

(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or any successor
schedule, form or report) thereto, each as promulgated pursuant to the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), disclosing that any person (as the term
“person” is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) other than a
Permitted Holder has become the beneficial owner (as the term “beneficial owner” is defined
under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of
securities representing 20 percent or more of the combined voting power of the
then-outstanding securities entitled to vote generally in the election of the Board (the
“Voting Stock”);

(iv) The Company files a report or proxy statement with the Securities and Exchange
Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A
(or any successor schedule, form or report or item therein) that a change in control of the
Company has or may have occurred or will or may occur in the future pursuant to any
then-existing contract or transaction, other than with respect to a Permitted Holder; or

(v) If during any period of two consecutive years, individuals who at the beginning of
any such period constitute the Board cease for any reason to constitute at least a majority
of the members thereof, unless the election, or the nomination for election by the Company’s
stockholders, of each member of the Board first elected during such period was approved by a
vote of at least two-thirds of the members of the Board then still in office who were
members of the Board at the beginning of any such period.

Notwithstanding the foregoing provisions of subsection (iii) or (iv) hereof, a “Change in Control”
shall not be deemed to have occurred for purposes of the Plan, either (1) solely because the
Company, a Subsidiary, or any Company-sponsored employee stock ownership plan or other employee
benefit plan of the Company, files or becomes obligated to file a report or a proxy statement under
or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act, disclosing beneficial ownership
by it of shares of Voting Stock, whether in excess of 20 percent or otherwise, or because the
Company reports that a change in control of the Company has or may have occurred or will or may
occur in the future by reason of such beneficial ownership or (2) solely because of a change in
control of any Subsidiary by which any Participant may be employed. Notwithstanding the foregoing
provisions of subsections (i-iv) hereof, if, prior to any event described in subsections (i-iv)
hereof that may be instituted by any person who is not an officer or director of the Company, or
prior to any disclosed proposal that may be instituted by any person who is not an officer or
director of the Company that could lead to any such event, management proposes any restructuring of
the Company that ultimately leads to an event described in subsections (i-iv) hereof pursuant to
such management proposal, then a “Change in Control” shall not be deemed to have occurred for
purposes of the Plan.

6. “Code” shall mean the Internal Revenue Code of 1986, as amended.

7. “Committee” shall mean the Compensation Committee of the Board or such other Committee as
may be authorized by the Board to administer the Plan.

8. “Company” shall mean Forest City Enterprises, Inc. and its successors, including, without
limitation, the surviving corporation resulting from any merger or consolidation of Forest City
Enterprises, Inc. with any other corporation or corporations.

9. “Deferral Election” shall mean an Election Agreement completed by a Participant and filed
with the Committee that indicates the amount of his or her Base Salary and/or Incentive
Compensation that is or will be deferred under the Plan.

10. “Disability” shall have the meaning given to such term in the Company’s Long Term
Disability Plan, as amended from time to time.

11. “Election Agreement” shall mean an agreement in the form that the Committee may designate
from time to time, including, without limitation, the “Election Agreement for 2005” that was filed
by Participants in December 2004.

12. “Eligible Employee” shall mean a full-time or part-time employee of the Company (or a
Subsidiary that has adopted the Plan) who is, as determined by the Committee, a member of a “select
group of management or highly compensated employees,” within the meaning of Sections 201, 301 and
401 of ERISA, and who is selected by the Committee to participate in the Plan. Unless otherwise
determined by the Committee, an Eligible Employee shall continue as such until termination of
employment.

13. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

14. “Incentive Compensation” shall mean cash incentive compensation payable pursuant to an
incentive compensation plan, whether such plan is now in effect or hereafter established by the
Company, which the Committee may designate from time to time.

15. “Insolvent” shall mean that the Company has become subject to a pending voluntary or
involuntary proceeding under the United States Bankruptcy Code or has become unable to pay its
debts as they mature.

16. “Key Employee” shall mean a key employee as defined in Section 409A of the Code and
Section 416(i) of the Code (without regard to paragraph (5) thereof) of the Company (or a
controlled group member).

17. “Participant” shall mean any Eligible Employee who has at any time made a Deferral
Election in accordance with Section 2 of Article II of the Plan and who, in conjunction with his or
her Beneficiary, has not received a complete distribution of the amount credited to his or her
Account.

18. “Permitted Holder” shall mean (i) any of Samuel H. Miller, Albert B. Ratner, Charles A.
Ratner, James A. Ratner, Ronald A. Ratner or any spouse of any of the foregoing, and any trusts for
the benefit of any of the foregoing, (ii) RMS, Limited Partnership and any general partner or
limited partner thereof and any person (other than a creditor) that upon the dissolution or winding
up of RMS, Limited Partnership receives a distribution of capital stock of the Company, (iii) any
group (as defined in Section 13(d) of the Exchange Act) of two or more persons or entities that are
specified in the immediately preceding clauses (i) and (ii), and (iv) any successive recombination
of the persons or groups that are specified in the immediately preceding clauses (i), (ii) and
(iii).

19. “Plan” shall mean this deferred compensation plan, which shall be known as the Forest City
Enterprises, Inc. 2005 Deferred Compensation Plan For Executives. The Plan is unfunded and is
maintained by the Company primarily for the purpose of providing deferred compensation for a select
group of management or highly compensated employees of the Company.

20. “Subsidiary” shall mean any corporation, joint venture, partnership, unincorporated
association or other entity in which the Company has a direct or indirect ownership or other equity
interest and directly or indirectly owns or controls 50 percent or more of the total combined
voting or other decision-making power.

21. “Termination of Employment” shall mean a separation from service as defined under Section
409A of the Code.

22. “Unforeseeable Emergency” shall mean a severe financial hardship to a Participant
resulting from (i) an illness or accident of the Participant or his or her spouse or dependent (as
defined in Section 152(a) of the Code), (ii) loss of the Participant’s property due to casualty, or
(iii) other similar or extraordinary circumstances arising as a result of events beyond the control
of the Participant.

23. “Year” shall mean a calendar year, commencing with calendar year 2005.

ARTICLE II

ELECTION TO DEFER

1. Eligibility. An Eligible Employee may make a Deferral Election with respect to
receipt of all or a specified part of his or her Base Salary or Incentive Compensation for any Year
in accordance with Section 2 of this Article. An Eligible Employee’s entitlement to defer shall
cease with respect to the Year following the Year in which he or she ceases to be an Eligible
Employee.

2. Initial Deferral Elections. Subject to Sections 2(iii) and 2(iv), all Deferral
Elections made shall be irrevocable, shall be made on an Election Agreement filed with the
Committee and shall comply with the following requirements:

(i) The Deferral Election shall specify the amount of Base Salary and/or Incentive
Compensation that is to be deferred within the limits under Section 3 of this Article as
well as the time or times at which the Participant has elected to have his or her Base
Salary and/or Incentive Compensation paid under Section 5 of this Article.

(ii) The Deferral Election shall be made prior to the first day of the Year for which
such Base Salary and/or Incentive Compensation would otherwise be earned (except that an
employee who first becomes an Eligible Employee during the course of a Year, rather than as
of the first day of a Year, shall make such Deferral Election within thirty (30) days
following the date the employee first becomes an Eligible Employee, and such Deferral
Election shall be effective only with regard to Base Salary and Incentive Compensation
earned following the filing of the Election Agreement with the Committee); provided,
however, that to the extent permitted by Section 409A of the Code, the Participant
may make a Deferral Election with respect to Incentive Compensation that constitutes
“performance-based compensation” (within the meaning of Section 409A(a)(4)(B)(iii) of the
Code) at a time later than the time described earlier in this first sentence but no later
than six (6) months prior to the end of the performance period with respect to which the
Incentive Compensation is earned.

(iii) Any Deferral Election shall continue to be effective from Year to Year until
revoked or modified by written notice from the Participant to the Committee, provided that
such written election to revoke or modify such Deferral Election must be made prior to the
beginning of the Year for which such Deferral Election is to be effective.

(iv) The Committee may, in accordance with Question and Answer 20 of Internal Revenue
Service Notice 2005-1, amend the Plan to allow a Participant during the Year 2005 to
terminate participation in the Plan or cancel his or her Deferral Election, provided
that (i) such amendment is enacted and effective on or before December 31, 2005 and
(ii) the amounts subject to such termination or cancellation are includible in the gross
income of the Participant in the taxable year in which the amounts are earned and vested.
In the event of any such termination or cancellation by a Participant, the amount subject to
such termination or cancellation shall be distributed to the Participant.

3. Amount Deferred. A Participant shall designate on the Election Agreement the
percentage or the dollar amount of his or her Base Salary or Incentive Compensation that is to be
deferred, provided, however, that the maximum deferral by a Participant during any
one Year shall be, with respect to such Year, the lesser of (i) $100,000 and (ii) 25% of the sum of
the Base Salary which the Participant would otherwise receive during such Year and the Incentive
Compensation which the Participant earned during such Year. A Participant may specify in the
Election Agreement that different percentages or dollar amounts shall apply to Incentive
Compensation payable under different incentive compensation plans.

4. Accounts. Base Salary and Incentive Compensation that a Participant elects to
defer shall be treated as if it were set aside in an Account on the date the Base Salary or
Incentive Compensation would otherwise have been paid to the Participant. Such Account will be
credited with interest at such rate and in such manner as is determined from time to time by the
Committee.

5. Time and Form of Payment of Account. Subject to Sections 7, 8, and 9 of this
Article, the amount of a Participant’s Account shall be paid as provided in this Section 5.

(i) The Deferral Election shall contain the Participant’s elections regarding the time
of the commencement of payment of the Participant’s Account. A Participant may elect to
commence payment as soon as practicable following (a) the date on which he or she incurs a
Termination of Employment for any reason, including, without limitation, by reason of death,
retirement, or Disability, or (b) with the Committee’s written approval at the time that the
Participant files his or her Election Agreement with the Committee, a specified date which
may be prior to or after the Participant’s Termination of Employment. Notwithstanding the
foregoing, in the event that a Participant elects (with the Committee’s approval as
described in the preceding sentence) to commence payments on a specified date and prior to
such date he or she incurs a Termination of Employment, payment of the Participant’s Account
shall commence, in the form elected pursuant to Section 5(ii), as soon as practicable
following the date of such Termination of Employment.

(ii) The Deferral Election shall also contain the Participant’s elections regarding the
form of payment of the Participant’s Account. The Participant may elect to receive the
amount of his or her Account attributable to deferral of Base Salary and Incentive
Compensation in one of the following forms: (a) a single, lump sum payment or, (b) in a
number of approximately equal annual installments, over a specified period not exceeding
five (5) years. In the event that the Account is paid in installments, the amount of each
installment shall be equal to the quotient obtained by dividing the Participant’s Account
balance as of the date of such installment payment by the number of installment payments
remaining to be made to or in respect of such Participant at the time of the calculation.
In the event that the Account is paid in installments, the amount of such Account remaining
unpaid shall continue to bear interest, as provided in Section 4 of this Article. The
payment of a single, lump-sum amount, or the payment of a number of approximately equal
annual installments, not in excess of five (5) payments, as designated by the Participant in
the Election Agreement, to a Participant (or his or her Beneficiary) pursuant to this
Section shall discharge all obligations of the Company to such Participant (or his or her
Beneficiary) under the Plan.

(iii) Notwithstanding the foregoing, if the Participant is a Key Employee, payment on
account of Termination of Employment may not commence before the date that is six (6) months
after the date of such Termination of Employment (or, if earlier, the date of death).

6. Subsequent Deferral Elections. A Participant may make a subsequent Deferral
Election to change the time of the commencement of payment(s) of his or her Account, the form of
payment of his or her Account, or both, if all of the following requirements are met:

(i) Such subsequent Deferral Election may not take effect until at least twelve (12)
months after the date on which the subsequent Deferral Election is made;

(ii) In the case of a subsequent Deferral Election related to a distribution of
deferred compensation not described in Section 7 or 9 of this Article, the first
distribution under such subsequent Deferral Election shall in all cases be deferred for a
period of not less than five (5) years from the date such distribution would otherwise have
been made; and

(iii) Any subsequent Deferral Election related to a distribution that is to be made at
a specified time or pursuant to a fixed schedule pursuant to Section 5 of this Article must
be made not less than twelve (12) months prior to the date of the first scheduled payment
under the prior Deferral Election.

7. Death of a Participant. In the event of the death of a Participant, the remaining
amount of the Participant’s Account shall be paid to the Beneficiary or Beneficiaries designated in
a writing on a form that the Committee may designate from time to time (the “Beneficiary
Designation”), in accordance with the Participant’s Deferral Election, or in accordance with a
special payment election filed by the Participant with the Committee at the same time as the
Participant’s Deferral Election under Section 5 or 6 of this Article is filed with the Committee
that is to be operative and override any other payment election under the Participant’s Deferral
Election in the event of the death of the Participant. Any special payment election filed by a
Participant subsequent to the filing of his or her initial Deferral Election under Section 5 of
this Article must meet such additional requirements as the Committee determines are appropriate to
avoid the inclusion of the amounts subject to such special payment election in the gross income of
a Participant or Beneficiary under Section 409A(a)(1) of the Code. A Participant’s Beneficiary
Designation may be changed at any time prior to his or her death by the execution and delivery of a
new Beneficiary Designation. The Beneficiary Designation on file with the Company that bears the
latest date at the time of the Participant’s death shall govern. In the absence of a Beneficiary
Designation or the failure of any Beneficiary to survive the Participant, the amount of the
Participant’s Account shall be paid to the Participant’s estate in accordance with the elections
made on the Participant’s Deferral Election. In the event of the death of the Beneficiary or
Beneficiaries after the death of a Participant, the amount of the Participant’s Account shall be
paid to the estate of the last surviving Beneficiary in accordance with the elections made on the
Participants’ Deferral Election.

8. Small Payments. Notwithstanding the foregoing, if at any time following a
Participant’s Termination of Employment the Participant’s Account balance does not exceed $10,000
(or such other amount permitted under Section 409A of the Code), such Account shall be
automatically paid to such Participant in a single, lump-sum payment as soon as practicable
thereafter, provided, however, that if the Participant is a Key Employee, payment may not occur
under this Section before the date that is six (6) months after the date of Termination of
Employment (or, if earlier, the date of death).

9. Unforeseeable Emergency. Notwithstanding the foregoing, in the event of an
Unforeseeable Emergency and at the request of a Participant or Beneficiary, accelerated payment
shall be made to the Participant or Beneficiary of all or a part of his or her Account. Payments
of amounts as a result of an Unforeseeable Emergency may not exceed the amount necessary to satisfy
such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result
of the distribution(s), after taking into account the extent to which the hardship is or may be
relieved through reimbursement or compensation by insurance or otherwise by liquidation of the
Participant’s assets (to the extent the liquidation of such assets would not itself cause severe
financial hardship).

10. Termination of Participation. Notwithstanding any other provision of the Plan, a
Participant’s active participation in the Plan shall terminate upon a determination by the
Committee that the Participant is not a member of a select group of management or highly
compensated employees of his or her employer, within the meaning of ERISA. In the event that the
Plan is terminated, the amounts allocated to a Participant’s Account shall not be distributed to
the Participant (or, in the case of his or her death, his or her Beneficiary) unless permitted by
Section 409A of the Code.

ARTICLE III

ADMINISTRATION

The Company, through the Committee, shall be responsible for the general administration of the
Plan and for carrying out the provisions hereof. The Committee shall have all such powers as may
be necessary to carry out the provisions of the Plan, including the power to (i) resolve all
questions relating to eligibility for participation in the Plan and the amount in the Account of
any Participant and all questions pertaining to claims for benefits and procedures for claim
review, (ii) resolve all other questions arising under the Plan, including any factual questions
and questions of construction, and (iii) take such further action as the Company shall deem
advisable in the administration of the Plan. The actions taken and the decisions made by the
Committee hereunder shall be final and binding upon all interested parties. In accordance with the
provisions of Section 503 of ERISA, the Committee shall provide a procedure for handling claims of
Participants or their Beneficiaries under the Plan. Such procedure shall be in accordance with
regulations issued by the Secretary of Labor and shall provide adequate written notice within a
reasonable period of time with respect to the denial of any such claim as well as a reasonable
opportunity for a full and fair review by the Committee of any such denial. It is intended that
the Plan comply with the provisions of Section 409A of the Code, as enacted by the Jobs Creation
Act of 2004, so as to prevent the inclusion in gross income of any amounts deferred hereunder in a
taxable year that is prior to the taxable year or years in which such amounts would otherwise
actually be distributed or made available to Participants or Beneficiaries. This Plan shall be
administered in a manner that effects such intent.

ARTICLE IV

AMENDMENT AND TERMINATION

The Company reserves the right to amend or terminate the Plan at any time by action of the
Board, except that that no such action shall adversely affect any Participant or Beneficiary who
has an Account, or result in any change in the timing or manner of payment of the amount of any
Account (except as otherwise permitted under the Plan), without the consent of the Participant or
Beneficiary (provided, however, that this limitation requiring the consent of
Participants or Beneficiaries to certain actions shall not apply to any amendment or termination
that is deemed necessary by the Company to ensure compliance with Section 409A of the Code).

ARTICLE V

MISCELLANEOUS

1. Non-Alienation of Deferred Compensation. No right or interest under the Plan of
any Participant or Beneficiary shall be (i) assignable or transferable in any manner, (ii) subject
to alienation, anticipation, sale, pledge, encumbrance, attachment, garnishment or other legal
process or (iii) in any manner liable for or subject to the debts or liabilities of the Participant
or Beneficiary. Notwithstanding the foregoing, to the extent permitted by Section 409A of the
Code, the Committee shall honor a judgment, order or decree from a state domestic relations court
which requires the payment of part or all of a Participants’ or Beneficiary’s interest under this
Plan to an “alternate payee” as defined in Section 414(p) of the Code.

2. Participation by Employees of Subsidiaries. An Eligible Employee who is employed
by a Subsidiary (that has adopted the Plan) and who elects to participate in the Plan shall
participate on the same basis as an Eligible Employee of the Company. The Account of a Participant
employed by a Subsidiary shall be paid in accordance with the Plan solely by such Subsidiary to the
extent attributable to Base Salary or Incentive Compensation that would have been paid by such
Subsidiary in the absence of deferral pursuant to the Plan, unless the Committee otherwise
determines that the Company shall be the obligor.

3. Interest of Participant. The obligation of the Company under the Plan to make
payment of amounts reflected in an Account merely constitutes the unsecured promise of the Company
to make payments from its general assets and no Participant or Beneficiary shall have any interest
in, or a lien or prior claim upon, any property of the Company. Further, no Participant or
Beneficiary shall have any claim whatsoever against any Subsidiary for amounts reflected in an
Account. Nothing in the Plan shall be construed as guaranteeing future employment to Eligible
Employees. It is the intention of the Company that the Plan be unfunded for tax purposes and for
purposes of Title I of ERISA. The Company may create a trust to hold funds to be used in payment
of its obligations under the Plan, and may fund such trust; provided, however, that
any funds contained therein shall remain liable for the claims of the Company’s general creditors.
Notwithstanding the above, upon the earlier to occur of (i) a Change in Control or (ii) a
declaration by the Board that a Change in Control is imminent, the Company shall promptly to the
extent it has not previously done so:

(a) establish an irrevocable trust, substantially in the form of the Rabbi Trust
attached hereto as Exhibit A (the funds of which shall be subject to the claims of
the Company’s general creditors) to hold funds to be used in payment of its obligations
under the Plan; and

(b) transfer to the trustee of such trust, to be added to the principal thereof, an
amount equal to (I) the aggregate amount credited to the Accounts of all of the Participants
and Beneficiaries under the Plan, less (II) the balance, if any, in the trust at such time.

4. Claims of Other Persons. The provisions of the Plan shall in no event be construed
as giving any other person, firm or corporation any legal or equitable right as against the Company
or any Subsidiary or the officers, employees or directors of the Company or any Subsidiary, except
any such rights as are specifically provided for in the Plan or are hereafter created in accordance
with the terms and provisions of the Plan.

5. Severability; Failure to Satisfy Section 409A. The invalidity and unenforceability
of any particular provision of the Plan shall not affect any other provision hereof, and the Plan
shall be construed in all respects as if such invalid or unenforceable provision were omitted. Any
provisions that would cause any amount deferred or payable under the Plan to be includible in the
gross income of any Participant or Beneficiary under Section 409A(a)(1) of the Code shall have no
force and effect unless and until amended to cause such amount to not be so includible (which
amendment may be retroactive to the extent permitted by Section 409A of the Code).

6. Governing Law. Except to the extent preempted by federal law, the provisions of
the Plan shall be governed and construed in accordance with the laws of the State of Ohio.

7. Relationship to Other Plans. The Plan is intended to serve the purposes of and to
be consistent with any incentive compensation plan approved by the Committee for purposes of the
Plan.

8. Headings; Interpretation.

(i) Headings in this Plan are inserted for convenience of reference only and are not to
be considered in the construction of the provisions hereof.

(ii) Any reference in this Plan to Section 409A of the Code will also include any
proposed, temporary or final regulations, or any other guidance, promulgated with respect to
such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.

(iii) For purposes of the Plan, the phrase “permitted by Section 409A of the Code,” or
words or phrases of similar import, shall mean that the event or circumstance that may occur
or exist only if permitted by Section 409A of the Code would not cause an amount deferred or
payable under the Plan to be includible in the gross income of a Participant or Beneficiary
under Section 409A(a)(1) of the Code.

EXECUTED at Cleveland, Ohio on March 24, 2005.

FOREST CITY ENTERPRISES, INC.

By: James Talton

Title: Executive Vice President – Human Resources

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