UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.    )

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Dear Fellow Stockholders:

I welcome you to join me and the entire Board of Directors at our 2015 Annual Meeting of Stockholders, which will be held on May 21, 2015, at The Resort at Pelican Hill in Newport Coast, California.

At this year’s meeting we will vote on the election of 10 directors, the ratification of Ernst & Young as the Company’s independent auditor, and, if properly presented at the meeting, two stockholder proposals. We will also conduct a non-binding advisory vote to approve the compensation of the Company’s named executive officers.

To attend the meeting a government-issued photo identification is required and we encourage you to register in advance for admission to the meeting. To register in advance, please follow the instructions on page 3 of the Proxy Statement.

Your vote is important. Whether or not you plan to attend the meeting, we want your shares to be represented. Please vote your shares as soon as possible electronically through the Internet, by telephone, or by completing, signing and returning the proxy card enclosed with the Proxy Statement. More detailed instructions on how to vote are provided on page 4 of the Proxy Statement.

Our Board of Directors values your opinion as a stockholder and appreciates your continued support of AvalonBay.

April 10, 2015

Sincerely,

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Timothy J. Naughton
Chairman of the Board
and Chief Executive Officer

 

Ballston Tower, 671 N. Glebe Road, Suite 800
Arlington, VA 22203

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 2015

NOTICE IS HEREBY GIVEN that the 2015 Annual Meeting of Stockholders (the “Annual Meeting”) of AvalonBay Communities, Inc., a Maryland corporation (the “Company”), will be held on Thursday, May 21, 2015, at 8:00 a.m., local time, at The Resort at Pelican Hill, 22701 Pelican Hill Road South, Newport Coast, California 92657, for the following purposes:

1.

To elect the following ten directors to serve until the 2016 Annual Meeting of Stockholders and until their respective successors are elected and qualify: Glyn F. Aeppel, Terry S. Brown, Alan B. Buckelew, Ronald L. Havner, Jr., John J. Healy, Jr., Timothy J. Naughton, Lance R. Primis, Peter S. Rummell, H. Jay Sarles, and W. Edward Walter.

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2.

To consider and vote upon ratification of the selection of Ernst & Young LLP by the Audit Committee of the Company’s Board of Directors to serve as the Company’s independent auditors for 2015.

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3.

To consider and vote upon a resolution to approve, on a non-binding, advisory basis, the compensation of certain executives of the Company as more fully described in the accompanying proxy statement.

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4.

To consider and vote upon a stockholder resolution concerning the adoption by the Board and submission to stockholders of a ‘proxy access’ bylaw, if properly presented at the Annual Meeting.

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5.

To consider and vote upon a stockholder resolution concerning a policy that the Board’s chairman should be an independent director, if properly presented at the Annual Meeting.

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6.

To transact such other business as may be properly brought before the Annual Meeting and at any postponements or adjournments thereof.

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The Board of Directors has fixed the close of business on March 6, 2015, as the record date for determining the stockholders entitled to receive notice of and to vote at the Annual Meeting and at any postponements or adjournments thereof. Only holders of record of the Company’s common stock, par value $0.01 per share (the “Common Stock”), at that time will be entitled to receive notice of and to vote at the Annual Meeting and at any postponements or adjournments thereof.

You are requested to authorize a proxy to vote your shares by completing and signing the enclosed proxy card, which is being solicited by the Board of Directors, and by mailing it promptly in the enclosed postage-prepaid envelope. You may also authorize a proxy to vote your shares by telephone or over the Internet by following the instructions on your proxy card. Any proxy delivered by a holder of Common Stock may be revoked by delivering written notice to the Company stating that the proxy is revoked or by delivery of a properly executed, later dated proxy. Holders of record of Common Stock who attend the Annual Meeting may vote in person, even if they have previously delivered a signed proxy or authorized a proxy by telephone or over the Internet, but the presence (without further action) of a stockholder at the Annual Meeting will not constitute revocation of a previously delivered proxy.

If you plan to attend the meeting, we encourage you to register in advance for admission to the meeting. To register, please follow the instructions set forth on page 3 of the accompanying proxy statement. All meeting attendees must present government-issued photo identification, such as a driver’s license or passport, at the meeting.

A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and our 2014 Annual Report to Stockholders, accompany this Notice.

By Order of the Board of Directors​

Edward M. Schulman
Secretary​

Arlington, Virginia
April 10, 2015

Proxy Statement Table of Contents

 

Proxy Summary

This summary highlights certain information about the Company and its Annual Meeting of Stockholders and summarizes information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider and you should read the entire proxy statement before voting. For more complete information regarding the Company’s 2014 performance, please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and the Company’s 2014 Annual Report to Stockholders, both of which are being sent to stockholders with this Proxy Statement. This proxy statement and the accompanying Notice of Annual Meeting and proxy card are first being sent to stockholders on or about April 10, 2015.

2015 Annual Meeting of Stockholders Information

Date and Time:

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Place:

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Record Date:

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Meeting Agenda and Voting Matters

Election of Directors (Proposal 1)

The Board of Directors recommends a vote FOR each director nominee.

*IFC = Investment and Finance Committee, AC = Audit Committee, CC = Compensation Committee, NCG = Nominating and Corporate Governance Committee

Immediately following the Annual Meeting, the Board expects to appoint Mr. Sarles as Lead Independent Director and to make certain other changes to committee chairmanships and memberships as described in “Board of Directors and its Committees” beginning on page 13.

Ratification of Selection of Auditors (Proposal 2)

The Board of Directors recommends a vote FOR ratification of the selection of Ernst & Young by the Audit Committee of the Company’s Board of Directors to serve as the Company’s independent auditors for 2015.

Advisory Vote to Approve Executive Compensation (Proposal 3)

The Board of Directors recommends a vote FOR the resolution to approve, on a non-binding, advisory basis, the compensation paid to the Company’s Chief Executive Officer and other officers named in the Summary Compensation Table on Page 38 (the “Named Executive Officers”).

Stockholder Proposal Concerning Proxy Access (Proposal 4)

The Board of Directors recommends a vote AGAINST this resolution, if properly presented at the meeting.

Stockholder Proposal Concerning Independent Chairman (Proposal 5)

The Board of Directors recommends a vote AGAINST this resolution, if properly presented at the meeting.

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Q.

Why am I receiving these materials?

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A.

The accompanying proxy is solicited on behalf of the Board of Directors of AvalonBay Communities, Inc., a Maryland corporation (the “Company”). We are providing these proxy materials to you in connection with our 2015 Annual Meeting of Stockholders to be held on Thursday, May 21, 2015, at 8:00 a.m., local time, at The Resort at Pelican Hill, 22701 Pelican Hill Road South, Newport Coast, California 92657, and any postponements or adjournments thereof  (the “Annual Meeting” or the “2015 Annual Meeting”). As a Company stockholder, you are invited to attend the Annual Meeting and are entitled and requested to vote on the proposals described in this proxy statement. Directions on how to attend the Annual Meeting in person are available on the Company’s Internet website at www.avalonbay.com/events.

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Q.

How can I access the proxy materials electronically?

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A.

This proxy statement, our 2014 Annual Report to Stockholders, and our Annual Report on Form 10-K for the year ended December 31, 2014 are available online at www.proxyvote.com. Instead of receiving copies of our future annual reports, proxy statements, and proxy cards by mail, stockholders can elect to receive an email that will provide electronic links to our proxy materials and an electronic link to the proxy voting site. Choosing to receive your future proxy materials online will save us the cost of producing and mailing documents to you and help conserve natural resources. You may sign up for electronic delivery by visiting www.proxyvote.com. If you elect to receive these materials by electronic delivery, you may change your election at any time.

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Q.

Who may vote at the Annual Meeting?

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A.

You may vote all the shares of our common stock, par value $0.01 per share ( “Common Stock”), that you owned at the close of business on March 6, 2015, the record date for determining stockholders entitled to receive notice of, and to vote on, these matters (the “Record Date”). On the Record Date, the Company had 132,208,943 shares of Common Stock outstanding and entitled to vote at the meeting. You may cast one vote for each share of Common Stock held by you on all matters.

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Q.

How do I obtain admission to the Annual Meeting?

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If you plan to attend the Annual Meeting, we encourage you to register in advance. All meeting attendees must present government-issued photo identification, such as a driver’s license or passport, at the meeting. In addition, if you are authorized to represent a corporate or institutional stockholder, you must also present proof that you are the authorized representative of such stockholder. Please submit your request to register on or before Friday, May 15, 2015, by mailing or faxing a request to the Company’s Corporate Secretary at 671 N. Glebe Road, Suite 800, Arlington, VA 22203, facsimile: 703-329-4830 or sending an email to 2015AnnualMeeting@AvalonBay.com. Please include the following information: (a) your name and mailing address, (b) whether you need special assistance at the meeting, (c) if your shares are held for you in the name of your broker, bank or other nominee, evidence of your stock ownership (such as a current letter from your broker or a photocopy of a current brokerage or other account statement) as of March 6, 2015. The meeting facilities will open at 7:30 a.m. local time, to facilitate your registration and security clearance. For your security you will not be permitted to bring any packages, briefcases, large pocketbooks or bags into the meeting. Also, cellular phones, audio tape recorders, video and still cameras, pagers, laptops and other portable electronic devices as well as pets may not be permitted into the meeting. Thank you in advance for your patience and cooperation with these rules.

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Q.

What constitutes a quorum at the Annual Meeting?

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The presence, in person or by proxy, of holders of a majority of all of the shares of Common Stock entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and “broker non-votes” will be counted for purposes of determining whether a quorum is present for the transaction of business at the Annual Meeting. A “broker non-vote” refers to a share represented at the meeting held by a broker, as to which instructions have not been received from the beneficial owner or person entitled to vote such shares and with respect to which, on one or more but not all matters, the broker does not have discretionary voting power to vote such share.

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Note that under New York Stock Exchange (“NYSE”) rules, if you hold shares through a bank, broker or other institution and you do not provide your voting instructions to them at least 10 days before the Annual Meeting, that firm has the discretion to vote your shares on proposals that the NYSE has determined are routine, such as the ratification of the appointment of the independent public accounting firm. A bank, broker or institution that holds your shares cannot vote your shares on non-routine matters at the Annual Meeting, such as the election of directors, approval of compensation-related matters, or a proposal submitted by a stockholder, without your voting instructions.

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What proposals will be voted on at the Annual Meeting?

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A.

At the Annual Meeting, stockholders will be asked to: (1) elect ten directors of the Company, (2) consider and vote upon ratification of the selection of Ernst & Young LLP as the Company’s independent auditors for 2015, (3) consider and vote upon a resolution to approve, on a non-binding, advisory basis, the Company’s named executive officer compensation, (4) consider and vote upon two stockholder proposals, if properly presented at the Annual Meeting, and (5) transact such other business as may be properly brought before the Annual Meeting, in each case as specified in the Notice of Annual meeting and more fully described in this proxy statement.

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Q.

How do I vote?

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Whether you hold shares directly as the stockholder of record or indirectly as the beneficial owner of shares held for you by a broker or other nominee (i.e., in “street name”), you may direct your vote without attending the Annual Meeting. You may vote by granting a proxy or, for shares you hold in street name, by submitting voting instructions to your broker or nominee. In most instances, you will be able to do this over the Internet, by telephone or by mail. Please refer to the summary instructions below and those included on your proxy card or, for shares you hold in street name, the voting instruction card provided by your broker or nominee.

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By Internet—If you have Internet access, you may authorize your proxy from any location in the world by following the “By Internet” instructions on the proxy card or, if applicable, the Internet voting instructions that may be described on the voting instruction card sent to you by your broker or nominee.

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By Telephone—If you are calling from the United States or Canada, you may authorize your proxy by following the “By Telephone” instructions on the proxy card or, if applicable, the telephone voting instructions that may be described on the voting instruction card sent to you by your broker or nominee.

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By Mail—You may authorize your proxy by signing your proxy card and mailing it in the enclosed, postage-prepaid and addressed envelope. For shares you hold in street name, you may sign the voting instruction card included by your broker or nominee and mail it in the envelope provided.

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For shares held directly in your name, you may change your proxy instructions at any time prior to the vote at the Annual Meeting. You may do this by granting a new properly executed and later-dated proxy, by filing a written revocation with the Secretary of the Company at the address of the Company set forth above, or by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting without further action will not cause your previously granted proxy to be revoked. You may change your proxy instructions for shares you beneficially own by submitting new voting instructions to your broker or nominee in the manner and within the time periods they prescribe.

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If a properly signed proxy is submitted but not marked as to a particular item, the proxy will be voted FOR the election of the ten nominees for director of the Company named in this Proxy Statement, FOR the ratification of the selection of Ernst & Young LLP as the Company’s independent auditors for 2015, FOR the non-binding, advisory resolution to approve the Company’s named executive officer compensation, and AGAINST both the stockholder proposal concerning proxy access and the stockholder proposal concerning a policy that the Board’s chairman should be an independent director, if each is properly presented at the Annual Meeting. It is not anticipated that any matters other than those set forth in the Proxy Statement will be presented at the Annual Meeting. If other matters are presented, proxies will be voted in the discretion of the proxy holders.

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The Company’s 2014 Annual Report to Stockholders and a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission (“SEC”) are being mailed to stockholders concurrently with this Proxy Statement. The Annual Report to Stockholders and Form 10-K, however, are not part of the proxy solicitation materials. A copy of any or all exhibits to the Company’s Annual Report on Form 10-K, including the Company’s Code of Business Conduct and Ethics may be obtained free of charge by writing to AvalonBay Communities, Inc., Ballston Tower, 671 N. Glebe Road, Suite 800, Arlington, VA 22203, Attention: Chief Financial Officer or by accessing the “Investors” section of the Company’s website (www.avalonbay.com).

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Proposal 1: Election of Directors

Required Vote and Recommendation

Information Regarding Nominees

Employee Director Nominee

Timothy J. Naughton

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Non-Employee Director Nominees

Glyn F. Aeppel

Terry S. Brown

Alan B. Buckelew

Ronald L. Havner, Jr.

John J. Healy, Jr.

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concluded that Mr. Healy should serve as a director based on his experience and knowledge regarding real estate and asset management, as well as his specific skills in evaluating the financial and operational aspects of real estate companies acquired through his experience with real estate and financial firms.

Lance R. Primis

Peter S. Rummell

H. Jay Sarles

W. Edward Walter

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Proposal 2: Ratification of Selection of Independent Auditors

Required Vote and Recommendation

Proposal 3: Non-Binding, Advisory Vote on Executive Compensation

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Required Vote and Recommendation

Proposal 4:  Stockholder Proposal on Proxy Access

The Office of the Comptroller of the City of New York, Municipal Building, One Centre Street, Room 629, New York, NY 10007-2341, as custodian and trustee of the New York City Employees’ Retirement System, the New York City Fire Department Pension Fund, the New York City Teachers’ Retirement System, and the New York City Police Pension Fund, and as custodian of the New York City Board of Education Retirement System, beneficial holder of an aggregate of 932,228 shares of Common Stock of the Company as of the date of submittal of its proposal, has given formal notice that it intends to introduce the following resolution at the 2015 Annual Meeting and has furnished the following statement in support of its proposal:

“RESOLVED: Shareholders of AvalonBay Communities, Inc. (the ‘Company’) ask the board of directors (the “Board”) to adopt, and present for shareholder approval, a ‘proxy access’ bylaw. Such a bylaw shall require the Company to include in proxy materials prepared for a shareholder meeting at which directors are to be elected the name, Disclosure and Statement (as defined herein) of any person nominated for election to the board by a shareholder or group (the ‘Nominator’) that meets the criteria established below. The Company shall allow shareholders to vote on such nominee on the Company’s proxy card.

The number of shareholder-nominated candidates appearing in proxy materials shall not exceed one quarter of the directors then serving. This bylaw, which shall supplement existing rights under the Company’s bylaws, should provide that a Nominator must:

(a)

have beneficially owned 3% or more of the Company’s outstanding common stock continuously for at least three years before submitting the nomination;

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(b)

give the Company, within the time period identified in its bylaws, written notice of the information required by the bylaws and any Securities and Exchange Commission rules about (i) the nominee, including consent to being named in the proxy materials and to serving as a director if elected; and (ii) the Nominator, including proof it owns the required shares (the ‘Disclosure’); and

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(c)

certify that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s communications with the Company shareholders, including the Disclosure and Statement; (ii) it will comply with all applicable laws and regulations if it uses soliciting material other than the Company’s proxy materials; and (c) to the best of its knowledge, the required shares were acquired in the ordinary course of business and not to change or influence control of the Company.

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The Nominator may submit with the Disclosure a statement not exceeding 500 words in support of the Nominee (the ‘Statement’). The Board shall adopt procedures for promptly resolving disputes over whether notice of nomination was timely, whether the Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority to be given to multiple nominations exceeding the one-quarter limit.

Supporting Statement

We believe proxy access is a fundamental shareholder right that will make directors more accountable and contribute to increased shareholder value. The CFA Institute’s 2014 assessment of pertinent academic studies and the use of proxy access in other markets similarly concluded that proxy access:

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Would “benefit both the markets and corporate boardrooms, with little cost or disruption.”

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Has the potential to raise overall US market capitalization by up to $140.3 billion if adopted market-wide.
(http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1)

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The proposed bylaw terms enjoy strong investor support – votes for similar shareholder proposals averaged 55% from 2012 through September 2014 – and similar bylaws have been adopted by companies of various sizes across industries, including Chesapeake Energy, Hewlett-Packard, Western Union and Verizon.

We urge shareholders to vote FOR this proposal.”

Statement in Opposition to Stockholder Proposal

The Board has carefully considered the foregoing stockholder proposal and unanimously recommends a vote AGAINST it.

The Board recognizes that proxy access is a topic of interest to the entire stockholder and governance community and we are actively involved in researching and reviewing the implications and potential consequences of the various forms of proxy access proposed and/or adopted recently by public companies. The Board believes that careful and thoughtful consideration should be given before the Company implements a proxy access rule since this would be a significant change to our governance structure. This deliberate approach includes reaching out to our stockholders to discuss their views with regard to proxy access. In contrast to this approach, the stockholder proposal advocates a “one size fits all” approach to proxy access. The proponent has made the identical proposal to 75 different public companies, without regard to the specific size, stockholder base, or governance structure of each company.

Proxy access, and the structure and details of any particular proxy access bylaw provision, have the potential to impact (i) a company’s ability to ensure appropriate independence and robust qualifications of its directors; (ii) the balance of the overall composition of the board; (iii) the ability of a company to keep special interest groups from using proxy access to highlight their own particular agendas that may differ from long-term shareholder interests; and (iv) the ability of the Company to prevent annual meetings from being unduly distracted by director nominees with detrimental objectives or agendas. Because of the seriousness of these issues, the Board believes that it is prudent at this time to recommend against the proxy access proposal as set forth above so that the Board has more opportunity to thoughtfully consider the best approach to proxy access and stockholder nominations based on conversations with our stockholders and a thorough review of the evolving landscape of proxy access as an element of corporate governance.

While the Board carefully evaluates this issue, it is important to note that the Company’s current corporate governance structures and procedures are designed to ensure board accountability to stockholders, including:

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annual election of all directors;

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a majority vote standard for all directors, in accordance with the Company’s bylaws;

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all but one director are independent;

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stockholders have the right to propose nominees to the Nominating and Corporate Governance Committee;

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stockholders may nominate directors pursuant to the Company’s bylaws and solicit proxies for director nominees under federal proxy rules;

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stockholders may submit proposals for consideration at an annual meeting and for inclusion in the proxy statement;

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stockholders may express their views on our executive compensation through an annual “say-on-pay” vote; and

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stockholders may communicate directly with the board through our board communication protocols.

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In summary, proxy access is a rapidly developing and changing area of corporate governance. Therefore, the Board believes that the appropriate exercise of its fiduciary responsibilities in determining the best and most suitable response to proxy access for the company involves discussions with our stockholders and thoughtful evaluation of the available options in a deliberate and measured manner. As a result, the Board recommends a vote AGAINST the proposal.

Required Vote and Recommendation

Only holders of record of Common Stock as of the close of business on the Record Date are entitled to vote on this proposal. Proxies will be voted “AGAINST” the stockholder proposal described above, if properly presented at the Annual Meeting, unless contrary instructions are set forth on the enclosed proxy card. A majority of the votes cast on the proposal at the Annual Meeting is required to approve the proposal. Under Maryland law, abstentions and broker non-votes are not treated as votes cast. Accordingly, an abstention or broker non-vote will have no effect on the result of the vote.

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Proposal 5:  Stockholder Proposal on Separation of Chairman and CEO

The Massachusetts Laborers’ Pension Fund, P.O. Box 3005, Burlington, MA 01803, beneficial holder of approximately 1,128 shares of Common Stock of the Company as of the date of submittal of its proposal, has given formal notice that it intends to introduce the following resolution at the 2015 Annual Meeting and has furnished the following statement in support of its proposal:

“RESOLVED: That the stockholders of AvalonBay Communities, Inc. (“AvalonBay” or “the Company”) ask the board of directors to adopt a policy that, whenever possible, the board’s chairman should be an independent director who has not previously served as an executive officer of the Company. The policy should be implemented so as not to violate any contractual obligation. The policy should also specify (a) how to select a new independent chairman if a current chairman ceases to be independent during the time between annual meetings of shareholders; and, (b) that compliance with the policy is excused if no independent director is available and willing to serve as chairman.

Supporting Statement

It is the responsibility of the Board of Directors to protect shareholders’ long-term interests by providing independent oversight of management, including the Chief Executive Officer (CEO), in directing the corporation’s business and affairs. Currently Mr. Timothy Naughton, is our Company’s Chairman of the Board and CEO. We believe this scheme may not adequately protect shareholders.

We believe that an independent Chairman who sets agendas, priorities and procedures for the board can enhance board oversight of management and help ensure the objective functioning of an effective board. We also believe that having an independent Chairman (in practice as well as appearance) can improve accountability to shareowners, and we view the alternative of having a lead outside director, even one with a robust set of duties as not adequate to fulfill these functions.

A number of respected institutions recommend such separation. CalPERS’ Corporate Core Principles and Guidelines state that ‘the independence of a majority of the Board is not enough’; ‘the leadership of the board must embrace independence, and it must ultimately change the way in which directors interact with management.’ In 2009 the Milstein Center at Yale School of Management issued a report, endorsed by a number of investors and board members that recommended splitting the two positions as the default provision for U.S. companies. A commission of The Conference Board stated in a 2003 report: ‘Each corporation should give careful consideration to separating the offices of Chairman of the Board and CEO, with those two roles being performed by separate individuals. The Chairman would be one of the independent directors.’

We believe that the recent economic crisis demonstrates that no matter how many independent directors there are on the Board, the Board is less able to provide independent oversight of the officers if the Chairman of that Board is not independent.

We, therefore, urge shareholders to vote FOR this proposal.”

Statement in Opposition to Stockholder Proposal

The Board has carefully considered the foregoing stockholder proposal and unanimously recommends a vote AGAINST it.

The Board believes that any decision to separate the roles of Chairman and CEO should be based on the specific circumstances of a corporation; the independence, role, and capabilities of its directors, including its Lead Independent Director; and the leadership provided by its CEO. The Board does not believe that separate roles for the Chairman and CEO should be required by policy or that such a separation would, by itself, provide any additional benefit to stockholders.

The Board further believes that the Company and its stockholders are currently best served by having Mr. Naughton serve as both Chairman and CEO. Among other benefits, Mr. Naughton’s role as CEO enables him, working with the Lead Independent Director, to act as a bridge between management and the Board, helping management and the Board to act with a common purpose. Mr. Naughton’s combined roles as CEO and Chairman promote unified leadership and direction for the Company. Mr. Naughton’s knowledge of the day-to-day operations of the Company, perspective on competitive developments, understanding of stockholder interests, and relationships with business partners and employees allow him to provide effective leadership in his role as Chairman and CEO.

Furthermore, the Company’s stockholders have very recently indicated that they support the current structure. At the Company’s 2014 Annual Meeting of Stockholders an almost identical proposal regarding separation of the Chairman and CEO roles was presented and voted upon. Over 80% of stockholder votes cast voted against such proposal.

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In addition, the Board has taken several steps to ensure that the Board effectively carries out its responsibility for the oversight of management. The Board has appointed a Lead Independent Director (currently Lance Primis, an independent member of the Board). The Lead Independent Director:

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presides at all meetings of the Board of Directors at which the Chairman is not present, including regular executive sessions of the independent directors

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serves as the liaison between the Chairman and the independent directors

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establishes and approves meeting agendas for the Board

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has the authority to call meetings of the independent directors

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confers with the Chairman and CEO regularly

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acts as a contact person for those who wish to communicate with the independent directors

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Also, Mr. Naughton is the only director who is a member of management, and each standing committee, other than the Investment and Finance Committee, is made up solely of independent directors.

The Board believes that its current governance structure provides unambiguous accountability and allows the Company to effectively execute its strategy and business plans to maximize stockholder value.

For these reasons, the Board continues to believe that the adoption of a policy requiring that, whenever possible, the Chairman of the Board should be an independent director who has not previously served as an executive officer of the Company is not in the best interests of the Company’s stockholders.

Required Vote and Recommendation

Only holders of record of Common Stock as of the close of business on the Record Date are entitled to vote on this proposal. Proxies will be voted “AGAINST” the stockholder proposal described above, if properly presented at the Annual Meeting, unless contrary instructions are set forth on the enclosed proxy card. A majority of the votes cast on the proposal at the Annual Meeting is required to approve the proposal. Under Maryland law, abstentions and broker non-votes are not treated as votes cast. Accordingly, an abstention or broker non-vote will have no effect on the result of the vote.

Other Matters

The Board of Directors does not know of any matters other than those described in this Proxy Statement that will be presented for action at the Annual Meeting. If other matters are presented, proxies will be voted in the discretion of the proxy holders.

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Code of Ethics and Corporate Governance Guidelines

Board of Directors and its Committees

Board of Directors

Audit Committee

Compensation Committee

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Nominating and Corporate Governance Committee

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qualifications and other information in accordance with the requirements for director nominations by stockholders in the Company’s Bylaws to: AvalonBay Communities, Inc., Ballston Tower, 671 N. Glebe Road, Suite 800, Arlington, VA 22203, Attention: Corporate Secretary.

Investment and Finance Committee

Leadership Structure and Lead Independent Director

Board of Directors Risk Oversight

Independence of the Board

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Contacting the Board

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Report of the Audit Committee

Fiscal 2013 and 2014 Audit Fee Summary

During fiscal years 2013 and 2014, the Company retained its principal independent auditors, Ernst & Young, to provide services in the categories and for the approximate fee amounts shown below:

(1)

Audit related fees include fees for services traditionally performed by the auditor such as subsidiary audits, employee benefit audits, and accounting consultation.

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(2)

Tax fees include preparation and review of subsidiary tax returns and taxation advice.

​

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Transactions with Related Persons, Promoters and Certain Control Persons

17

18

Compensation Discussion and Analysis

EXECUTIVE SUMMARY AND 2014 ACHIEVEMENTS:

2014 Achievements

Bonus Program Summary

19

Summary of Long Term Incentive Performance Award Program

Metrics:

For 2014, our multiyear long term performance awards made to each named executive officer in February 2014 (other than to Mr. Sargeant, who retired in May 2014), included five performance metrics. Three of these metrics related to Total Stockholder Return (“TSR”) (the “TSR Performance Metrics”):

(1)

A basis point (bp) equals one one-hundredth of a percent. 100 bp equals 1.0%.

​

The remaining two performance metrics for these performance awards were based on (i) Operating FFO growth of the Company versus our peers during the performance period, and (ii) the difference between the Company’s Net Debt to Adjusted EBITDA ratio and the average Net Debt to Adjusted EBITDA ratio of our peers during the performance period (collectively, the “Operating Performance Metrics”).

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(1)

A basis point (bp) equals one-one hundredth of a percent. 100 bp equals 1.0%.

​

(2)

The peers used in calculating each of the Operating Performance Metrics include: Apartment Investment and Management Company, Associated Estates Realty Corporation, Mid-America Apartment Communities, Inc., Camden Property Trust, Equity Residential, Essex Property Trust, Inc., Home Properties, Inc., UDR, Inc., and Post Properties, Inc.

​

Awards maturing on December 31, 2014 were based on performance against the TSR Metrics for the three year period ending December 31, 2014, and performance against the Operating Metrics for the one year period ending on December 31, 2014. We are transitioning to long-term performance awards based on performance against both the TSR Metrics and Operating Metrics measured over a three year period, as described below.

Performance Against Metrics:

The Company’s TSR for the three year period ending on December 31, 2014, was 12.4% (above maximum, which is 200% achievement), 490 basis points below the FTSE NAREIT Equity REITs Index (below threshold, which is 0% achievement), and 70 basis points below the FTSE NAREIT Apartment Index (which is 71.2% of target achievement). As a result, achievement under the Long Term Incentive Award Program for the awards maturing on December 31, 2014 using exclusively the TSR Performance Metrics was determined to be 90.5% of Target overall. Therefore, our executives’ compensation included restricted stock for only 90.5% of the performance units measured solely against the TSR Performance Metrics maturing at the end of 2014.

 

The Company’s performance measured against the Operating Performance Metrics for the one year period ending on December 31, 2014 was above target. Actual Operating FFO per share growth of 8.8% over such period was 340 basis points above the peer average for the same period of 5.4% (above target, at 185.8% achievement), while the Company’s Net Debt to Adjusted EBITDA one year quarterly average of 5.5x as of December 31, 2014 was 0.9x below the peer average of 6.4x (above target, at 186.2% achievement). As a result, achievement under the Long Term Incentive Award Program for the awards maturing on December 31, 2014 using exclusively the Operating Performance Metrics was determined to be 185.9% of Target overall. Therefore, our executives’ compensation included restricted stock for 185.9% of the performance units measured solely against the Operating Performance Metrics maturing at the end of 2014.

21

Summary of Other 2014 Compensation Matters

As reported last year, during the first quarter of 2014, our named executive officers also received supplemental restricted awards in respect of the successful integration of the acquisition of 40% of the assets of Archstone Enterprise, L.P., (the “Archstone acquisition") the largest acquisition in Company history, which enabled us to largely meet our geographic portfolio allocation objectives, increase brand penetration within our footprint, and enhance G&A and operating synergies at the corporate and site level.

Mr. Sargeant, the Company’s long time Chief Financial Officer, retired in May 2014, and was succeeded by Mr. O’Shea. In connection with his retirement, Mr. Sargeant received (i) $225,000, which represented 5/12 of his 2014 target annual bonus amount of  $540,000, and (ii) $437,500, which represented 5/12 of the original target dollar value used to determine the target number of units used for his 2012-2014 performance award. Mr. O’Shea received supplemental awards of units under our Long Term Performance Program, using only the TSR Metrics, for the three year measurement periods ending on December 31, 2014 and December 31, 2015.

22

FULL DISCUSSION

REVIEW OF 2014 COMPENSATION

Consideration of the Results of the 2014 Stockholder Advisory Vote on Executive Compensation

Objectives of Our Executive Compensation Programs

Components of Executive Compensation

The component elements of each named executive officer’s annual compensation for 2014 are set forth in the following table:

23

24

Establishment of Goals

25

Review of 2014 Base Salary

Following were the base salaries established for 2014 for each of the named executive officers.

Review of 2014 Annual Bonus

The following table sets forth the target, threshold and maximum annual bonus established in February 2014 and the actual bonus award made in February 2015 with respect to performance in 2014 for each of the named executive officers. These goals and achievements are discussed further below.

The actual bonuses awarded above reflect (1) the achievement of specific Company performance goals, (2) the performance of the officer’s business unit, where applicable, and (3) the performance of the individual officer. Various weightings are applied to each category based on each officer’s position and his or her ability to impact performance for the Company as a whole or a particular business unit. In the case of Mr. Sargeant, who retired in May 2014, his actual award was equal to 5/12 of his target annual bonus. In the case of Mr. Wilson, the Value of Actual Restricted Stock Awarded includes a $150,000 discretionary stock award for performance in 2014.

For 2014, the following categories of performance goals and relative weightings were approved for the annual bonus program:

The corporate component of the annual bonus included four categories of performance goals, with weightings applicable to each goal set in advance. The following corporate goals were established for 2014:

(i)

The achievement of a targeted level of Operating FFO per share composed 50% of total corporate performance. Operating FFO on an absolute basis was set at $6.44 per share for the achievement of threshold performance, $6.74 per share for the achievement of target performance, and $7.04 per share for the achievement of maximum performance. Actual 2014 Operating FFO on an absolute basis was determined to be $6.78 per share.

​

26

(ii)

The operating performance of development and redevelopment activities, as compared to the original budgeted performance, made up 15% of the total corporate performance, split evenly between development performance and redevelopment performance. Meeting budgeted net operating income (“NOI”) for this component was determined to be target performance. For Development NOI, 7.5% below budgeted Development NOI was threshold performance, and exceeding budgeted Development NOI by 7.5% or more was maximum performance. For Redevelopment NOI, 3.0% below budgeted Redevelopment NOI was threshold performance, and exceeding budgeted NOI by 3.0% was maximum performance. In 2014 budgeted Development NOI was approximately $55.6M and actual Development NOI achievement was $61M. In 2014, budgeted Redevelopment NOI was approximately $43.5 and actual Redevelopment NOI was $44.2.

​

(iii)

The Development yield performance for communities stabilizing during the year as compared to the pre-established target yield for such developments represented 10% of the total corporate performance. Target achievement of this goal was set at meeting the pre-established target yield, with threshold performance being 0.75 percentage points below the target yield and maximum being 0.75 percentage points above the target yield. Actual performance was approximately 0.40% above the target yield.

​

(iv)

The effectiveness of management (defined as general and administrative management, talent management and leadership development, balance sheet management, portfolio management, and capital and liquidity management) and progress on various corporate initiatives made up 25% of the total corporate performance metrics for 2014. For 2014, the Compensation Committee determined that achievement on this category was 110% of target.

​

27

These goals, metrics and achievement are graphically illustrated in the following charts:

Overall, achievement of the corporate component of performance for 2014 for annual bonuses was determined to be 125.8% of target.

28

29

Review of 2014 Long-Term Incentive Awards

Under our multi-year, long-term incentive award program, performance awards are granted each year with a target number of restricted stock units that may be reduced or increased at the end of the performance period depending on achievement against set metrics. Beginning in 2014, the metrics included both the TSR Metrics and the Operating Metrics. To transition to awards including both types of metrics, in February 2014 the Board granted three performance awards to each participant: (i) two awards using solely the Operating Metrics, with one award maturing on December 31, 2014 and one on December 31, 2015, and (ii) an award using a combination of the TSR Metrics and the Operating Metrics, maturing on December 31, 2016. An officer must be employed with the Company at the end of the performance period to receive a payout under the performance award for each period. For awards with a performance period that begins on or after January 1, 2015, after one full year of employment is completed during the Performance Period, a pro rata portion of the award will vest (to be paid out in fully vested shares after the end of the Performance Period to the extent the metrics are achieved) if there is a separation of employment due to death, disability, Retirement, or a termination without cause at a time when the age and service requirements for Retirement eligibility are met.

 

   

The metrics under the performance awards made in 2014 with a three-year performance period ending on December 31, 2016, are as follows:

30

(1)

The absolute and relative metrics above reflect the metrics used for the awards made in 2014 for the performance period maturing on December 31, 2016.

​

(2)

A basis point (bp) equals one one-hundredth of a percent. 100 bp equals 1.0%.

​

(3)

The peers used in calculating each of the Operating Performance Metrics include: Apartment Investment and Management Company, Associated Estates Realty Corporation, Mid-America Apartment Communities, Inc., Camden Property Trust, Equity Residential, Essex Property Trust, Inc., Home Properties, Inc., UDR, Inc., and Post Properties, Inc.

​

Officers have the right to elect, prior to the end of a performance period, that employee stock options (valued at the Black-Scholes value of an option at the end of the performance period, as adjusted for changes in the stock price through the date of the actual award) be awarded in lieu of 25% of the value of the restricted stock that would otherwise be awarded in respect of that year’s annual bonus and maturing performance award. Restricted stock and options awarded at the end of the performance period are subject to vesting over three years.

The following table sets forth the target number of restricted stock units awarded each named executive officer in February 2014 for their performance awards associated with the three-year performance period ending on December 31, 2016.

In order to transition to awards measuring performance against both the TSR Metrics and the Operating Metrics, supplemental awards were also made in February 2014 based solely on the Operating Metrics (with threshold, target and maximum goals as described above) for the one-year period ending on December 31, 2014, and the two-year period ending on December 31, 2015, as follows:

The Company’s TSR (on an annualized, compounded three year basis adjusted to reflect use of the average stock price and index value for 20 trading days at the beginning and end of the performance period) as of December 31, 2014, was 12.4%, while TSR for the same period for the FTSE NAREIT Equity REITs Index was 17.3%, and for the FTSE NAREIT Equity Apartments Index was 13.1%. As a result, achievement under the Long Term Incentive Award Program for the TSR awards maturing on December 31, 2014 was determined to be 90.5% of Target overall, (200% of Target for absolute TSR, 0% of Target for performance relative to the FTSE NAREIT Equity REITs Index, and 71.2% of Target for performance relative to the FTSE NAREIT Equity Apartments Index).

The Company’s performance measured against the Operating Performance Metrics for the one year period ending on December 31, 2014 was above target. Actual Operating FFO per share growth of 8.8% over such period was 340 basis points above the peer average for the same period of 5.4% (above target, at 185.8% achievement), while the Company’s Net Debt to Adjusted EBITDA one year quarterly average of 5.5x as of December 31, 2014 was 0.9x below the peer average of 6.4x (above target, at 186.2% achievement). As a result, achievement under the Long Term Incentive Award Program for the awards maturing on December 31, 2014 using exclusively the Operating Performance Metrics was determined to be 185.9% of Target overall.

The goals, metrics and achievement for the performance awards maturing on December 31, 2014 are graphically illustrated in the following charts:

31

Based on these results, the named executive officers received the following number of shares of restricted stock on February 12, 2015, in respect of the performance awards maturing on December 31, 2014, representing 117.8% of the restricted stock units relating to such period as described above. These shares vest over three years.

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Supplemental Archstone Awards

Also in the first quarter of 2014, in consideration of the significant efforts and accomplishments associated with the integration of the operations and assets acquired as part of the Archstone acquisition, our Board approved the following special grants of restricted stock to the named executive officers:

(1)

These shares of restricted stock vest in three equal annual installments beginning on March 1, 2015.

​

Realized Pay for 2014 Performance

The following table shows one way in which our Compensation Committee looks at the compensation paid and awarded to each of the named executive officers for service and performance with respect to 2014. This table differs from the Summary Compensation Table provided on page 38, which includes several items that are driven by accounting and actuarial assumptions that are not necessarily reflective of the compensation actually realized by the executive in a particular year. The primary difference between this supplemental table and the Summary Compensation Table is the method used to value long-term performance award units, stock options and stock awards. SEC rules require that the grant date fair value of all performance award units, stock options and stock awards be reported in the Summary Compensation Table in the row for the year in which they were granted, regardless of which year the awards were made with respect to or which year the awards pay out in the form of restricted shares of stock. As a result, a significant portion of the total compensation reported in the Summary Compensation Table relates to awards made for performance in prior years or, in the case of performance awards, awards for future years in which performance has not yet been determined and for which the value is uncertain (and which may end up having no value at all). In contrast, this table is provided to illustrate the actual cash and restricted stock received by each named executive officer for service and performance in 2014. Note that the amounts reported below differ substantially from the amounts determined under SEC rules and reported in the Summary Compensation Table on page 38 and this table is not a substitute for the Summary Compensation Table.

(1)

Amounts in this column reflect the value of shares of restricted stock awarded in February 2015 (i) with respect to performance under the Annual Bonus program in 2014, and (ii) for achievement under the long-term incentive performance awards maturing on December 31, 2014, all with a value per share of  $173.39, the closing price of the Company’s common stock on the NYSE on the date of the award. In the case of Mr. Wilson, it also includes a discretionary stock award of  $150,000 for performance in 2014.

​

(2)

Amounts in this column reflect the cash awards made in February 2015 with respect to performance under the Annual Bonus program in 2014.

​

(3)

Amounts in this column include the same components described in the “All Other Compensation” column of the Summary Compensation Table.

​

33

(4)

The value of the shares of restricted stock awarded to the named executive officers in February 2014 related to their efforts associated with the integration of the operations and assets acquired as part of the Archstone acquisition in 2013 is not included in this table. Using, as of the award date, the closing stock price for the shares so awarded, those awards had the following values for the named executive officers: Mr. Naughton—$653,636; Mr. Sargeant—$71,100; Mr. O’Shea—$83,549; Mr. Birenbaum—$118,329; Mr. Breslin—$122,436; and Mr. Wilson—$0.

​

2015 COMPENSATION DETERMINATIONS

The following compensation determinations were made for 2015 for the named executive officers, other than Mr. Sargeant, who retired in May 2014:

Base Salary for 2015, effective March 1, 2015:

The target, threshold and maximum 2015 annual bonus for that officer:

The target, threshold and maximum number of performance units granted in 2015 that may be earned for the performance period 2015-2017:

(1)

The target number of units in column ( ) is derived from the following target dollar values: $4,225,000 for Mr. Naughton; $650,000 for Mr. O’Shea, $800,000 for Mr. Birenbaum, $800,000 for Mr. Breslin, and $500,000 for Mr. Wilson. To derive the target number of units, in each case 60% of the target dollar value (representing the portion of the award tied to TSR Metrics) was divided by the Monte Carlo value as of the date of the award for a unit based solely on the TSR metrics ($139.18 per unit) and 40% of the target dollar value (representing the portion of the award tied to Operating Metrics) was divided by the closing price of Common Stock on the date of the award ($166.23).

​

Based on awards made in previous years, the target, threshold and maximum number of performance units that may be earned at the end of 2015 are as follows:

(1)

Includes units granted in February 2013 with respect to Total Shareholder Return metrics for the 2013-2015 measurement period and units granted in February 2014 with respect to relative Operating FFO per share growth and leverage metrics for the 2014-2015 measurement period.

​

34

Other Benefits

Compensation Policies

35

Practices with regard to dates and pricing of stock and option grants

Risk Considerations

Section 162(m)

36

Supplemental Appendix to Compensation Discussion and Analysis

The table below shows the adjustments to the Company’s FFO for the year ended December 31, 2014 for non-routine items to calculate Operating FFO referred to on page 19 of this Proxy Statement.

(1)

Amounts include the Company’s proportionate share of gains and losses from joint ventures with Equity Residential as part of the Archstone acquisition, joint venture dispositions, including the Company’s promoted interests, costs associated with the extinguishment of debt, and acquisition costs including certain costs incurred related to the Archstone acquisition.

​

(2)

Represents write-offs expensed by the Company during the period for development rights and retail tenants individually in excess of $1,000.

​

Net Debt to Adjusted EBITA is calculated by the Company as total debt that is consolidated for financial reporting purposes, less consolidated cash and cash in escrow, divided by annualized fourth quarter 2014 EBITDA as adjusted for NOI from discontinued operations and real estate assets sold or held for sale, not classified as discontinued operations; gain on sale of communities; and joint venture income.

Compensation Committee Report

Compensation Committee Interlocks and Insider Participation

37

Summary Compensation Table

The table below summarizes the compensation amounts paid in or earned by each of the named executive officers for the fiscal years in which they were named executive officers (years ending December 31, 2014, December 31, 2013 and December 31, 2012 for Messrs. Naughton and Sargeant; years ending December 31, 2014 and December 31, 2013 for Messrs. Breslin and Birenbaum, who became named executive officers in 2013; and the year ending December 31, 2014 in the case of Messrs. O’Shea and Wilson, who became named executive officers in 2014).

For 2014, the amounts under “Stock Awards” and “Total Compensation” include the grant date value of three performance awards made in February 2014 and maturing at the end of 2014, 2015 and 2016, and subject to vesting requirements thereafter. For 2013, those amounts include the grant date value of three performance awards made in February 2013 and maturing at the end of 2013, 2014 and 2015.

Executives are eligible to defer a portion of their salaries and bonuses under our Deferred Compensation Plan. The amounts shown below are before any deferrals under the Nonqualified Deferred Compensation Plan. Amounts deferred in 2014 are shown in the Nonqualified Deferred Compensation Table beginning on page 44 below.

(1)

The amounts shown as salary in column (c) reflect actual payments received in each indicated year, which may vary slightly from the salary described in the Compensation Discussion and Analysis as a result of  (i) the number of pay periods in each calendar year and (ii) the fact that salary increases may not go into effect until early March of each year.

​

(2)

The amounts in column (e) and column (f) include restricted stock and option awards actually granted during the fiscal year for service in the prior fiscal year. For example, the row for 2014 includes the value of stock and option awards made in February 2014 with respect to 2013 service.

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(3)

The amounts in column (e) reflect the aggregate grant date fair value for awards made in the fiscal years ended December 31, 2012, December 31, 2013, and December 31, 2014 computed in accordance with FASB ASC Topic 718 for restricted stock awards and performance unit awards made pursuant to the Company’s 2009 Stock Option and Incentive Plan. The value of restricted stock awards is based solely on the closing price of our Common Stock on the NYSE on the date of grant; as a result, no assumptions were used in the calculation of this value.

​

In 2014, in addition to restricted stock awards granted as part of the Annual Bonus Program, included in column (e), the Company made the following awards as part of its general performance award program for officers, also included in column (e):

•

Awards based on TSR Metrics and Operating Metrics for the performance period 2014-2016. These awards had a grant date fair value of  $111.77 per unit for the TSR Metric portion of the award, based on the Monte Carlo value on the date of grant, and $128.97per unit for the Operating Metric portion of the award, based on the closing price of our Common Stock on the NYSE on the date of grant.

​

38

•

To transition to the inclusion of Operating Metrics in performance awards, the Company also made awards based on Operating Metrics for the measurement periods 2014 and 2014-2015. These awards had a grant date value of  $128.97 per unit, based on the closing price of our Common Stock on the NYSE on the date of grant.

​

In addition, Mr. O’Shea received two supplemental performance awards in 2014 in recognition of his promotion to Chief Financial Officer:

•

Award based on TSR Metrics for the performance period 2012-2014. This award had a grant date value of  $24.05 per unit (based on the Monte Carlo value on the date of grant).

​

•

Award based on TSR Metrics for the performance period 2013-2015. This award had a grant date value of  $43.90 per unit (based on the Monte Carlo value on the date of grant).

​

The total value of the 2014 and 2014-2015 Operating Metrics performance unit awards and 2014-2016 TSR and Operating Metrics performance unit awards, if earned at maximum and valued at the closing price of our Common Stock on the NYSE on the date of grant, for the named executive officers is: Mr. Naughton—$9,249,728; Mr. Sargeant—$0; Mr. O’Shea—$1,750,123; Mr. Birenbaum—$2,476,482; Mr. Breslin—$2,020,186; and Mr. Wilson —$1,388,491. The total value of the 2012-2014 and 2013-2015 supplemental awards made to Mr. O’Shea if earned at maximum and valued at the closing price of our Common Stock on the NYSE on the date of grant is $528,777.

The values of TSR Metric performance awards included in column (e) for 2013 are:

•

$74.37 per unit for awards for measurement period 2011-2013 (based on the Monte Carlo value on the date of grant).

​

•

$59.39 per unit for awards for measurement period 2012-2014 (based on the Monte Carlo value on the date of grant).

​

•

$76.03 per unit for awards for measurement period 2013-2015 (based on the Monte Carlo value on the date of grant).

​

The total value of the 2011-2013, 2012-2014 and 2013-2015 performance unit awards, if earned at maximum and valued at the closing price of our Common Stock on the NYSE on the date of grant, for the named executive officers is: Mr. Naughton—$5,225,088; Mr. Sargeant—$2,100,089; Mr. Breslin—$735,018; and Mr. Birenbaum—$844,151.

(4)

The amounts in column (f) reflect the aggregate grant date fair value for option awards made pursuant to the Company’s 2009 Stock Option and Incentive Plan in the fiscal years ended December 31, 2012, December 31, 2013, and December 31, 2014 computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of this amount are included in footnote 10 to the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 19, 2015.

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(5)

The amounts shown in column (g) reflect the cash awards to the named individuals determined by the Compensation Committee in February of the following year (based upon the achievement of the performance metrics established in the year indicated, as more fully described in the Compensation Discussion and Analysis above) and ratified by the members of the full Board of Directors who would be qualified to serve on the Compensation Committee.

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(6)

All earnings under the Company’s nonqualified deferred compensation program are determined by reference to returns of actual mutual funds and the Company does not consider such earnings to be above market.

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(7)

For 2014, the amounts shown in column (i) include, for each named executive officer (a) dividends paid on unvested shares of restricted stock during 2014 in the following amounts: Mr. Naughton—$128,427; Mr. Sargeant—$30,681; Mr. O’Shea—$29,126; Mr. Birenbaum—$24,355; Mr. Breslin—$46,400; and Mr. Wilson—$36,752; (b) amounts contributed by the Company to the named executive officers’ 401(k) accounts in the amount of  $7,800 each, and (c) premiums paid by the Company in 2014 for Company-owned life insurance policies on the lives of such named executive officers for which the Company has endorsed the respective policies so that any death benefit, in excess of the cumulative premiums paid by the Company, will be paid to the beneficiaries of the deceased, which premiums were in the following amounts for each officer (such amounts representing payment of a whole-life premium which builds cash value in the Company-owned policy to support future repayment of the cumulative premiums; see “Potential Payments Upon Termination or Sale Event—Endorsement Split Dollar Agreements”): Mr. Naughton—$32,736; and Mr. Sargeant—$25,611. The amount shown includes premiums paid by the Company for a standard term life insurance policy in the face amount of $750,000 for: Mr. O’Shea—$935; Mr. Birenbaum—$935; Mr. Breslin—$883; and Mr. Wilson—$2,285.

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(8)

Stock awards for Mr. Naughton in 2014 include the following: 5,093 shares of restricted stock awarded in respect of the Archstone integration; three performance unit awards consisting of 35,860 total target performance units maturing at the end of 2014, 2015, and 2016, which are subject to time-based vesting thereafter. Stock awards for Mr. Naughton in 2013 include the following: 12,597 shares of restricted stock awarded in respect of 2012 performance; 10,569 shares of restricted stock awarded in respect of the closing of the Archstone acquisition; three performance unit awards consisting of 20,061 target performance units each maturing at the end of 2013, 2014, and 2015, which are subject to time-based vesting thereafter.

​

   

In February 2014 Mr. Naughton was awarded 24,230 of target units for his 2014-2016 TSR Metrics and Operating Metrics Award. However, it had been the intention of the Compensation Committee and the independent members of the Board who qualify for service on the Compensation Committee to award 26,072 target units to Mr. Naughton for his 2014-2016 Performance Award. This error was discovered in 2015, and an additional 1,842 of 2014-2016 target units were awarded to Mr. Naughton in 2015. Had these 1,842 units been issued in February 2014, as originally intended, the amount in column (e) for Mr. Naughton for 2014 would have been increased by $216,458.

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(9)

Stock awards for Mr. Sargeant in 2014 include the following: 554 shares of restricted stock awarded in respect of the Archstone integration. Stock awards for Mr. Sargeant in 2013 include the following: 5,726 shares of restricted stock awarded in respect of 2012 performance; 2,642 shares of restricted stock awarded in respect of the closing of the Archstone acquisition; three performance unit awards consisting of 8,063 target performance units each maturing at the end of 2013, 2014, and 2015, which are subject to time-based vesting thereafter.

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39

   

In connection with his retirment, Mr. Sargeant received (i) $225,000, which represented 5/12 of his 2014 target annual bonus amount of  $540,000, and (ii) $437,500, which represented 5/12 of the original target dollar value used to determine the target number of units used for his 2012-2014 performance award.

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(10)

Stock awards for Mr. O’Shea in 2014 include the following: 877 shares of restricted stock awarded in respect of 2013 performance; 651 shares of restricted stock awarded in respect of the Archstone integration; three performance unit awards consisting of 6,785 total target performance units maturing at the end of 2014, 2015, and 2016, which are subject to time-based vesting thereafter; two supplemental performance unit awards consisting of 2,050 total target performance units maturing at the end of 2014 and 2015, which are subject to time-based vesting thereafter.

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(11)

Stock awards for Mr. Birenbaum in 2014 include the following: 1,782 shares of restricted stock awarded in respect of 2013 performance; 922 shares of restricted stock awarded in respect of the Archstone integration; three performance unit awards consisting of 9,601 total target performance units maturing at the end of 2014, 2015, and 2016, which are subject to time-based vesting thereafter. Stock awards for Mr. Birenbaum in 2013 include the following: 2,935 shares of restricted stock awarded in respect of 2012 performance; 1,972 shares of restricted stock awarded in respect of the closing of the Archstone acquisition; three performance unit awards consisting of 3,241 target performance units each maturing at the end of 2013, 2014, and 2015, which are subject to time-based vesting thereafter.

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(12)

Stock awards for Mr. Breslin in 2014 include the following: 3,134 shares of restricted stock awarded in respect of 2013 performance; 954 shares of restricted stock awarded in respect of the Archstone integration; three performance unit awards consisting of 7,832 total target performance units maturing at the end of 2014, 2015, and 2016, which are subject to time-based vesting thereafter. Stock awards for Mr. Breslin in 2013 include the following: 3,374 shares of restricted stock awarded in respect of 2012 performance; 3,944 shares of restricted stock awarded in respect of the closing of the Archstone acquisition; three performance unit awards consisting of 2,822 target performance units each maturing at the end of 2013, 2014, and 2015, which are subject to time-based vesting thereafter.

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(13)

Stock awards for Mr. Wilson in 2014 include the following: 5,477 shares of restricted stock awarded in respect of 2013 performance; three performance unit awards consisting of 5,383 total target performance units maturing at the end of 2014, 2015, and 2016, which are subject to time-based vesting thereafter.

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Grants of Plan-Based Awards

The table below sets out the grants made to the named executive officers in 2014 under the Company’s 2009 Stock Option and Incentive Plan.