2018 Guide to Effective Proxies

2.17.10 Peer groups | 475 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES COMPENSATION DISCUSSION AND ANALYSIS Other industrial REITs are too small in size to be used in our comparison group The comparison group did not include any industrial REITs because they were too small relative to us. The largest other industrial REIT is only 16% of our AUM. (1) In our 2017 outreach program, our stockholders expressed that it was important to see how our compensation ties to performance against other industrial REITs. We measure our performance relative to industrial REITs to determine the size of annual LTI equity awards, according to our equity award formula. Annual LTI equity awards are the largest portion of our core compensation. AUM is most the appropriate measure to gauge size and scope Our AUM captures an additional $38.8 billion in assets that we manage but are not included in our consolidated balance sheet. In 2017, these assets generated revenue representing 54% of our owned and managed net operating income. (2) Our NEOs’ compensation is tied to the performance of all assets represented by our AUM, not just our consolidated assets. The graphic below shows that our AUM is substantially greater than the AUM (1) of most companies in our compensation comparison group. 0 10 20 30 40 50 60 70 80 90 100 Compensation Comparison Group Companies Asset Under Management ($B) AUM OF OUR COMPENSATION COMPARISON GROUP (1) VS. PROLOGIS AUM Avalon Bay Equity Residential Boston Properties Ventas Welltower Public Storage Equinix General Growth Prologis American Tower Simon Property Group $79B (1) AUMs of comparison group companies are derived from publicly available data. Prologis AUM includes estimated investment capacity. (2) Net operating income is a non-GAAP measure. Please see Appendix A for a discussion and reconciliation to the most directly comparable GAAP measure. I 68 COMPENSATION DISCUSSION AND ANALYSIS Discussion of Compensation Comparison Group No REITs represent a true comparison to Prologis The Compensation Committee sets a competitive reference point for the elements of target total core compensation (annual base salary, annual bonus and annual LTI equity awards) at the market median of a comparison group of large-cap REITs. Target compensation is positioned within a reasonable range of the competitive reference point based on the NEO’s level of experience, past performance and anticipated future contributions. In May 2017, FW Cook, our independent compensation consultant, conducted its annual compensation analysis on behalf of the Compensation Committee. The comparison group used by FW Cook comprised 10 large-cap REITs that are generally the largest internally managed U.S. publicly traded equity REITs by market capitalization. Although the following REITs were among the closest in comparison to us, the combination of our worldwide reach, significant development platform, and size and scope of our strategic capital business put us in a unique category. Such companies may individually demonstrate strength in one or two of these categories, but not in all. Compensation Comparison Group Size (1) Developer (2) Global (3) Strategic Capital (4) Prologis ✓ ✓ ✓ ✓ American Tower Corporation ✓ ✓ AvalonBay Communities, Inc. ✓ ✓ Boston Properties, Inc. ✓ ✓ Equinix (5) ✓ ✓ ✓ Equity Residential ✓ General Growth Properties, Inc. ✓ Public Storage, Inc. ✓ ✓ Simon Property Group, Inc. ✓ ✓ ✓ Ventas, Inc. ✓ ✓ Welltower (5) ✓ ✓ ✓ (1) Size threshold is at least $32.0 billion of AUM based on enterprise value. (2) Total development portfolio is at least 5% of assets. (3) Operations outside of United States and Canada. (4) Based on management of a business including closed and open-ended funds and publicly-traded vehicles. Most comparison companies have joint ventures with one other partner. However, these joint ventures are structured and managed differently from our perpetual life funds (which can raise capital on a continual basis) and publicly traded vehicles with multiple investors that obtain liquidity by redemption or sale of their equity in the vehicles. (5) As discussed above, our comparison group is generally the ten largest internally-managed U.S. publicly-traded REITs. For the 2017 performance year, Equinix and Welltower replaced Vornado Realty Trust and HCP, Inc. (which were in our comparison group for the 2016 performance year) on this top ten list. I 67 PROLOGIS