Sustainability

At Vornado, we believe in sustainability and that sensitivity to our environment is a critical aspect of our business. Chris Kennedy, working with Myron Maurer, has already implemented a sustainability program at the landmark, 3.3 million square foot Merchandise Mart building in Chicago, achieving silver LEED-EB certification. We are proud of Chris and his team for this accomplishment. Each of our businesses is focusing on sustainability. Mitchell Schear has assumed the responsibility for establishing best practices company wide.

Compensation

First quarter is comp season at Vornado. This is when Mike and Joe with a little help from me and a lot of help from Steve Santora running the data, working with consultants and our Board of Trustee's Compensation Committee, fix salaries, bonus and equity awards. The objective here, of course, is to attract, retain and motivate a team of highly talented professionals at all levels. Increasingly, over recent years we have weighted the mix more heavily to equity-based compensation to even more closely align the interests of our senior management with shareholders. This year equity compensation was split about equally between out-of-the-money stock options and an Out Performance Plan (OPP). Stock options were struck at a price of $103, a 17.5% premium over the price of our stock on the date of grant. The OPP provides for an aggregate maximum award of $75 million, has a four-year measurement period and is based on both absolute and relative performance. For retention purposes (handcuffs), the options vest equally over five years and, when earned, the OPP vests equally in years four and five. Please see our Proxy Statement filed April 4, 2008 for details of these compensation matters.

E-Proxy

Recently adopted SEC rules permit companies to distribute their proxy materials and annual report to shareholders electronically. This is the first year that this procedure is available, and we have decided to be pioneers here along with such companies as Sun MicroSystems, Sara Lee, Jones Lang LaSalle, Microsoft and among our real estate brethren – Simon Properties, Federal Realty and Equity Residential.

As required by the rules, a notice of availability of proxy materials and annual report will be mailed on April 4, 2008 to our shareholders of record as of March 14, 2008. Shareholders will have the ability to access proxy materials, on the website www.proxyvote.com, or alternately to request a printed set of proxy materials be sent to them free of charge.

The E-proxy method is certainly the way of the future and is cost efficient (we expect to save as much as three quarters of the $850,000 we spent in previous years on printing and processing our proxy materials). In the end, since it is not our culture to print a glossy, marketing-style annual report with lots of pictures, this new Internet-based system makes perfect sense. For pictures of our properties, we encourage shareholders to access the property loop on our website www.vno.com.

At Vornado, we take corporate governance and compliance very seriously. Our Board of Trustees is diligent here. Everyone is involved, me, Mike, our accounting and control people, Alan Rice, Senior Vice President, Corporation Counsel, and Joseph Macnow, who is our guru and last word on this topic.

We welcome Candace Beinecke, the Managing Partner of major Manhattan law firm Hughes Hubbard & Reed LLP, to our Board. Our newest trustee is as intelligent and experienced as it gets. She joins a board of wise and seasoned founding partners, acquired partners, independent businessmen and academics who have guided and supported Mike and me. Our trustees deserve all our thanks.

Happy big birthday Beth. Welcome to Kate Ascher. And yes, Mrs. Ellis, Tom is doing fine.