701 Western Avenue

Glendale, California 91201-2349

March 17, 2017

Dear Public Storage Shareholder:

On behalf of the Board of Trustees of Public Storage, I am pleased to invite you to our 2017 Annual Meeting of Shareholders on Wednesday, April 26, 2017, at 2:00 p.m., Pacific Daylight Time, to be held at the Hilton Los Angeles North/Glendale, located at 100 West Glenoaks Boulevard in Glendale, California.

We have included the official notice of meeting, proxy statement and form of proxy with this letter. The proxy statement describes in detail the matters listed in the notice of meeting.

Your vote is important. Whether or not you plan to attend the annual meeting, we hope you will vote as soon as possible. You may vote your shares over the Internet, by telephone or, if you elect to receive printed proxy materials, by mail by following the instructions on the proxy card or the voting instruction card. Of course, even if you vote your shares ahead of time, you may still attend the meeting.

Thank you for your continued support of Public Storage. We look forward to seeing you at our 2017 Annual Meeting.

Sincerely,

Ronald L. Havner, Jr.

Chairman of the Board and

Chief Executive Officer

As required under applicable regulations of the SEC, we are providing shareholders with an advisory vote on how often to hold the advisory shareholder vote to approve executive compensation. Under this proposal, shareholders may vote to hold the advisory vote to approve executive compensation every one, two or three years.

The Board believes that a one-year frequency best achieves the intended objectives of the advisory vote to approve executive compensation. This gives shareholders the opportunity to provide feedback to the Board’s Compensation Committee (the Compensation Committee) on how its decisions in the just-completed fiscal year, as well as outlook and anticipated decisions in the current fiscal year, are reflective of and further the Compensation

Committee’s overarching goals of (1) aligning executive compensation with company performance, (2) incentivizing our executive officers to create long-term shareholder value and (3) emphasizing future pay opportunity over current pay. Having this information on an annual basis gives the Compensation Committee the ability to proactively consider incremental adjustments in response to year-to-year changes in the level of shareholder support.

This vote is advisory and not binding on the Board. However, the Board and the Compensation Committee value all shareholder feedback and will consider the outcome of the vote in deciding on the frequency of future advisory votes to approve executive compensation.

Our Board has nominated nine incumbent trustees, who, if elected by shareholders at our annual meeting, will be expected to serve until next year’s annual meeting.

RECOMMENDATION:

Vote FOR all nominees

Proposal 1 – Election of trustees

Executive Summary

The Nominating/Corporate Governance Committee recommended, and the Board has nominated, each of our nine incumbent trustees for election to the Board for the one-year term beginning with our 2017 Annual Meeting, or until their successors, if any, are elected or appointed. We believe that each nominee for election as a trustee will be able to serve if elected.

We believe that each nominee has the skills, experience and personal qualities the Board seeks in its trustees and that the combination of these nominees creates an effective Board that functions well and serves the best interests of Public Storage and our shareholders.

The Board is responsible for overseeing management and providing sound governance on behalf of our shareholders. Risk management oversight is a key priority. The Board carries out its responsibilities through highly capable trustees, the Lead Independent Trustee, a strong committee structure and adherence to our corporate governance principles.

Trustee Nomination and Selection Criteria

In evaluating potential candidates for service on the Board, the Nominating/Corporate Governance Committee and the Board have and exercise broad discretion to select trustee candidates who will best serve the Board and Public Storage in the current and anticipated business environment.

The goal in the vetting and nomination process is to achieve an appropriate balance of knowledge, experience and capability on the Board. The Board, through the Nominating/Corporate Governance Committee, considers the following experience, qualifications, attributes and skills of both potential trustee nominees and existing members of the Board:

Our trustee nominees have qualifications, skills and experience relevant to our business. Each trustee nominee has experience, mainly at senior executive levels in other organizations, and a majority of the trustee nominees hold or have held directorships at other U.S. public companies.

Four of our trustee nominees, in addition to our CEO, have served as chief executive officers, and all have demonstrated superb leadership and intellectual and analytical skills gained from deep experience in management, finance and corporate governance.

Ronald L. Havner, Jr., 59

Trustee since 2002

Chairman and Chief Executive Officer of Public Storage

TRUSTEE QUALIFICATION HIGHLIGHTS:

Mr. Havner has been Chairman and Chief Executive Officer of Public Storage since August 2011 and November 2002, respectively. Mr. Havner joined Public Storage in 1986 and has held a variety of senior management positions. Mr. Havner has been Chairman of the Board of Public Storage’s affiliate, PS Business Parks, Inc. (PS Business Parks) since March 1998. Mr. Havner also serves as a director of AvalonBay Communities, Inc. (NYSE: AVB) and California Resources Corp. (NYSE: CRC) Mr. Havner was the 2014 Chairman of the Board of Governors of the National Association of Real Estate Investment Trusts, Inc. (NAREIT).

Mr. Havner’s qualifications for the Board include his extensive leadership experience and Company and industry knowledge. As the only trustee who is also a member of the Public Storage executive management team, Mr. Havner provides management’s perspective in Board discussions about the operations and strategic direction of the Company.

In considering the nomination of Mr. Havner for re-election to the Board, the Nominating/Corporate Governance Committee and the Board considered each of the qualifications above, including Mr. Havner’s experience in having served as our Chairman since 2011, our Chief Executive Officer since 2002, and as Chairman and former Chief Executive Officer of PS Business Parks, in which we own a 42% interest.

The Nominating/Corporate Governance Committee and the Board also considered whether Mr. Havner’s role as Chairman of PS Business Parks and his service on two other public company boards would enable him to commit sufficient focus and time to perform responsibly his duties as a trustee of Public

Storage. In determining that these other commitments would not prevent him from responsibly performing these duties, the Nominating/Corporate Governance Committee and the Board considered the substantial overlap between his duties as Chief Executive Officer and Chairman of Public Storage and his duties as a director of PS Business Parks, particularly given Public Storage’s 42% ownership of PS Business Parks, the fact that PS Business Parks’ financial results are reflected in Public Storage’s financial statements under the equity method of accounting, and the contractual relationships between Public Storage and PS Business Parks, including the management agreement, property management agreement, license agreement and cost sharing and administration services agreement. In addition, Mr. Havner was the President and CEO of PS Business Parks from 1997 to 2002.

Given this substantial overlap in duties, the Nominating/Corporate Governance Committee and the Board treated his board service for Public Storage and PS Business Parks as a single directorship for purposes of assessing the number of public company boards to which he is committed. In doing so, the Nominating/Corporate Governance Committee and the Board recognized that in 2013, a proxy advisory firm that represents certain of our shareholders increased the percentage ownership required for treating parent/subsidiary directorships as a single directorship from 20% to 50%, and that therefore this firm may treat these as two directorships for purposes of applying its policies. However, for the reasons noted above the Nominating/Corporate Governance Committee and the Board determined that the facts and circumstances in this particular case warranted treating Mr. Havner’s board service for Public Storage and PS Business Parks as a single directorship.

Tamara Hughes Gustavson, 55

Trustee since 2008

Real Estate Investor; Philanthropist

TRUSTEE QUALIFICATION HIGHLIGHTS:

Ms. Gustavson joined the Board in November 2008. She was previously employed by Public Storage from 1983 to 2003, serving most recently as Senior Vice President, Administration. During the past six years, Ms. Gustavson has been supervising her personal business investments and engaged in charitable activities. Ms. Gustavson also serves on the Board of Trustees of the William Lawrence and Blanche Hughes Foundation and the Board of Trustees of the University of Southern California. Ms. Gustavson is our largest single shareholder and a member of the Hughes family (the Hughes Family) that collectively owns approximately 14.3% of the Company’s Common Stock. She is the sister of B. Wayne Hughes, Jr., also a trustee, and the daughter of B. Wayne Hughes, Chairman Emeritus and the Company’s Co-Founder.

Ms. Gustavson’s qualifications for election to the Board include her previous managerial experience at Public Storage and her ongoing investment and charitable board experience. And as the largest individual shareholder of the Company, Ms. Gustavson provides the Board with a shareholder’s perspective in Board discussions about the operations and strategic direction of the Company.

Uri P. Harkham, 68

Trustee since 1993

Compensation Committee

Chief Executive Officer of Harkham Family Enterprises

TRUSTEE QUALIFICATION HIGHLIGHTS:

Mr. Harkham is a member of the Compensation Committee and became a member of the Board in March 1993. Since 1978, Mr. Harkham has been the Chief Executive Officer of Harkham Family Enterprises, a real estate firm specializing in buying and rebuilding retail and mixed use real estate throughout Southern California. Until his retirement in 2011, Mr. Harkham was also President and Chief Executive Officer of Harkham Industries, which specialized in the design, manufacture and marketing of women’s clothing under its four labels, Harkham, Hype, Jonathan Martin and Johnny Martin, since its organization in 1974. Mr. Harkham still serves as a consultant in the retail and fashion industry.

Mr. Harkham’s qualifications for election to the Board include his extensive real estate experience and experience with consumer businesses. He also brings to the Board his leadership experience as the Chief Executive Officer of Harkham Industries and Harkham Family Enterprises and his knowledge of international business operations.

Leslie S. Heisz, 56

Trustee since 2017

Retired Managing Director of Lazard Frères & Co.

TRUSTEE QUALIFICATION HIGHLIGHTS:

Ms. Heisz was appointed by the Board as a trustee in February 2017. Ms. Heisz is an experienced investment banking and finance executive. Ms. Heisz joined Lazard Frères & Co. in 2003 as a senior advisor and served as a managing director from 2004 through April 2010, providing strategic financial advisory services for clients in a variety of industries. Ms. Heisz was previously a managing director of Dresdner Kleinwort Wasserstein and its predecessor for six years, specializing in mergers and acquisitions, as well as leveraged finance, and leading the Gaming and Leisure Group and the Los Angeles office. Ms. Heisz has been a member of the Board of Directors of Kaiser Permanente since January 2015 and Edwards Lifesciences (NYSE: EW) since July 2016. She previously served on the Boards of Directors of Ingram Micro Inc. (NYSE: IM), Towers Watson (NASDAQ: WLTW), HCC Insurance Holdings, Inc. and International Game Technology (NYSE: IGT).

Ms. Heisz’s qualifications for election to the Board include her diverse business expertise across a number of industries, including deep finance and strategic advisory skills. She has also had extensive corporate governance experience serving on many public company boards.

B. Wayne Hughes, Jr., 57

Trustee since 1998

Founder of American Commercial Equities, LLC

TRUSTEE QUALIFICATION HIGHLIGHTS:

Mr. Hughes, Jr. became a member of the Board in January 1998. He was employed by Public Storage from 1983 to 2002, serving as Vice President–Acquisitions of Public Storage from 1992 to 2002. Mr. Hughes, Jr. is the founder and an officer of American Commercial Equities, LLC and its affiliates, companies engaged in the acquisition and operation of commercial properties in California. He is the brother of Tamara Hughes Gustavson, also a trustee, and the son of B. Wayne Hughes, Chairman Emeritus and the Company’s Co-Founder. The Hughes Family together owns approximately 14.3% of the Company’s Common Stock.

Mr. Hughes, Jr.’s qualifications for election to the Board include his extensive experience in the real estate industry, including previous management experience at Public Storage. He continues to play an active role in family real estate investment activities and brings that expertise to Board discussions.

Avedick B. Poladian, 65

Trustee since 2010

Audit Committee (Chair)

Nominating/Corporate Governance Committee (Chair)

Retired Executive Vice President and Chief Operating Officer of Lowe Enterprises, Inc.

TRUSTEE QUALIFICATION HIGHLIGHTS:

Mr. Poladian is Chair of the Audit Committee of our Board (the Audit Committee) and the Nominating/Corporate Governance Committee. He became a member of the Board in February 2010. From 2007 to the end of 2016, Mr. Poladian held the positions of Executive Vice President and Chief Operating Officer for Lowe Enterprises, Inc., a diversified national real estate company that he joined in 2003. Mr. Poladian was with Arthur Andersen from 1974 to 2002 and is a certified public accountant (inactive). He serves as a director of two funds managed by Western Asset Management Funds, a director of Occidental Petroleum Corporation (NYSE: OXY), and a director of California Resources Corp. (NYSE: CRC) Mr. Poladian is also a member of the Board of Councilors of the University of Southern California School of Policy, Planning and Development, the Board of Advisors of the Ronald Reagan UCLA Medical Center and the YMCA of Metropolitan Los Angeles.

Mr. Poladian qualifies as one of the Company’s Audit Committee financial experts and provides the Board expert perspective in financial management and analysis. Having served in a senior management position at one of the world’s largest accounting firms, combined with his experience as Chief Operating Officer and Chief Financial Officer of a diversified real estate company, Mr. Poladian has extensive knowledge of the real estate industry and key business issues, including personnel and asset utilization, in addition to all aspects of fiscal management. Through his experience with other public companies, Mr. Poladian brings valuable insight into our business and corporate governance.

Gary E. Pruitt, 67 (Lead Independent Trustee)

Trustee since 2006

Audit Committee

Nominating/Corporate Governance Committee

Retired Chairman and Chief Executive Officer of Univar N.V.

TRUSTEE QUALIFICATION HIGHLIGHTS:

Mr. Pruitt is the Lead Independent Trustee of the Board and a member of the Audit Committee and the Nominating/Corporate Governance Committee. He became a member of the Board in August 2006 in connection with the merger of Shurgard Storage Centers, Inc. with Public Storage. Mr. Pruitt retired as Chairman of Univar N.V. (Univar) (NYSE: UNVR), a chemical distribution company based in Bellevue, Washington, with distribution centers in the United States, Canada and Europe in 2010 and retired as Chief Executive Officer in October 2009. He joined Univar in 1978. Previously, Mr. Pruitt was a chartered accountant with Arthur Andersen from 1973 through 1977. Mr. Pruitt is a member of the Board of Directors of PS Business Parks (NYSE: PSB), Itron, Inc. (NASDAQ: ITRI), a global technology company, and Esterline Technologies Corp. (NYSE: ESL), a specialized manufacturing company—all companies listed on the New York Stock Exchange.

Mr. Pruitt’s qualifications for election to the Board include his leadership and financial experience as Chairman and Chief Executive Officer of a multi-national company and all the business attributes required of that position, along with operational and manufacturing expertise through his various other management positions held with Univar. Mr. Pruitt’s public accounting financial background qualifies him as one of the Company’s Audit Committee financial experts and provides the Board expert perspective in financial management and analysis. With his other public company board experience, Mr. Pruitt also provides strategic and global perspectives on our business.

Ronald P. Spogli, 68

Trustee since 2010

Compensation Committee

Nominating/Corporate Governance Committee

Co-Founder of Freeman Spogli & Co.

Former Ambassador to the Italian Republic and the Republic of San Marino

TRUSTEE QUALIFICATION HIGHLIGHTS:

Mr. Spogli is a member of the Compensation Committee and the Nominating/Corporate Governance Committee. He became a member of the Board in February 2010. Mr. Spogli co-founded Freeman Spogli & Co. (Freeman Spogli), a private investment firm, in 1983. He served as the United States Ambassador to the Italian Republic and the Republic of San Marino from August 2005 until February 2009. Mr. Spogli is a trustee of Stanford University and of the J. Paul Getty Trust, a member of the Investment Committee of the California Institute of Technology, a director of Grandpoint Capital Inc., a bank holding company, a member of the Board of Directors of SAVE, S.p.A., which operates the Venice Marco Polo Airport, and a member of the Board of Directors of White Bridge Investments, an Italian investment company.

Mr. Spogli’s qualifications for election to the Board include his broad-ranging board and executive responsibilities for a variety of companies engaged in consumer businesses in which the firm of Freeman Spogli has investments. In addition, Mr. Spogli’s experience in government and international relations provides helpful insight in the European countries where Public Storage has investments.

Daniel C. Staton, 64

Trustee since 1999

Compensation Committee (Chair)

Audit Committee

Chairman and Managing Director of Staton Capital LLC

TRUSTEE QUALIFICATION HIGHLIGHTS:

Mr. Staton is Chairman of the Compensation Committee and a member of the Audit Committee, and he became a member of the Board in March 1999. Mr. Staton founded Staton Capital LLC, an investment and venture capital firm, in 2003 and serves as Chairman and Managing Director. Mr. Staton has served as Chairman and Director of Armour Residential REIT (NYSE: ARR) (Armour) since 2009 and served as President and Chief Executive Officer of Enterprise Acquisition Corp. from its inception in 2007 until its merger with Armour. Mr. Staton has also served as Chairman of the Board of Javelin Mortgage Investment Corp (NYSE: JMI) (Javelin), a mortgage REIT, since 2012 until its merger with Armour.

Mr. Staton’s qualifications for election to the Board include his extensive real estate industry experience. He also brings his leadership, operational and financial experience as Chairman of Armour to the Board. Mr. Staton’s extensive financial investment experience qualifies him as one of the Company’s Audit Committee financial experts. With his other public company board experience, Mr. Staton also provides strategic and operational perspectives on our business.

Corporate Governance Framework

Our Board has adopted the following corporate governance documents, which establish the framework for our corporate governance and outline the general practices of our Board with respect to Board structure, function and conduct, and Board and committee organization:

Our Corporate Governance Guidelines and Code of Conduct are reviewed at least annually by the Nominating/Corporate Governance Committee, which makes recommendations for any changes to the Board.

In February 2016, the Board approved and adopted updates to the Corporate Governance Guidelines to (i) incorporate the trustee and executive officer stock ownership guidelines that the Board previously implemented in March 2015 (see “Trustee Stock Ownership Guidelines” on page 22 and “Executive Stock Ownership Guidelines” on page 33) and (ii) conform to the updated Code of Conduct.

The Board also approved a new anti-hedging provision to our securities trading policy in February 2016. This new provision prohibits trustees, officers and employees from directly or indirectly engaging in hedging against future declines in the market value of any securities of the Company. The

objective of this policy is to enhance alignment between the interests of our trustees, officers and employees and those of our shareholders.

In February 2017, the Board reviewed market data on board composition and approved an amendment to the Corporate Governance Guidelines to increase the mandatory retirement age of trustees from 70 to 73.

You can access our current Corporate Governance Guidelines, Code of Conduct, Code of Ethics and Committee Charters in the “Investor Relations” section of our website, www.publicstorage.com, or by writing to Public Storage, 701 Western Avenue, Glendale, California 91201-2349, Attention: Corporate Secretary. We will disclose any amendments or waivers to the Code of Ethics on our website or in accordance with SEC and NYSE requirements.

Board Leadership

Our Board recognizes that one of its key responsibilities is to determine the optimal leadership structure to provide effective oversight of management. As a result, the Board does not have a policy as to whether the roles of Chairman and Chief Executive Officer should be combined or separated. Rather, the Board believes that Public Storage shareholders are best served when the Board has flexibility to consider the relevant facts and circumstances when a Chairman is elected, to ensure that the Board leadership structure best reflects the needs of the Company at that time.

As such, when B. Wayne Hughes, the Company’s former Chairman and co-founder, retired as a result of having reached the mandatory retirement age for Board members, the Board determined to combine the roles of Chairman and Chief Executive Officer when it elected Ronald L. Havner, Jr. as Chairman in August 2011. The Board also considered that many advantages of separating the roles of Chairman and Chief Executive Officer could be met in significant part by the appointment of a “Lead Independent Trustee” for the Board (as discussed below).

Lead Independent Trustee

Our Board established the position of Lead Independent Trustee in 2011 to provide for an independent leadership role on the Board when the roles of Chairman and Chief Executive Officer were combined. We describe more fully the role of the Lead Independent Trustee in our Corporate Governance Guidelines. Among other things, the Lead Independent Trustee presides at all executive sessions of the non-management trustees and the independent trustees.

Our Lead Independent Trustee is Gary Pruitt, who was re-appointed in 2014 to serve in that capacity for a three-year term expiring in November 2017.

Chairman Emeritus

Following his retirement as Chairman, Mr. Hughes continued to serve as Chairman Emeritus and Co-Founder, which has enabled the Board to continue to avail itself of his wisdom, judgment and experience.

Consulting Arrangement.  Pursuant to a consulting arrangement approved by the Compensation Committee and the disinterested trustees in March 2004, Mr. Hughes (1) agreed to be available for up to 50 partial days a year for consulting services, (2) receives compensation of $60,000 per year and the use of a Company car and (3) is provided with the services of an executive assistant at the Company’s headquarters. This consulting arrangement was extended in 2016 through December 31, 2017.

Board Responsibilities and Oversight of Risk Management

Our Board is responsible for overseeing our Company-wide approach to major risks and our policies for assessing and managing these risks.

Our Board regularly receives presentations from management on areas of risk facing our business. Our Board and management actively engage in discussions about these potential and perceived risks to the business.

In addition, three standing Board committees assist our Board in its oversight responsibilities (as described below). These committees have assigned areas of oversight responsibility for different matters, as more fully described in the Committee Charters and as required by the NYSE.

Our Audit Committee assists in the Board’s oversight of the integrity of our financial statements and risks and exposures related to financial matters, tax, accounting, disclosures and internal controls over financial reporting. Our Audit Committee is also responsible for considering the qualifications and independence of our independent registered public accounting firm and the performance of our internal audit function and independent registered public accounting firm. Our Audit Committee also considers Company policies on risk assessment and risk management.

Our Compensation Committee oversees the compensation of our Chief Executive Officer and other executive officers and evaluates the appropriate compensation incentives to motivate senior management to grow long-term shareholder returns without taking undue risks.

Our Nominating/Corporate Governance Committee focuses on risks associated with trustee and management succession planning, corporate governance and overall Board effectiveness.

These three Board committees also hear reports from members of management, which help each committee to understand and discuss risk identification and risk management. The chair of each of the Board’s standing committees reports on its committee’s discussion to the full Board at the following Board meeting. All trustees have access to members of management if a trustee wishes to follow up on items discussed outside the Board meeting.

Board Orientation and Education

Each new trustee participates in an orientation program and receives materials and briefings concerning our business, industry, management and corporate governance policies and practices. We provide continuing education for all trustees through board materials and presentations, discussions with management and the opportunity to attend external board education programs. In addition, all Board members have access to resources of the National Association of Corporate Directors through a Company membership.

Trustee Independence

Our Board evaluates the independence of each trustee annually based on information supplied by trustees and the Company and on the recommendations of the Nominating/Corporate Governance Committee. In making its determinations, our Board also considers the standards for independence set forth in the NYSE rules. A trustee qualifies as independent unless the Board determines that the trustee has a material relationship with Public Storage, based on all relevant facts and circumstances, subject to the NYSE rules. Material relationships may include commercial, industrial, consulting, legal, accounting, charitable, family and other business, professional and personal relationships.

Based on its review in February 2017, the Nominating/ Corporate Governance Committee recommended to the Board and the Board determined that:

Committees of the Board

Our Board has three standing committees: the Audit Committee, the Nominating/Corporate Governance Committee and the Compensation Committee. These standing committees, the committee members and the number of meetings held in 2016 are described below.

Each of the standing committees operates pursuant to a written charter, which can be viewed in the “Investor Relations” section of our website, www.publicstorage.com, and will be provided in print to any shareholder who requests a copy by writing to the Corporate Secretary.

Audit Committee

The primary functions of our Audit Committee, as set forth in its charter, are to assist our Board in fulfilling its responsibilities for oversight of:

All three members of our Audit Committee qualify as financial experts and as independent within the meaning of the rules of the SEC and NYSE.

Compensation Committee

The primary functions of our Compensation Committee, as set forth in its charter, are to:

Our Compensation Committee also periodically reviews compensation of non-management trustees and makes recommendations to the full Board, which determines the amount of such compensation.

During 2016, our Compensation Committee made all compensation decisions for our executive officers, including the named executive officers, as set forth in the Summary Compensation Table below.

Our Compensation Committee has the authority to delegate any of its authority or responsibilities to individual members of the Compensation Committee or a subcommittee of the Compensation Committee. However, the Compensation Committee did not delegate any of its responsibilities during 2016. Our Compensation Committee also has the sole authority to retain outside compensation consultants for advice, and engaged F.W. Cook & Co., Inc. (FW Cook) in 2015 to prepare a market compensation survey for certain named executive officer roles (which was subsequently updated in early 2016). In addition, the Company relies on publicly available information about senior executive compensation at similar companies.

Compensation Committee Interlocks and Insider Participation. No executive officer of Public Storage served on the compensation committee or board of any other entity which has an executive officer who also served on the Compensation Committee or Board of Public Storage at any time during 2016, and no member of the Compensation Committee had any relationship with us requiring disclosure under Item 404 of SEC Regulation S-K.

Oversight of Compensation Risks. With respect to consideration of risks related to compensation, the Compensation Committee annually considers a report from management concerning its review of potential risks related to compensation policies and practices applicable to all employees. Most recently, in February 2017, the Compensation Committee considered the annual report and also considered and discussed with management management’s conclusion that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on our Company.

In connection with preparing the report for the Compensation Committee’s consideration, members of our senior management team, including our Chief Executive Officer and Chief Human Resources Officer, reviewed the target metrics for all of our employee incentive compensation plans. At the completion of the review, management and the Compensation Committee concluded that our

incentive compensation plans did not create undue risks for the Company. As such, we believe there is little motivation or opportunity for employees to take undue risks to earn incentive compensation awards.

Nominating/Corporate Governance Committee

The primary functions of the Nominating/Corporate Governance Committee, as set forth in its charter, are to:

Our Board has delegated to the Nominating/Corporate Governance Committee responsibility for recommending nominees for election to the Board. Other duties and responsibilities of our Nominating/Corporate Governance Committee include periodically reviewing the structure, size, composition and operation of the Board and each Board committee; recommending assignments of trustees to Board committees; conducting a preliminary review of trustee independence; periodically evaluating trustee compensation and recommending to the Board any changes in trustee compensation; overseeing trustee orientation; periodically evaluating risks associated with trustee and management succession planning, corporate governance and overall Board effectiveness; and annually evaluating its charter and performance.

Trustee Qualifications. Our Nominating/Corporate Governance Committee is responsible under our Corporate Governance Guidelines for reviewing with the Board the skills and characteristics required of Board members in the context of the current composition of the Board. This assessment includes an evaluation of whether a trustee qualifies as independent and a consideration of his or her skills,

knowledge, perspective, business judgment and leadership, relevant industry or regulatory experience, business creativity and vision, all in the context of the perceived needs of the Board at that time. The Nominating/Corporate Governance Committee is further guided by the principles set forth in its charter.

Trustee Diversity. Although the Nominating/Corporate Governance Committee does not have and does not believe there is a need for a formal policy concerning diversity, it seeks to ensure that a diversity of experiences and viewpoints are represented on the Board. The nomination of Ms. Heisz for election as a new trustee was in part driven by the Nominating/Corporate Governance Committee’s consideration of and commitment to increasing the diversity of the Board’s membership.

We do not have any other policies or guidelines that limit the selection of trustee candidates by the Nominating/Corporate Governance Committee, and the Nominating/Corporate Governance Committee and the Board have and continue to exercise broad discretion to select trustee candidates who will best serve the Board and Public Storage in the current and anticipated business environment.

Communications with the Board

We provide a process by which shareholders and interested parties may communicate with our Board. Communications to our Board should be addressed to: Public Storage, 701 Western Avenue, Glendale, California 91201-2349, Attention: Corporate Secretary. Communications that are intended for a specified individual Board member or group of Board members should be addressed c/o Corporate Secretary at the above address and will be forwarded to the Board member(s).

Response to Proxy Advisory Firm Policy Change

We are aware that a proxy advisory firm has recently adopted a policy of recommending “no” votes for governance committee trustees of public companies that have governance documents that restrict the ability of shareholders to amend the bylaws. Our Charter, in accordance with Maryland law, provides that our bylaws may only be amended by our Board. In response to this proxy advisory firm’s policy change, the Nominating/Corporate Governance Committee considered whether amending our governance documents to provide shareholders the right to amend the bylaws was in the best interest of the Company. The committee considered, among other things:

Based on these considerations, the Nominating/Corporate Governance Committee determined not to recommend that the Board amend our governance documents at this time. We will continue to engage with our shareholders on governance matters and we remain committed to maintaining strong corporate governance practices and updating those practices to the extent such updates are in the best interests of the Company.

Board and Committee Meetings and Attendance

The Board meets at regularly scheduled intervals and may hold additional special meetings as necessary or desirable in furtherance of its responsibilities. The non-management trustees generally meet in executive sessions without the presence of management following each regularly scheduled Board meeting. The sessions are designed to encourage open Board discussion of any matter of interest without the Chief Executive Officer or any other members of management present.

During the year ended December 31, 2016, the full Board held four in-person meetings and one telephonic meeting. Each trustee serving as a trustee in 2016 attended 100% of the total number of meetings of the Board held during 2016 and 100% of the total number of meetings held during 2016 by all committees of the Board on which he or she served during the period of his or her service. We do not have a policy regarding trustees’ attendance at the annual meeting of shareholders, but trustees are encouraged to attend. All trustees who served as trustees in 2016 attended the 2016 annual meeting of shareholders.

Compensation of Trustees

General Compensation Arrangements

Compensation for non-management trustees who are not officers or employees of Public Storage or an affiliate (currently, all trustees other than Ronald L. Havner, Jr.) is set by the Board after consideration of the recommendations of the Compensation Committee. The Board has approved the mix of cash and equity compensation described below.

Retainers

Retainers are paid quarterly in cash and are pro-rated when a trustee joins the Board (or in the case of the Lead Independent Trustee, when an appointment is made) other than at the beginning of a calendar year. Below are the annual retainers that non-management trustees were entitled to receive during 2016 for Board service:

Equity Awards

Each new non-management trustee is, upon the date of his or her initial election by the Board or the shareholders to serve as a trustee, granted a non-qualified stock option to purchase 15,000 shares of Common Stock at an exercise price equal to the closing price for the Common Stock on the NYSE on such date, which vests in three equal annual installments based on continued service.

Annually, each trustee other than Ronald L. Havner, Jr. receives a non-qualified stock option to acquire 5,000 shares of Common Stock, which vests in three equal annual installments based on continued service. The annual grants are made immediately following the annual meeting of shareholders at an exercise price equal to the closing price for the Common Stock on the NYSE on such date.

Trustee Stock Ownership Guidelines. The Board implemented stock ownership guidelines effective March 17, 2015. Each trustee is expected to beneficially own Common Stock equal in market value to a specified multiple of his or her annual base salary or annual cash retainer, as applicable. The guideline for each non-management trustee is three times the annual cash retainer, or $360,000. Each non-management trustee has five years from the date of election to attain his or her ownership target.

Only shares of Common Stock owned by the non-management trustee, shares of Common Stock owned jointly by him/her and his/her spouse, shares owned by his/her spouse or beneficially for his/her children or in the 401(k) Plan are counted for determining compliance with these guidelines. Unvested time-based restricted stock units (RSUs) and in-the-money value of vested options are NOT counted for determining compliance with these guidelines. The Nominating/Corporate Governance Committee administers these stock ownership guidelines and may modify their terms and grant hardship exceptions in its discretion. As of the date of this proxy statement, all of our non-management trustees who have served for five years or more, except for one trustee, exceeded his/her stock ownership requirement.

Approve the Company’s compensation practices and principles and their implementation for 2016 for the compensation of the Company’s named executive officers as discussed and disclosed in the Compensation Discussion and Analysis, the compensation tables and any related material contained in this proxy statement.

RECOMMENDATION:

Vote FOR approval

Advisory Vote

We are again providing shareholders an advisory vote on the compensation of our named executive officers, also known as a “say-on-pay” proposal. The Board has determined to hold these votes annually. The advisory vote is a non-binding vote on the compensation of our named executive officers as described in this proxy statement in the CD&A, the tabular disclosure regarding such compensation and the Company’s accompanying narrative disclosure.

At our 2016 Annual Meeting, almost 98% of the votes cast on the say-on-pay proposal were voted in favor of the proposal. Our Compensation Committee considered the results of this vote and believes they affirm shareholder support of the Company’s compensation of its executive officers. Accordingly, our 2016 executive compensation was generally unchanged from the 2015 program.

Annual incentive bonus payments were tied to achieving at least (i) 3% increase in year-over-year U.S. same store revenue and free cash flow per share and (ii) 5% increase in Core FFO per share. The target for awards of RSUs was established as the achievement of at least 4.0% growth in U.S. same store revenues. The Compensation Committee selected these metrics as key drivers of Company growth in February 2016, and determined that it was appropriate to raise the targets for (i) Core FFO per share from 3% in 2015 to 5% in 2016 (for the annual incentive bonus) and (ii) U.S. same store revenues from 3.5% in 2015 to 4.0% in 2016 (for the RSU awards) following its consideration of various factors, including historical company performance and current market conditions. As discussed in the CD&A beginning on page 26 of this proxy statement, actual performance exceeded the incentive targets for payment of cash bonuses and the award of RSUs. Refer to the Company’s 2016 Annual Report on Form 10-K for information regarding U.S. same store revenues. Refer to the Appendix to this proxy statement for reconciliations and other information regarding Core FFO.

We believe our compensation program for executive officers helped drive strong performance in our business in 2016. In addition, our TSR beat the NAREIT Equity Index and the S&P 500 indices for the three-year, 10-year and 20-year periods ending December 31, 2016, averaging 14.6% in total annual return since 1996.

The Board therefore recommends that shareholders approve the compensation of the Company’s named executive officers as disclosed pursuant to the SEC’s compensation rules, including in the CD&A, the compensation tables and the narrative disclosures that accompany the compensation tables in this proxy statement.

The vote on our executive compensation programs is advisory and nonbinding on the Company. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation programs, values the opinions expressed by the Company’s shareholders and will continue to consider the outcome of the vote when making future compensation decisions regarding our named executive officers.

The Board of Trustees recommends a vote FOR approval of our executive compensation as described in this proxy statement.

Compensation Discussion and Analysis

The following section summarizes our philosophy and objectives regarding the compensation of our named executive officers, including how we determine the elements and amounts of executive compensation. This section should be read in conjunction with our tabular disclosures regarding the compensation of our named executive officers in the year ended December 31, 2016 and the Compensation Committee Report, which can be found on page 41 of this proxy statement.

Executive Summary

The Compensation Committee’s goal for our executive compensation program is to hire, retain and motivate our senior management to achieve solid financial results and create long-term shareholder value. Our named executive officers are paid based on what the Compensation Committee considers appropriate in view of individual and corporate performance, competitive levels, and our objective of aligning individual and shareholder interests to maximize the value of our shareholders’ investments in our securities over the long term. We believe that our compensation programs have been effective in helping the Company achieve these goals.

In general:

In fiscal year 2016, senior management successfully (i) grew U.S. same store revenues, funds from operations and free cash flow, (ii) increased the volumes and penetration of our ancillary businesses and (iii) maintained a conservative capital structure with a focus on cost controls. Their efforts were directly responsible for the following results:

Based on these achievements and considerations, the Compensation Committee made the following compensation decisions with respect to 2016 performance:

On the other hand, in keeping with our conservative compensation philosophy and practices:

We believe our compensation program for executive officers drove 2016 performance and will continue to drive improved Company performance even if economic and industry conditions become more challenging. Accordingly, the Board recommends that shareholders approve the compensation of the Company’s named executive officers, as disclosed pursuant to the SEC’s compensation rules, including the CD&A, the compensation tables and the narrative disclosures that accompany the compensation tables in this proxy statement.

Our Executive Officers

In accordance with SEC rules and regulations, our named executive officers for the year ended December 31, 2016 include our Chief Executive Officer, our Chief Financial Officer and the three other most highly compensated executive officers who were serving as executive officers on December 31, 2016. Accordingly, our named executive officers for the year ended December 31, 2016 consisted of Ronald L. Havner, Jr., Chairman of the Board and Chief Executive Officer, and the following four executive officers, whose biographical summaries are set forth below:

Executive Officer Diversity. Although we do not have and do not believe there is a need for a formal policy concerning diversity of executive officers, the Board seeks to ensure that a diversity of experiences, backgrounds and viewpoints are represented in our management. Currently, our named executive officers consist of 40% diverse members (one ethnic minority and one female out of five named executive officers) and the Board and management continue to be focused and committed to increasing diversity in ongoing succession planning discussions.

Compensation Philosophy, Objectives and Process

Our compensation goals are to hire, retain and motivate our senior management to create long-term shareholder value. We pay our named executive officers a mix of cash and long-term equity compensation that we consider appropriate in view of individual and corporate performance, competitive levels, and our objective of aligning

individual and shareholder interests to maximize the value of our shareholders’ investments in our securities over the long term.

In general, our compensation program for named executive officers consists of (1) a base salary, (2) short-term incentives in the form of annual cash bonuses and (3) long-term performance- and time-based incentives in the form of equity awards, which may be RSUs or stock options, and vest upon continued service or the achievement of defined performance goals.

Annual and long-term incentive compensation for named executive officers is designed to reward achievement of Company-wide performance goals by tying awards primarily to financial objectives such as growth in (1) U.S. same store revenue, (2) free cash flow and (3) Core FFO. Other corporate and individual objectives are also considered from time to time.

From time to time, the Compensation Committee retains independent compensation consultants to assist in its determination of market compensation rates for our named executive officers. In 2015, the Compensation Committee retained FW Cook to prepare an updated market compensation survey, which was completed in Q2 2015 and further updated in February 2016.

The Compensation Committee considers corporate, business unit and individual performance generally, and, particularly with respect to Mr. Havner’s compensation, input from other Board members. With respect to the compensation of the executive officers who report to Mr. Havner, the Compensation Committee also considers the recommendations of Mr. Havner.

Focus on Pay for Performance

The guiding principle of our executive compensation philosophy is to pay for performance and incentivize our executive officers to create long-term shareholder value. Performance bonuses and long-term, equity-based compensation vary based on the Company’s achievement of financial and operational goals and on each executive’s contributions to such achievement. This link between incentive payouts and achievement of goals has helped drive our strong and consistent performance year after year.

Emphasis on Long-Term Compensation and At-Risk Pay

The Compensation Committee strives to provide an appropriate mix of different compensation elements, including finding a balance among short- and long-term compensation. Cash payments primarily reward more recent performance, while equity awards with five- to eight-year vesting periods incentivize our named executive officers to continue to deliver results over a longer period of time and also serve as a retention tool. In addition, the Compensation Committee believes that a substantial portion of our named executive officers’ compensation should be at-risk, contingent on the Company’s operating and stock-price performance over the long-term.

Assessment of Individual Contributions to Overall Performance

The Compensation Committee’s evaluation of each named executive officer places strong emphasis on his or her contributions to the Company’s overall performance rather than focusing only on his or her individual business or function. The Compensation Committee believes that the named executive officers share the responsibility to support the goals and performance of the Company as a whole.

Long-Term Financial Performance

Public Storage has delivered strong financial performance over a sustained period of time, increasing Core FFO per share and free cash flow per share over the last seven years and U.S. same store revenue growth over the last four years. The Compensation Committee believes that our compensation program, structured on the philosophy and objectives outlined above, is a key driver of the Company’s strong performance over the long term.

The Compensation Committee made all final compensation decisions for named executive officers in 2016. For more information on the Compensation Committee and its responsibilities, see “Corporate Governance and Board Matters – Committees of the Board – Compensation Committee” on page 18.

Sound Governance Practices

In designing our executive compensation around the philosophy and objectives outlined above, the Compensation Committee believes that our program encourages the highest performance standards and aligns the interests of our named executive officers with the interests of our long-term shareholders by:

At the same time, the following features in our program discourage inappropriate risk taking:

Elements of Compensation

To achieve our compensation objectives, we believe that total executive compensation should be balanced among the following components: (1) an annual base salary, (2) short-term performance-based incentive opportunities in the form of bonuses that are generally paid in cash and (3) long-term performance-based incentive opportunities in the form of equity awards, which typically may include stock options and/or RSU awards, each of which generally vests upon continued service. Mr. Havner’s bonus under his compensation plan is paid in a combination of cash and RSUs, as discussed above, and the Compensation Committee has the discretion to pay

other executive officer bonuses in options, RSUs or a combination of cash, options and RSUs.

Annual Base Salary

Annual base salary provides a competitive level of fixed compensation to attract and retain the best possible executive talent. We establish base salaries at a level so that a significant portion of the total cash compensation such executives can earn is performance-based (through annual and special incentive compensation). We also set base salaries based on factors that include whether levels are competitive with comparable REITs and/or competitive conditions in the local market, an individual’s performance and responsibilities and the business judgment of the members of the Compensation Committee.

The Compensation Committee considers input from Board members with respect to Mr. Havner’s base salary and the recommendations of Mr. Havner for the other named executive officers. In general, the Compensation Committee reviews base salaries annually for the named executive officers.

Short-Term Performance-Based Bonus Awards

We historically have paid annual cash bonuses to reward our executive officers, including each of the named executive officers, for the achievement of financial and operational goals and individual performance objectives to enable Public Storage to meet long- and short-term goals. Mr. Havner typically receives a combination of cash and RSUs for his bonus.

The Compensation Committee selects key financial metrics based on their importance to our Board, senior executive team and investors. The Compensation Committee typically sets a target and maximum for bonus payments for each individual executive officer to comply with Section 162(m). If the performance targets are met, the Compensation Committee must approve a bonus award, but has the discretion to reduce the bonus below the maximum target bonus amount set for purposes of Section 162(m). The actual bonus amounts are subject to the discretion of the Compensation Committee based on the collective business judgment of its members. The Compensation Committee has the discretion to award bonuses even if the performance targets are not met.

We may also reward the accomplishment of significant transactions with special bonuses that may be paid to designated executive officers upon successful completion of the transaction. These bonuses, like the amount of annual bonuses paid, are subject to the discretion of the Compensation Committee.

Long Term Performance- and Time-Based Equity Compensation

The Compensation Committee believes that our executive officers should have an incentive to improve the Company’s long-term performance by having an ongoing stake in the success of our business. Our executive officers may receive stock options, RSUs or a mix based on the determination of the Compensation Committee in its discretion.

The Compensation Committee does not set awards based on a fixed weighting between stock options and RSUs. In general, the Compensation Committee considers equity awards for executive officers in connection with their annual performance review.

We believe equity awards help retain and motivate executives because they vest over a period of time and thus the recipient may only realize the full potential value of the award to the extent he or she remains employed by Public Storage over that period. In general, equity awards are granted only after the Compensation Committee has determined that the applicable performance goals have been achieved. Granted awards vest ratably in installments over the period of time, and pursuant to other terms and conditions, specified in the grant.

Stock Options. Stock options have value solely to the extent that the price of our Common Stock is greater than the exercise price of the option at the time of exercise. Options help us retain executive officers in that options vest over a multi-year period and achieve their maximum value to the executive only if he or she remains in the Company’s employ for a period of years.

Stock options are granted with an exercise price of not less than 100% of the fair market value of our Common Stock on the date of grant, which ensures that the executive officer does not profit from the option unless the price of our Common Stock increases after the grant date.

The Compensation Committee determines stock option award levels to the named executive officers in its discretion, considering input from other Board members with respect to stock option awards to Mr. Havner, recommendations of Mr. Havner with respect to awards to the other named executive officers, the executive’s responsibilities and performance and equity awards at other companies, including REITs, of a comparable size and market capitalization.

RSUs. RSUs increase in value as the value of our Common Stock increases, and vest over time, provided that the executive officer remains employed at Public Storage.

Awards of RSUs serve the Compensation Committee’s objectives of retaining Public Storage executive officers and other employees and motivating them to advance the interests of Public Storage and its shareholders. Unlike stock options, RSUs retain some value even in persistently declining markets, and may be particularly important to the Company during difficult market conditions because of their value in retaining executive talent at times when we may need it most. In addition, to better align the interests of our named executive officers with those of our shareholders, vested RSUs, but not vested options, count toward the determination of whether the respective stock ownership guidelines have been satisfied.

In recent years, the Compensation Committee has approved a program to provide awards of RSUs to senior executives (other than our Chief Executive Officer) based on the achievement of targeted performance levels.

Equity Grant Practices. Equity grants to all of our executive officers, including the named executive officers, must be approved by the Compensation Committee, which consists entirely of independent trustees.

The 2016 Plan. The 2016 Plan, which amended and restated our prior compensation plan, was approved by our Board and recommended for submission to our shareholders in February 2016. At our 2016 Annual Meeting, our shareholders approved the 2016 Plan by the affirmative vote of more than 96% of the votes cast. The 2016 Plan became effective as of April 25, 2016, and all awards of equity and incentive compensation granted by the Company on and subsequent to that date were made under the 2016 Plan and are subject to its terms and conditions.

Executive Stock Ownership Guidelines

The Board implemented stock ownership guidelines for executive officers effective March 17, 2015. Each executive officer is expected to beneficially own Common Stock equal in market value to a specified multiple of his or her annual base salary. The guideline for the Chief Executive Officer is five times his or her base salary and for the other executive officers is three times his or her base salary. Each executive officer has five years from the date of hire to attain his or her ownership target.

Only shares of Common Stock owned by the executive, shares of Common Stock owned jointly by him/her and his/her spouse, shares owned by his/her spouse or beneficially for his/her children or in the 401(k) Plan are counted for determining compliance with these guidelines. Unvested time-based RSUs and in-the-money value of vested options are NOT counted for determining compliance with these guidelines. The Nominating/Corporate Governance Committee administers these stock ownership guidelines and may modify their terms and grant hardship exceptions in its discretion. As of the date of this proxy statement, all of our named executive officers who have been with the Company for at least five years exceeded his/her stock ownership requirement.

Tax and Accounting Considerations – Section 162(m)

Section 162(m) of the Code imposes a $1,000,000 limit on the annual deduction that may be claimed for compensation paid to each of the Chief Executive Officer and three other highest paid employees of a publicly held corporation (other than the Chief Financial Officer). Certain performance-based compensation awarded under a plan approved by shareholders is excluded from that limitation. Awards of stock options and our annual cash incentive awards are designed in general to qualify for deduction as performance-based compensation. However, while the Compensation Committee considers the tax deductibility of compensation, the Compensation Committee has approved and may approve compensation that does not qualify for deductibility in circumstances it deems appropriate to promote varying corporate goals.

In such instances, the Compensation Committee has also considered that as a result of the Company’s REIT status under federal tax law, the inability to deduct compensation payments effectively will require a

corresponding future increased distribution to shareholders to avoid taxable income for the Company and to help maintain the Company’s REIT status. While the Compensation Committee considers the accounting impact of various forms of incentive compensation and compensation elements on the Company’s financial statements, accounting treatment is generally not the basis underlying the decision to award a particular form of compensation if the Compensation Committee deems the award the most appropriate incentive to achieve the Company’s compensation goals.

Under the 2016 Plan, the limit on the aggregate value of cash and non-cash awards, other than stock options and SARs, that may be granted to any individual in any calendar year is $15 million.

2016 Executive Compensation

Company Performance

Successful Execution on Strategy and Achievement of Extraordinary Results. In 2016, management continued its strategic focus on (i) growing U.S. same store revenues, funds from operations and free cash flow, (ii) increasing our share of the market and improving the quality of our product by acquiring and developing new and existing properties at attractive valuations, (iii) driving the volumes and penetration of our ancillary businesses and (iv) maintaining a conservative capital structure with a focus on cost control. Management’s successful execution on these strategies and their stewardship over our investments enabled the Company to deliver solid results on several fronts during the year, including the following:

Factors Considered by the Compensation Committee in its Compensation Decisions for 2016

2016 Advisory Vote to Approve Executive Compensation. We believe our executive compensation program is appropriately structured to achieve our objective of driving growth in long-term shareholder value. At our 2016 Annual Meeting, almost 98% of the votes cast by shareholders voted to approve our executive compensation practices as described in the proxy statement. The Compensation Committee considered the results of this vote and concluded that its pay for performance philosophy is supported by shareholders, and decided not to make significant changes to our executive compensation programs for 2016.

Compensation Surveys. Each component of compensation we pay to our named executive officers—salary, cash bonuses and equity compensation—is based generally on the Compensation Committee’s (and, for Mr. Havner, the independent trustees’, and for each named executive officer other than himself, Mr. Havner’s) subjective assessment of each individual’s role and responsibilities and consideration of market compensation rates. While market rates are a factor reviewed by the Compensation Committee, we do not “benchmark” or specifically target certain levels of compensation.

Historically for our executive officers, the Compensation Committee determined market compensation rates by reviewing public disclosures of compensation paid to senior executive officers by other companies (especially REITs) of comparable size and market capitalization. In 2015, the Compensation Committee retained an independent compensation consultant, FW Cook, to prepare an updated market compensation survey for our executive officers. FW Cook’s study was completed in Q2 2015 and was further updated in February 2016 with more current publicly available information. Among other data, the study included information concerning executive officer compensation at two peer groups of companies, one consisting of 15 REITs and the other consisting of 12 retail companies, as follows:

The Compensation Committee considered the comparability of the peer group companies identified by FW Cook and based its 2015 compensation decisions in part on its review of the broad range of information presented in the report. The Compensation Committee also considered the updated compensation survey results at its February 2016 meeting and decided not to make any additional changes to our named executive officer compensation.

Role of Management. In general, Mr. Havner attends all meetings of the Compensation Committee at which (1) compensation of the other named executive officers is discussed or (2) Company-wide compensation matters, such as consideration of a new equity plan, are discussed.

Mr. Havner does not vote on items before the Compensation Committee and was not present during the Committee’s discussion and determination of his compensation. The Compensation Committee and the Board solicit Mr. Havner’s views on the performance of the executive officers reporting to him, including each of the other named executive officers, and consider his recommendations with respect to the compensation paid to each such officer. The Compensation

Committee also considers input from Mr. Havner with respect to his compensation.

Framework for CEO and Other Executive Compensation. The Compensation Committee solicits the views of the Board as to compensation of all named executive officers, particularly with respect to the compensation of Mr. Havner. For named executive officers other than the CEO, the Compensation Committee generally sets their base salaries, bonus and equity compensation after consideration of the recommendations prepared by Mr. Havner with respect to the appropriate amounts to reward and incentivize each officer.

During 2012, the Compensation Committee considered a new compensation package for Mr. Havner in his role as the Chairman, Chief Executive Officer and President, following the expiration of a three-year compensation program approved in 2008. In connection with that consideration, the Compensation Committee retained FW Cook to provide comparative information on peer group compensation practices for the Chairman, Chief Executive Officer and other executive officers, as well as directional suggestions for Mr. Havner’s compensation program. Based on its review and analysis of the information provided by FW Cook and other publicly available information, the Compensation Committee approved Mr. Havner’s compensation program in July 2012 as consisting of the following features:

As discussed above, FW Cook was retained in 2015 to prepare a compensation study for executive officer positions. In February 2015, based on its review of FW Cook’s 2015 report and other publicly available information, the Compensation Committee decided

to keep all features of Mr. Havner’s compensation program approved in 2012 unchanged, except that the maximum annual cash incentive award payable to Mr. Havner was increased from $2 million to $3 million.

The Compensation Committee engaged and oversaw FW Cook directly. FW Cook provided services only to the Compensation Committee and did not provide any other services to the Company in 2016.

2016 Compensation Targets

The Compensation Committee designed its incentive compensation programs for 2016 to focus management on growing our business.

2016 Annual Cash Incentive Targets. Consistent with its pay for performance philosophy, the Compensation Committee in early 2016 set the achievement of at least (i) 3% year-over-year increases in each of 2016 same store revenues and free cash flow per share and (ii) 5% increase in Core FFO per share as the performance goals for payment of 2016 bonuses for the Chief Executive Officer and his team. Bonus target amounts for all named executive officers reporting to Mr. Havner other than Mr. Reyes were set at 100% of base salary (including for Mr. Russell, a pro rata portion of which was awarded in connection with his joining the Company in July 2016). Mr. Reyes’ bonus target was set at $1 million. The Compensation Committee considered that these goals might be challenging in light of uncertain conditions in the self-storage industry in the United States, but concluded that they were achievable.

For purposes of these targets, Core FFO is a non- GAAP measure that represents net income before depreciation expense, gains and losses on real estate assets, foreign currency gains and losses, the application of EITF D-42 to the redemption of securities and certain other items. Free cash flow is a non-GAAP measure that represents Core FFO with non-cash share-based compensation expense added back, less capital expenditures for the maintenance of our facilities. Refer to the Appendix to this proxy statement for reconciliations and other information regarding Core FFO.

The Compensation Committee did not assign any specific numerical targets or weights to the three

performance goals other than achieving gains during 2016 of at least 3% year-over-year for same store revenues and free cash flow per share and 5% year-over-year for Core FFO per share. The Compensation Committee also did not establish targets for the amount of increase required in any of the three performance metrics as a condition to earning a particular level of bonus. Upon achievement of the target in each of the three metrics, the Compensation Committee is required to approve a bonus award but has the discretion to reduce the amount payable below the maximum amount set for purposes of Section 162(m), under which all named executive officer bonus amounts were capped at 15 times base salary, with the exception of Mr. Havner and Mr. Reyes, who were capped at $15 million.

2016 Performance-Based RSU Targets. Also in early 2016, the Compensation Committee set the minimum performance level for awards of RSUs at the achievement of at least 4.0% growth in same store revenues, and established the following potential award levels:

2016 Compensation Decisions

In early 2017, the Compensation Committee considered that senior management exceeded each of the targets set for 2016 compensation, with year-over-year increases in same store revenues of 5.5%, free cash flow per share of 9.6% and Core FFO per share of 10.0%. As a result, the Compensation Committee made the following decisions with respect to 2016 compensation, which are discussed in detail below:

Base Salaries. The Compensation Committee’s philosophy is to weigh executive officer compensation more heavily towards performance-based, at-risk compensation. This reflects the Committee’s view that a substantial portion of management compensation should be incentive compensation that is paid only if performance targets are met. Consistent with that philosophy, the Compensation Committee maintained base salaries at 2015 levels for all named

executive officers other than Mr. Russell. As disclosed in our Form 8-K filed with the SEC on June 17, 2016, Mr. Russell’s annual base salary was set at $600,000.

Annual Cash Incentives. Based on the achievement of the annual incentive performance targets set for 2016, the Compensation Committee awarded bonuses to all named executive officers. Because these awards were based on pre-established performance goals, they are presented in the Summary Compensation Table on page 42 as “Non-Equity Incentive Plan Compensation.”

In determining the actual amount of Mr. Havner’s bonus, the Compensation Committee considered Mr. Havner’s leadership in achieving the Company’s strong results. At the conclusion of its review and discussion, the Compensation Committee approved a cash bonus of $3 million together with an award of 50,000 RSUs for Mr. Havner’s 2016 performance, consistent with bonus targets and the compensation program approved by the Compensation Committee in February 2016. However, Mr. Havner accepted and received only $2 million of the approved $3 million cash bonus.

The Compensation Committee also considered the recommendations of Mr. Havner with respect to the appropriate cash bonuses to be paid to the other named executive officers for their contributions in exceeding the 2016 performance targets. In determining his recommendations, Mr. Havner compiled information as to each executive officer’s responsibilities and achievements and his subjective assessment of the individual performance of each named executive officer.

Mr. Havner’s recommendations were at or above the target bonus amounts, depending on his assessment of each individual’s performance. Based on its review of the Company’s performance against the previously established goals and after consideration of the information and recommendations provided by Mr. Havner, the Compensation Committee approved cash bonuses for 2016 performance as follows: Mr. Reyes, $2 million (200% of target); Mr. Doll, $1 million (190% of target); and Ms. Krol, $750,000 (158% of target). As discussed above, Mr. Russell received a bonus of $300,000 in connection with his appointment as President in July 2016. Each of the foregoing bonuses was below the maximum

previously set by the Compensation Committee for Section 162(m) purposes.

2016 Performance-Based RSUs. The performance-based RSUs awarded for 2016 performance were based on achieving a targeted level of growth in year-over-year same store revenues. These awards were granted in early 2017 following a determination that the minimum performance goals were achieved, although the Compensation Committee retained the discretion to reduce the awards based on an executive officer’s performance during the year, irrespective of the Company meeting the growth targets. The Compensation Committee also determined that any RSUs awarded under the program would vest in eight equal annual installments beginning in March 2018 and then on the second through eighth anniversaries of the grant date.

Actual 2016 same store revenue growth was 5.5%, which qualified eligible named executive officers for RSU awards at the 200% of target level. However, Mr. Reyes was awarded 24,000 RSUs, which amounted to 120% of his targeted opportunity. Mr. Doll was awarded 12,000 RSUs, which amounted to 200% of his targeted opportunity, and Ms. Krol received no RSU award in light of her expected retirement in 2017. Finally, as disclosed in our Form 8-K filed with the SEC on June 17, 2016, Mr. Russell received a grant of 10,000 RSUs, vesting in five equal annual installments, when he joined the Company in July 2016.

2016 Options. In early 2017, the Compensation Committee awarded Messrs. Havner, Russell, Reyes and Doll options to acquire 100,000, 20,000, 60,000 and 25,000 shares of Common Stock, respectively. And as disclosed in our Form 8-K filed with the SEC on June 17, 2016, Mr. Russell received a grant of options to acquire 25,000 shares of Common Stock when he joined the Company in July 2016.

All stock option awards vest in equal annual installments over five years beginning one year from the date of grant, and expire ten years from the date of grant. Stock options have value solely to the extent that the price of our Common Stock at the time of exercise is greater than the exercise price of the option. All stock options were granted with an exercise price at the fair market value of our

Common Stock on the date of grant. The Compensation Committee granted these stock

options in order to help the Company retain these executive officers.

Appointment of Joseph D. Russell, Jr. as President

On June 17, 2016, the Board approved the appointment of Joseph D. Russell, Jr. as President of the Company, effective July 1, 2016. In connection with his appointment, Mr. Russell’s annual base salary and target bonus were set at $600,000 and 100% of annual base salary, respectively. Mr. Russell received a pro rata portion of his targeted bonus in connection with his joining the Company in July 2016. He was also granted an option to acquire 25,000 shares of Common Stock and 10,000 RSUs, each subject to vesting in equal installments over five years.

2017 Compensation Outlook

We expect the operating environment in 2017 to be challenging for a variety of reasons. We are experiencing softness in demand in several of our major markets due to local economic conditions and, in certain areas, increased supply of newly constructed self-storage facilities.

Given these expectations, the Compensation Committee made the following decisions with respect to 2017 compensation for named executive officers:

Compensation Committee Report

The Compensation Committee of the Board of Trustees of Public Storage has reviewed and discussed with management the foregoing Compensation Discussion and Analysis. Based on this review and discussion, the Compensation Committee recommended to the Board of Trustees that the Compensation Discussion and Analysis be included in this proxy statement and in the Annual Report on Form 10-K of Public Storage for the fiscal year ended December 31, 2016. This report is provided by the following independent trustees, who comprise the Compensation Committee: