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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. )
Filed by the Registrantý | ||
Filed by a Party other than the Registranto | ||
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o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material |
The Allstate Corporation | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
ý | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
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(2) | Aggregate number of securities to which transaction applies: | |||
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o | Fee paid previously with preliminary materials. | |||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
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(4) | Date Filed: |
The Allstate Corporation 2775 Sanders Road, Northbrook, IL 60062 April 7, 2014 | ||||||
To Our Stockholders, | ||||||
STRATEGIC OVERSIGHT | ||||||
Allstate's strategy of delivering differentiated value propositions to the four customer segments in the insurance market is working, as the company is growing and earning attractive returns. Management is focused on executing this strategy while building important capabilities to drive future growth, such as broadening customer relationships and improving customer connectivity. We repositioned the property-liability investment portfolio, lowering financial exposure to interest rates. In 2013, we also announced the sale of Lincoln Benefit Life to strategically focus Allstate Financial and redeploy capital to earn higher risk-adjusted returns. | ||||||
We maintain communication throughout the year with major stockholders on governance issues and use stockholder surveys and other information to ensure we have a complete and balanced understanding of governance issues that apply to Allstate. This year, we further expanded this process by asking each Board | ||||||
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The nominating and governance committee has expanded and formalized Board evaluation practices. Individual director evaluations are conducted annually by the lead director, chair of the nominating and governance committee, and the chairman. We | |||||
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EXECUTIVE COMPENSATION | |||||||
Following a number of significant changes to executive compensation practices in 2012 and solid stockholder support of the say-on-pay proposal in 2013, we have focused on market-based changes to executive compensation programs. We reduced the maximum cash incentive pool funding for senior management from 250% of target to 200%. We made this change in 2012 for CEO compensation, so this change will align other executive officers with this structure in 2014. Management also revised certain employee benefit programs, which increased book value per share in 2013 and reduces future costs. The changes are estimated to substantially reduce the CEO's future pension benefits. | |||||||
We thank John Riley, our lead director, for his insightful and | |||||||
balanced approach to Board governance over the last 16 years. We are particularly grateful for John's willingness to extend his role for a year past normal retirement to help create an effective and efficient lead director model. We also thank Ron LeMay for his strategic oversight and technology expertise during 14 years of service on our Board. We are enthusiastic about the addition of Bobby Mehta, who brings additional financial services and technology experience to our collective capabilities. The Allstate Board is fully committed to fulfilling its fiduciary duty to stockholders by being proactive and focused on stockholder returns. We thank you for your continued support. |
Notice of Annual Meeting | 1 | |
Proxy and Voting Information | 2 | |
Corporate Governance Practices | 4 | |
Board Meetings and Committees | 4 | |
Nomination Process for Board Election | 6 | |
Proposal 1. Election of Directors | 8 | |
Director Biographies | 9 | |
Board Leadership Structure and Practices | 20 | |
Communication with the Board | 22 | |
Compensation Committee Interlocks and Insider Participation | 22 | |
Related Person Transactions | 22 | |
Nominee Independence Determinations | 22 | |
Proposal 2. Say-on-Pay: Advisory Vote on the Executive Compensation of the Named Executives | 23 | |
Executive Compensation | 24 | |
Compensation Discussion and Analysis | 24 | |
Executive Compensation — Design | 25 | |
Executive Compensation — Earned Awards | 34 | |
Compensation Committee Report | 40 | |
Executive Compensation — Tables | 41 | |
Executive Compensation — Performance Measures | 58 | |
Director Compensation | 60 | |
Security Ownership | 63 | |
Section 16(a) Beneficial Ownership Reporting Compliance | 64 | |
Securities Authorized for Issuance Under Equity Compensation Plans | 65 | |
Proposal 3. Approval of the Material Terms of the Annual Executive Incentive Plan | 66 | |
Proposal 4. Ratification of the Appointment of Independent Registered Public Accountant | 69 | |
Audit Committee Report | 70 | |
Other Items | ||
Stockholder Proposals | 71 | |
Counting of Votes for Stockholder Proposals | 76 | |
Stockholder Proposals for the 2015 Annual Meeting | 76 | |
Allstate 401(k) Savings Plan Participants | 77 | |
Proxy Statement and Annual Report Delivery | 77 | |
Procedures for Attending the Annual Meeting in Person | 78 | |
Proxy Solicitation | 78 | |
Appendices | ||
Appendix A — Categorical Standards of Independence | A-1 | |
Appendix B — The Allstate Corporation Annual Executive Incentive Plan | B-1 | |
Appendix C — Policy Regarding Pre-Approval of Independent Registered Public Accountant's Services | C-1 | |
Appendix D — List of Executive Officers | D-1 | |
Appendix E — Definitions of Non-GAAP Measures | E-1 |
Notice of Annual Meeting | PROXY STATEMENT |
Notice of 20132014 Annual Meeting of Stockholders
When: | Tuesday, May | |||
Where: | West Plaza Auditorium Allstate 3100 Sanders Road Northbrook, Illinois 60062 | |||
Items of Business: | 1. | |||
2. | ||||
3. | ||||
4. | ||||
5. | ||||
6. | ||||
7. | Stockholder proposal on reporting political expenditures, if properly presented. | |||
In addition, any other business properly presented may be acted upon at the meeting. | ||||
Who Can Vote: | Holders of Allstate stock at the close of business on March | |||
Attending the Meeting: | Stockholders who wish to attend the meeting in person should review the | |||
Date of Mailing: |
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Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on May 21, 2013.20, 2014. The Notice of 20132014 Annual Meeting, Proxy Statement, and 20122013 Annual Report and the means to vote by Internet are available at www.proxyvote.com.
By Order of the Board, | ||
Secretary | ||
April |
Table of Contents1 | The Allstate Corporation
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WHO IS ASKING FOR YOUR VOTE AND WHY | The annual meeting will be held only if there is a quorum, which means that a majority of the outstanding common stock entitled to vote is represented at the meeting by proxy or in person. To ensure there will be a quorum, the Allstate Board of Directors asks you to | |||||
WHO CAN VOTE | You are entitled to vote if you were a stockholder of record at the close of business on March | |||||
HOW TO VOTE | If you hold shares in your own name as a registered stockholder, you may vote in person by attending the annual meeting, or you may instruct the proxies how to vote your shares by following the instructions on the proxy card/voting instruction form.If you plan to attend the meeting in person, please see the If you hold shares in street name (that is, through a broker, bank, or other record holder), you should follow the instructions provided by your broker, bank, or other record holder to vote your shares. If you hold shares through the Allstate 401(k) Savings Plan, see the instructions on page Before your shares have been voted at the annual meeting by the proxies, you may change or revoke your Abstentions are counted for quorum purposes. | |||||
CONFIDENTIALITY OF VOTES | All proxies, ballots, and tabulations that identify the vote of a particular stockholder are confidential, except as necessary to allow the inspector of election to certify the voting results or to meet certain legal requirements. A representative of American Election Services, LLC will act as the inspector of election and will count the votes. The representative is independent of Allstate and its directors, officers, and employees. | |||||
If you write a comment on your proxy card, voting instruction form, or ballot, it may be provided to our secretary along with your name and address. Your comments will be provided without reference to your vote, unless the vote is mentioned in your comment or unless disclosure of the vote is necessary to understand your comment. At our request, the distribution agent or the solicitation agent | ||||||
DISCRETIONARY VOTING AUTHORITY OF PROXIES | If you complete and submit a signed proxy card/voting instruction form to allow your shares to be represented at the annual meeting, but do not indicate how your shares should be voted on one or more proposals, then the proxies will vote your shares as the Board of Directors recommends on those proposals. Other than the proposals listed on page 3, we do not know of any other matters to be presented at the meeting. If any other matters are properly presented at the meeting, the proxies may vote your shares in accordance with their best judgment. | |||||
1 -- The Allstate Corporation | 2
Providing voting instructions, discretionary voting authority of proxiesVoting Instructions
You may instruct the proxies to vote "FOR" or "AGAINST" each proposal, or you may instruct the proxies to "ABSTAIN" from voting. Each share of our common stock outstanding on the record date will be entitled to one vote on each of the 1211 director nominees and one vote on each other proposal. A description of how votes are counted is included with each proposal.
Proposal | Board Recommendation | Rationale for Board Recommendation | ||||
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1. | Election of | • Broad and diverse slate of • Highly successful executives with relevant skills. • Balanced tenure with 10 of | ||||
2. | • Strong oversight by compensation • Excellent 2013 business results. • Enhanced alignment with | |||||
3. | • Well-structured market-based program. • Administered by an independent committee. • Designed to | |||||
4. | Ratification of Ratification of the appointment of Deloitte & Touche LLP as Allstate's independent registered public accountant for | • Independent with few ancilliary services. • Reasonable fee. | ||||
5. | Stockholder | • Existing stock ownership guidelines • Named executives' equity holdings exceed stock ownership guidelines. • Retention guidelines were expanded for all prospective grants beginning in 2014. | ||||
6. | Stockholder | • Board oversees and reviews public policy initiatives. • Allstate already provides significant transparency through public policy report. • Less than 10% of shares voted supported a | ||||
7. | Stockholder proposal on reporting political expenditures.* | • Board oversees and reviews public policy initiatives. • Allstate already provides significant transparency through public policy report. • Less than 10% of | ||||
* Advisory/Non-Binding Proposal |
Abstentions are counted for quorum purposes. If you return a signed proxy card/voting instruction form to allow your shares to be represented at the annual meeting, but do not indicate how your shares should be voted on one or more proposals listed above, then the proxies will vote your shares as the Board of Directors recommends on those proposals. Other than the proposals listed above, we do not know of any other matters to be presented at the meeting. If any other matters are properly presented at the meeting, the proxies may vote your shares in accordance with their best judgment.
3 | The Allstate Corporation -- 2
PROXY STATEMENT | ||||||
Corporate Governance Practices |
Corporate Governance Practices
Allstate has a history of strong corporate governance. By evolving our governance as governance "best practices" are a critical component toapproach in light of best practices, our success in drivingBoard drives sustained stockholder value. Over the years, our Board of Directors has evolved our practices tovalue and best serveserves the interests of Allstate stockholders, including:stockholders.
ü | Annual election of all directors. | |
ü | Majority vote standard in uncontested elections. Each director must be elected by a majority of votes cast, not a plurality. | |
ü | No stockholder rights plan ("poison pill"). | |
ü | No supermajority voting provisions. | |
ü | Confidential voting. | |
ü | Stockholders holding 10% or more of our outstanding stock have the right to call a special meeting. | |
ü | Stockholders holding 10% or more of our outstanding stock have the right to request action by written consent. | |
ü | Stockholder engagement. Allstate regularly engages with its stockholders to better understand their perspectives. | |
Board committees review and assess stockholder feedback to determine whether action is necessary. | ||
ü | Independent Board. Our Board is comprised of independent directors, except our CEO. | |
ü | Independent lead director. | |
ü | Independent Board committees. Each committee other than the executive committee is made up of independent directors. Each committee operates under a written charter that has been approved by the Board. | |
Formation of a risk and return committee. | ||
ü | Formal director evaluation process. Each year, the lead director, chairman of the Board, and chair of the nominating and governance committee evaluate each director. | |
Formalized and expanded processes to enhance cross-committee and Board communication. | ||
ü | Regular Board self-evaluation process. The Board and each committee evaluates its performance at the end of each in-person meeting. | |
Expanded the committee reports provided to Board. | ||
ü | Authority to retain independent advisors by each committee. | |
ü | Annual report on corporate involvement with public policy. The report provides transparency on Allstate initiatives to promote sound public policy | |
ü | Robust code of ethics. Allstate is committed to operating its business with the highest level of ethical conduct and has adopted aCode of Ethics that applies to | |
Expanded equity retention requirements for senior executives above stock ownership |
You can learn more about our corporate governance by visiting www.allstateinvestors.com, where you will find ourCorporate Governance Guidelines, each standing committee charter, ourCode of Ethics, andDirector Independence Standards. Each of these itemsdocuments also is available in print upon request made to the Office of the Secretary, The Allstate Corporation, 2775 Sanders Road, Suite A2W,F7, Northbrook, Illinois 60062-6127.
The Board held eight meetings during 2012.2013. Currently, the Board has fourfive standing committees: audit, compensation and succession, executive, and nominating and governance.governance, and risk and return. The following table identifies each standing committee, its members, functions, and number of meetings held during 2012.2013. The Board has determined the members of the audit, compensation and succession, and nominating and governance, and risk and return committees are independent within the meaning of applicable laws, NYSE listing standards, and theDirector Independence Standards in effect at the time of determination.
3 -- The Allstate Corporation | 4
| Key Responsibilities | Meetings in | Directors | Report | ||||||||||
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The Allstate Corporation Board of Directors | • Strategic • Corporate • Stockholder • Leadership | 8 | Chair: Thomas J. Wilson • 10 of 11 | letter to stockholders | ||||||||||
Audit Committee | • Assists the Board in its oversight of the integrity of financial statements and other financial information including reviews of Allstate's financial statements; system of internal control over accounting and financial reporting and disclosures; enterprise risk control assessment and guidelines and policies by which risk assessment and management is governed; ethics; and compliance with legal and regulatory requirements. • Appoints, retains, and oversees the work of the independent registered public accountant, and with the Board, evaluates its qualifications, performance, and independence. • Evaluates Allstate's internal audit function through semi-annual reviews of its audit plan, policies and procedures, resources, risk assessment methodologies and significant findings. | 8 | Chair: Judith A. Sprieser • F. Duane Ackerman • Robert D. Beyer • Kermit R. Crawford • Mary Alice Taylor The Board determined that Ms. Sprieser, Mrs. Taylor, and Messrs. Ackerman and Beyer are each individually qualified as an audit committee financial expert. Messrs. Greenberg, Henkel, Mehta, and Rowe have the background and experience to qualify as audit committee financial experts but do not currently serve on the audit committee. | Page 70 | ||||||||||
Compensation and Succession Committee | • Assists the Board in determining the compensation of the executive officers, including the CEO. • Reviews management succession plans and executive organizational structure for Allstate and each significant operating subsidiary. • Administers Allstate's executive compensation plans and has sole authority to retain the committee's independent compensation consultant. | 7 | Chair: Jack M. Greenberg • Herbert L. Henkel • Andrea Redmond • John W. Rowe | Page 40 | ||||||||||
Nominating and Governance Committee | • Recommends candidates to be nominated by the Board for election as directors. • Reviews theCorporate Governance Guidelines and advises the Board on corporate governance issues. • Determines performance criteria and oversees assessment of the Board's performance and director independence. | 6 | Chair: F. Duane Ackerman •
• Andrea Redmond
• John W. Rowe
• Mary Alice Taylor | None | ||||||||||
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| • Assists the Board in
• Reviews risk and return process, policies, and guidelines used to evaluate, monitor, and manage enterprise risk and return. • Supports the audit committee in its oversight of risk controls and management |
| Chair: Robert D. Beyer •
• Ronald T. LeMay •
•
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Executive | • Has the powers of the Board in the management of Allstate's business affairs to the extent permitted under the bylaws, excluding any powers granted by the Board to any other committee of the Board. | 0(1) | Chair: Thomas J. Wilson • F. Duane Ackerman •
• Jack M. Greenberg • H. John Riley, Jr. • Judith A. Sprieser | None | ||||||||||
(1) |
5 | The Allstate Corporation -- 4
Nomination Process for Board Election
The Board is continually engaged in identifyingcontinuously identifies potential director candidates to anticipatein anticipation of retirements, resignations, or the need for expanded capabilities. The graphic and bullets below describe the ongoing nominating and governance committee process to identify highly qualified candidates for Board service.
5 -- The Allstate Corporation
An invitation to join the Board may be extended by the Board, the nominating and governance committee. The committee chair, or the chairman ofrecommends candidates for election to the Board.
The Board ultimately is responsible for naming nominees for election or appointing nominees to serve until election at the next annual meeting. Over the last two years, we have considered about 40 potential candidates. As a result, we have added three highly qualified directors in Messrs. Crawford, Henkel, and Rowe.
The Board and nominating and governance committee believe that each director should based on his or her professional experiences, be well-versed in
The Allstate Corporation | 6
strategic oversight, corporate governance, stockholder advocacy, and leadership in order to be an effective member of the Allstate Board. In addition to this fundamental expertise, the Board and committee seek directors with corporate operating experience, relevant industry experience, financial expertise, and/or compensation and succession experience. The Board and committee also look for a balance of retired former executives and executives who are actively engaged in operating a business. The image below depicts the overall skill set required to be an effective Allstate director as well as additional capabilities of our current Board.
The Board and committee expect each non-employee director to be free of interests or affiliations that could give rise to a biased approach to directorship responsibilities or a conflict of interest, and free of any significant relationship with Allstate that would interfere with the director's exercise of independent judgment. The Board and committee also expect each director to act in a manner consistent with a director's fiduciary duties of loyalty and care. All nominees for election must comply with the applicable requirements of Allstate's bylaws, which are posted on allstate.com. Allstate executive officers may not serve on boards of other corporations whose executive officers serve on Allstate's Board.
Table of ContentsCandidates Nominated by Stockholders
Candidates nominated by stockholders
The nominating and governance committee will consider director candidates recommended by a stockholder in the same manner as all other candidates recommended by other sources. A stockholder may recommend a candidate at any time of the year by writing to the Office of the Secretary, The Allstate Corporation, 2775 Sanders Road, Suite A2W,F7, Northbrook, Illinois 60062-6127. A stockholder also may directly nominate someone for election as a director at a stockholders' meeting. Under our bylaws, a stockholder may nominate a candidate at the 20142015 annual meeting of stockholders by providing advance notice to Allstate that is received by the Office of the Secretary no earlier than the close of business on January 21, 2014,20, 2015, and no later than February 20, 2014.19, 2015. The notice must be sent to the Office of the Secretary, The Allstate Corporation, 2775 Sanders Road, Suite A2W,F7, Northbrook, Illinois 60062-6127 and must meet the requirements set forth in the corporation's bylaws. A copy of the bylaws is available from the Office of the Secretary upon request or can be accessedfound on the Corporate Governance portionsection of allstate.com.
7 --| The Allstate Corporation
The Board recommends 1211 nominees for election to the Allstate Board for one-year terms beginning in May 2013.2014. This is a talented slate of nominees, both individually and as a team. They bring a full complement of business and leadership skills to their oversight responsibilities. Half have been public company CEOs and most nominees serve on other public company boards, enabling best practices from other companies to be adapted to serve Allstate. Their diversity of experience and expertise facilitates robust and thoughtful decision-making on Allstate's Board.
Each nominee, other than Messrs. Crawford and Henkel,Mr. Mehta, was previously was elected at Allstate's annual meeting of stockholders on May 22, 2012,21, 2013, and has served continuously since then. Mr. CrawfordMehta was elected by the Board effective January 30, 2013. Mr. Henkel was elected by the Board effective March 1, 2013.February 18, 2014. The terms of all directors expire at the annual meeting in May 2013.2014. The Board expects all nominees named in this proxy statement to be available for election. If any nominee is not available, then the proxies may vote for a substitute. On the following pages, we list the background and reasons for nominating each individual. Unless otherwise indicated, each nominee has served for at least five years in the business position currently or most recently held.
To be elected under our majority vote standard, each director must receive thean affirmative vote of the majority of the votes cast. In other words, the number of shares voted "FOR" a director must exceed 50% of the votes cast on that director. Abstentions will not be counted as votes cast and will have no impact on the vote's outcome. Broker non-votes will not be counted as shares entitled to vote on the matter and will have no impact on the vote's outcome.
Board Composition | Chairman of the Board | |||||||
Independent directors | 91% | Thomas J. Wilson | ||||||
Public company board experience | 82% | • | Successful operating leadership at | |||||
Public company CEO experience | 55% | Allstate for 19 years, including seven | ||||||
Relevant industry experience | 55% | years as CEO. | ||||||
Diversity | 45% | • | Led continuous improvement in corporate | |||||
Tenure | — over five years | 55% | goverance. | |||||
— under five years | 45% | • | CEO for 17 months before being selected as chairman. | |||||
Committee Chair Qualifications | ||||||
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Audit Committee Chair | Compensation and Succession Committee Chair | Nominating and Governance Committee Chair | Risk and Return Committee Chair | |||
Judith A. Sprieser | Jack M. Greenberg | F. Duane Ackerman | Robert D. Beyer | |||
• Audit committee financial expert under the Securities Exchange Act of 1934. • Experience on four audit committees of public companies. | • Extensive experience on public company boards, including non-executive chairman. • Former chairman and CEO of McDonald's Corporation. | • Former chairman and CEO of BellSouth Corporation. • Governance experience on other public company boards. | • Extensive risk and return operating experience as CEO of The TCW Group, Inc. • Global investment management expertise. | |||
The Allstate Corporation --| 8
F. Duane Ackerman Independent Age 71 | ||||||||||||
PROFESSIONAL EXPERIENCE | ||||||||||||
• Former Chairman | ||||||||||||
Allstate Board Service
| Other Public Board | |||||||||||
• Tenure: 15 years (1999) | • The Home Depot, Inc. | 2007–present | ||||||||||
• Audit committee member | • United Parcel Service, Inc.
| 2007–present | ||||||||||
• Nominating and governance committee chair | ||||||||||||
• Executive committee member | ||||||||||||
QUALIFICATIONS | ||||||||||||
ü Corporate governance — director and former chairman and CEO. | ||||||||||||
ü Stockholder advocacy — experience managing | ||||||||||||
ü Leadership — expertise in leadership development and succession planning. | ||||||||||||
ü Strategic oversight — experience in a highly regulated industry. | ||||||||||||
• CEO of a publicly traded company for nearly a decade. | ||||||||||||
• | ||||||||||||
• Expertise in leadership development and succession planning from former operating roles and other directorships. | ||||||||||||
• Extensive experience with executive compensation decisions | ||||||||||||
COMMITTEE EXPERTISE HIGHLIGHTS | ||||||||||||
Nominating and Governance Committee Chair | ||||||||||||
• Keen insight into board dynamics and governance matters from tenure as chairman and CEO of BellSouth and current service on two other public company boards. | ||||||||||||
• Member of The Home Depot nominating and corporate governance committee. | ||||||||||||
Audit Committee Member | ||||||||||||
• Chair of The Home Depot audit committee since 2008. |
9 --| The Allstate Corporation
Robert D. Beyer
Robert D. Beyer Independent Age 54 | ||||||||||||
PROFESSIONAL EXPERIENCE | ||||||||||||
• Chairman of Chaparal Investments LLC, company, since 2009. | ||||||||||||
• Former CEO of The TCW Group, Inc., a global investment management firm. | ||||||||||||
• Former director of Société Générale Asset Management, S.A. and The TCW Group, Inc. | ||||||||||||
Allstate Board Service
| Other Public Board | |||||||||||
• Tenure: 8 years (2006) | • The Kroger Company | 1999–present | ||||||||||
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| 2013–present | |||||||||||
• Risk and | ||||||||||||
• Executive committee member | ||||||||||||
QUALIFICATIONS | ||||||||||||
ü Corporate governance — director and former CEO. | ||||||||||||
ü Stockholder advocacy — strong investment acumen. | ||||||||||||
ü Leadership — former CEO of a global investment management firm. | ||||||||||||
ü Strategic oversight — extensive experience developing and implementing investment strategies. | ||||||||||||
• Strategic and operational leadership of large asset management firm with a | ||||||||||||
• Experience in evaluating companies' strategies, operations, and financial performance. | ||||||||||||
• Risk management expertise proven through conception and development of TCW's risk management infrastructure. | ||||||||||||
• Global investment management expertise applied in assessing the strategies and performance of Allstate's | ||||||||||||
COMMITTEE EXPERTISE HIGHLIGHTS | ||||||||||||
Risk and Return Committee Chair | ||||||||||||
• Extensive career in finance and investment management, starting with Bear, Stearns & Co. in 1983. From 2005 until 2009, CEO and director of The TCW Group, Inc., investment management firm of over $150 billion under management. President and CIO of the principal operating subsidiary of TCW, from 2001 until 2005. Founder and current chairman of private investment firm and holding company, Chaparal Investments LLC. | ||||||||||||
• Developed TCW's risk management infrastructure, and the compliance, operational, and financial reporting systems of Crescent Capital Corporation, an investment management firm Mr. Beyer co-founded in 1991. | ||||||||||||
Audit Committee Member | ||||||||||||
• Member of financial policy committee of The Kroger Company board of directors. |
The Allstate Corporation --| 10
Kermit R. Crawford
Kermit R. Crawford Independent Age 54 | ||||||||||||
PROFESSIONAL EXPERIENCE • President, Pharmacy, | ||||||||||||
• Former Executive Vice President of Pharmacy Services, Senior Vice President of Pharmacy Services, Vice President and Executive Vice President of Pharmacy Benefit Management Services of Walgreen Company. | ||||||||||||
Allstate Board Service
| Other Public Board | |||||||||||
• Tenure: 1 year (2013) | • None | |||||||||||
•
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QUALIFICATIONS | ||||||||||||
ü Corporate governance — senior leadership position at a public company and service on the boards of civic organizations. | ||||||||||||
ü Stockholder advocacy — establishment of strong platforms for long-term stockholder value creation. | ||||||||||||
ü Leadership — | ||||||||||||
ü Strategic oversight — experience leading a | ||||||||||||
• | ||||||||||||
• Extensive experience leading operational change, including use of technology. | ||||||||||||
• Full-time current executive with access to ongoing consumer insights. | ||||||||||||
COMMITTEE EXPERTISE HIGHLIGHTS | ||||||||||||
Audit Committee Member | ||||||||||||
• President, Pharmacy, Health and Wellness for Walgreen Company, responsible for all aspects of strategic, operational, and profit and loss management of major division of largest national drugstore chain operator. | ||||||||||||
Nominating and Governance Committee Member | ||||||||||||
• Member of governing bodies of several non-profit organizations, including Northwestern Lake Forest Hospital and the University of Southern California School of Pharmacy. |
11 --| The Allstate Corporation
Jack M. Greenberg
Jack M. Greenberg Independent Age 71 | ||||||||||||
PROFESSIONAL EXPERIENCE | ||||||||||||
• Chairman of The Western Union Company, a money transfer service firm. | ||||||||||||
• Chairman of Innerworkings, Inc., a global provider of print and promotional services, since 2010. | ||||||||||||
• Former Chairman and CEO of McDonald's Corporation. | ||||||||||||
Allstate Board Service
| Other Public Board | |||||||||||
•
| • Hasbro, Inc. | 2003– | ||||||||||
• Compensation and succession committee | • Innerworkings, Inc. | 2007–present | ||||||||||
• Executive committee member | • Manpower, Inc. | 2003–present | ||||||||||
• The Western Union Company | ||||||||||||
• Quintiles Transnational Holdings, Inc. | 2013–present | |||||||||||
QUALIFICATIONS | ||||||||||||
ü Corporate governance — experience as chairman and | ||||||||||||
ü Stockholder advocacy — | ||||||||||||
ü Leadership — led a global public company. | ||||||||||||
ü Strategic oversight — expertise in | ||||||||||||
• Extensive executive leadership and management experience, including as chairman and CEO of McDonald's Corporation. Twenty-year public company directorship at McDonald's Corporation. | ||||||||||||
• In-depth understanding of consumer-focused business that invests heavily in marketing. | ||||||||||||
• Experience in executive compensation as chair of the compensation committee at Manpower, Inc. | ||||||||||||
• Expertise as an attorney, a CPA, and a member of the American Institute of Certified Public Accountants. | ||||||||||||
• Insight on global economy based on experience leading worldwide businesses provides perspective on Allstate's operations, | ||||||||||||
• | ||||||||||||
COMMITTEE EXPERTISE HIGHLIGHTS | ||||||||||||
• | ||||||||||||
• | ||||||||||||
The Allstate Corporation --| 12
Herbert L. Henkel
Herbert L. Henkel Independent Age 65 | ||||||||||||
PROFESSIONAL EXPERIENCE | ||||||||||||
• Former Chairman and CEO of Ingersoll-Rand Company, a commercial manufacturer of industrial products. | ||||||||||||
• Former President and Chief Operating Officer of Textron, Inc., a global manufacturing company. | ||||||||||||
• Former director of AT&T Corporation and Visteon Corporation. | ||||||||||||
Allstate Board Service
| Other Public Board | |||||||||||
•
| • 3M Company | 2007–present | ||||||||||
• Compensation and succession committee member | • C.R. Bard, Inc. | 2002–present | ||||||||||
•
| ||||||||||||
QUALIFICATIONS | ||||||||||||
ü Corporate governance — extensive public company board service. | ||||||||||||
ü Stockholder advocacy — lead director at C.R. Bard. | ||||||||||||
ü Leadership — former | ||||||||||||
ü Strategic oversight — extensive experience in global business development. | ||||||||||||
• Expertise in strategy formation, acquisitions, and | ||||||||||||
• Prior and current experience as chair of the 3M audit committee. | ||||||||||||
COMMITTEE EXPERTISE HIGHLIGHTS | ||||||||||||
Compensation and Succession Committee Member | ||||||||||||
• | ||||||||||||
• Director of C.R. Bard since 2002. Currently serves as member of compensation committee, as well as lead director and member of executive, finance, and governance committees. | ||||||||||||
Risk and Return Committee Member | ||||||||||||
• Significant experience in management and oversight of risk for publicly traded companies, including as chairman and CEO for Ingersoll-Rand Company and in various executive leadership positions at Textron, Inc. from 1995–1999. |
13 --| The Allstate Corporation
Ronald T. LeMay
Siddharth N. (Bobby) Mehta Independent Age 55 | ||||||||||||
PROFESSIONAL EXPERIENCE | ||||||||||||
• Former President and Chief | ||||||||||||
• Former Chief Executive Officer, HSBC Finance Corporation. | ||||||||||||
Allstate Board Service
| Other Public Board | |||||||||||
•
| • Piramal Enterprises Ltd. | 2013–present | ||||||||||
• Consistent with past practice, committee assignments will be established during first year of service | • MasterCard International, Inc. | 2005-2006 | ||||||||||
QUALIFICATIONS | ||||||||||||
ü Corporate governance — director and former chairman and CEO. | ||||||||||||
ü Stockholder advocacy — | ||||||||||||
ü Leadership — | ||||||||||||
ü Strategic oversight — | ||||||||||||
• | ||||||||||||
• Key leadership roles in corporate marketing, strategic planning, and corporate development. | ||||||||||||
• | ||||||||||||
The Allstate Corporation --| 14
Andrea Redmond
Andrea Redmond Independent Age 58 | ||||||||||||
PROFESSIONAL EXPERIENCE | ||||||||||||
• Former managing director, | ||||||||||||
• Independent consultant providing executive recruiting, succession planning, and talent management services. | ||||||||||||
Allstate Board Service
| Other Public Board | |||||||||||
• Tenure: 4 years (2010) | • None | |||||||||||
• Nominating and governance committee member | ||||||||||||
QUALIFICATIONS | ||||||||||||
ü Corporate governance — | ||||||||||||
ü Stockholder advocacy — expertise in | ||||||||||||
ü Leadership — experience assessing and evaluating CEOs and | ||||||||||||
ü Strategic oversight — insights from a wide range of | ||||||||||||
• Expertise in succession planning, talent management, and compensation in public companies across industries, including financial services, technology, transportation, consumer products, and | ||||||||||||
• Experience helping companies identify and recruit leaders capable of building | ||||||||||||
• | ||||||||||||
COMMITTEE EXPERTISE HIGHLIGHTS | ||||||||||||
Compensation and Succession Committee Member | ||||||||||||
• Experienced in executive recruiting, succession planning, and talent management. | ||||||||||||
• Previously a senior partner at highly regarded global executive search firm, Russell Reynolds Associates, 1986-2007, including significant tenure as co-head of the CEO/board services practice. | ||||||||||||
• Extensive experience working with numerous publicly traded companies to recruit and place senior executives, including Hewlett-Packard, Visa USA, Bank One, United Airlines, Sprint, SAFECO, Providian Financial, AXA Financial, Polaroid Corporation, Cardinal Health, and Hewitt Associates. | ||||||||||||
Nominating and Governance Committee Member | ||||||||||||
• Significant expertise recruiting and evaluating directors for a variety of public companies, including Walgreens, Hewlett-Packard, Visteon, Prudential, and USG Corporation. |
15 --| The Allstate Corporation
H. John Riley, Jr.
Independent | ||||||||||||
|
| |||||||||||
| ||||||||||||
The Allstate Corporation -- 16
John W. Rowe
• Chairman Emeritus and Former Chairman and CEO of Exelon Corporation, one of the country's largest electric utilities. | ||||||||||||
• Former director of Sunoco, Inc. and Exelon Corporation. | ||||||||||||
Allstate Board Service | Other Public Board Service | |||||||||||
•
Tenure: 2 years (2012) | • Northern Trust Corporation | 2002–present | ||||||||||
• Compensation and succession committee member | •
SunCoke Energy | 2012–present | ||||||||||
• Nominating and governance committee member | • American DG Energy, Inc. | 2013–present | ||||||||||
QUALIFICATIONS | ||||||||||||
ü Corporate governance — | ||||||||||||
ü Stockholder advocacy — lead director at Northern Trust Corporation. | ||||||||||||
ü Leadership — as chairman and CEO, led one of the country's largest electric utility companies. | ||||||||||||
ü Strategic oversight — experience in a highly regulated industry. | ||||||||||||
• Extensive leadership and management experience as a CEO. | ||||||||||||
• | ||||||||||||
• Lead director on the board of Northern Trust Corporation and a former director of Unum Provident, | ||||||||||||
COMMITTEE EXPERTISE HIGHLIGHTS | ||||||||||||
Compensation and Succession Committee Member | ||||||||||||
• Leadership responsibilities as former chairman and CEO of Exelon Corporation. | ||||||||||||
• Member of SunCoke Energy compensation committee. | ||||||||||||
• Member of Northern Trust Corporation compensation and benefits committee. | ||||||||||||
• Former director of Sunoco and member of its compensation committee. | ||||||||||||
Nominating and Governance Committee Member | ||||||||||||
• Chair of corporate governance committee and lead director of Northern Trust Corporation. | ||||||||||||
• Member of SunCoke Energy governance committee. | ||||||||||||
• Former director of Sunoco and member of its executive committee. |
17 -- The Allstate Corporation | 16
Judith A. Sprieser
Judith A. Sprieser Independent Age 60 | ||||||||||||
PROFESSIONAL EXPERIENCE | ||||||||||||
• Vice Chair of the Supervisory Board of Royal Ahold NV. | ||||||||||||
• Former CEO of Transora, Inc., a technology software and services company. | ||||||||||||
• Former director at USG Corporation and Adecco SA. | ||||||||||||
Allstate Board Service
| Other Public Board | |||||||||||
•
| • Experian plc | 2010–present | ||||||||||
• Audit committee chair | • IntercontinentalExchange Group, Inc. | 2004–present | ||||||||||
•
|
Reckitt Benckiser Group plc
| 2003–present | ||||||||||
• Executive committee member | • Royal Ahold NV | 2006–present | ||||||||||
QUALIFICATIONS | ||||||||||||
ü Corporate governance — broad public company director service. | ||||||||||||
ü Stockholder advocacy — | ||||||||||||
ü Leadership — former CEO. | ||||||||||||
ü Strategic oversight — | ||||||||||||
• | ||||||||||||
• Oversight of a highly regulated business as a director at | ||||||||||||
• Considerable experience in evaluating financial statements and supervising financial executives, including as | ||||||||||||
• Prior and current experience as chair of the audit committee at Allstate and | ||||||||||||
COMMITTEE EXPERTISE HIGHLIGHTS | ||||||||||||
Audit Committee Chair | ||||||||||||
• Numerous key leadership positions with financial oversight responsibilities, including CEO of Transora, Inc., and CFO of Sara Lee Corporation. | ||||||||||||
• Chair of IntercontinentalExchange Group, Inc. audit committee. | ||||||||||||
• Former chair of Experian plc audit committee. | ||||||||||||
Risk and Return Committee Member | ||||||||||||
• Audit committee chair. | ||||||||||||
• Significant risk oversight and management experience as CEO of start-up technology company, Transora, Inc., CFO of Sara Lee Corporation, and through extensive service on numerous public company boards in highly regulated industries. |
17 | The Allstate Corporation -- 18
Mary Alice Taylor
Mary Alice Taylor Independent Age 64 | ||||||||||||
PROFESSIONAL EXPERIENCE | ||||||||||||
• | ||||||||||||
• Independent business executive | ||||||||||||
Allstate Board Service
| Other Public Board | |||||||||||
• Tenure: 16 years (1996-1998; 2000–present) | • Blue Nile, Inc. | 1999–present | ||||||||||
• Nominating and governance committee member | ||||||||||||
QUALIFICATIONS | ||||||||||||
ü Corporate governance — public company board experience including lead director | ||||||||||||
ü Stockholder advocacy — | ||||||||||||
ü Leadership — former senior executive of major public companies. | ||||||||||||
ü Strategic oversight — strategy formation | ||||||||||||
• Senior executive roles in technology, finance, operations, and distribution | ||||||||||||
• | ||||||||||||
• Certified public accountant. | ||||||||||||
COMMITTEE EXPERTISE HIGHLIGHTS | ||||||||||||
Audit Committee Member | ||||||||||||
• Significant financial oversight expertise developed as chairman and CEO of HomeGrocer.com and in senior executive roles at Citicorp and FedEx Corporation. | ||||||||||||
• Director and former member of the audit committee of Blue Nile, Inc. | ||||||||||||
Nominating and Governance Committee Member | ||||||||||||
• | ||||||||||||
• Prior experience as lead director. |
19 -- The Allstate Corporation | 18
Thomas J. Wilson
Thomas J. Wilson Chief Executive Officer Age 56 | ||||||||||||
PROFESSIONAL EXPERIENCE | ||||||||||||
• Chairman of Allstate since May | ||||||||||||
• President of Allstate since January | ||||||||||||
Allstate Board Service
| Other Public Board | |||||||||||
• Tenure: 8 years (2006) | • State Street Corporation | 2012–present | ||||||||||
• Executive committee chair | ||||||||||||
QUALIFICATIONS | ||||||||||||
ü Corporate governance — chairman, president, and CEO | ||||||||||||
ü Stockholder advocacy — active stockholder engagement. | ||||||||||||
ü Leadership — assembled and leads Allstate's senior leadership team. | ||||||||||||
ü Strategic oversight — | ||||||||||||
• Key leadership roles for over | ||||||||||||
• Thorough and in-depth understanding of Allstate's business, including its employees, agencies, products, investments, customers, and investors. | ||||||||||||
• | ||||||||||||
• In-depth understanding of insurance industry. | ||||||||||||
• Industry and community leadership, including as former chair of the Property and Casualty CEO Roundtable and the Financial Services | ||||||||||||
COMMITTEE EXPERTISE HIGHLIGHTS | ||||||||||||
Executive Committee Chair | ||||||||||||
• Chairman, president, and CEO of Allstate. | ||||||||||||
• Comprehensive knowledge of Allstate's business and industry with 19 years of leadership experience. | ||||||||||||
• Key leadership experience in numerous business and community service organizations, including The Financial Services Roundtable, U.S. Chamber of Commerce, and Federal Reserve Bank of Chicago. |
19 | The Allstate Corporation -- 20
PROXY STATEMENT | ||||||
Corporate Governance Practices |
Board Leadership Structure and Practices
H. John Riley, Jr. is the Board'sThe Board has an independent lead director. As lead director Mr. Riley:who:
H. John Riley, Jr., who has served as the lead director since 2011, is retiring at the 2014 annual meeting of stockholders. The Board will elect a new lead director following the annual meeting.
Board Role in Management Succession
In addition,Board meetings with the CEO advises the nominating and governance committee and the Board about chairmanin executive sessions.
Board Role in Setting Compensation
Our executive compensation program is based on the philosophy that compensation should be directly linked to performance; a significant percentage of compensation should be at risk for senior executives; and compensation should be aligned with shareholder return.
The Allstate Corporation | 20
Securities Exchange Act of 1934 or covered employees as defined in Internal Revenue Code section 162(m)(3). The compensation and succession committee has authority to grant equity awards to eligible employees in accordance with the terms of our 20092013 Equity Incentive Plan. In between meetings, theThe Board has delegated limited
21 -- The Allstate Corporation
authority to an equity award committee, consisting of the CEO, to grant awards of stock options or restricted stock units in connection with hiring, promotion, and recognition of employees other than executive officers.units. All awards granted between compensation and succession committee meetings are reported at the next meeting.
The
In 2012, Allstate paid $177,000 in aggregate fees to Towers Watson for executive compensation consulting services. The committee reviewed a report on additional services provided to Allstate by Towers Watson or its affiliates in 2012 for fees that exceeded $120,000 in the aggregate. In addition to executive compensation consulting services, Allstate engaged Towers Watson to provide services including benefits consulting and software license and maintenance services for fees totaling $2,879,000. These fees were primarily incurred under an agreement entered into with Watson Wyatt, prior to its merger with Towers Perrin in 2010.
The committee reviewed the additional services provided by Towers Watson and concluded that they did not create a conflict of interest. The professionals who provide executive compensation services are not involved in the provision of the other services to Allstate. The provision of the other services has had no impact on whether the executive compensation consulting services provided by Towers Watson would continue.
In 2012, the committee conducted a review of various executive compensation consultant service providers, including Towers Watson, in the ordinary course of its approval of an independent compensation consultant. The committee considered various consultant characteristics, including, independence, resources and scale, technical and industry expertise, boardroom presence, and interaction with committee members. The committee approved a new independent executive compensation consultant with services to begin in 2013.
Management Participation in Committee Meetings
Audit Committee. OurA number of our executives, including the CEO, CFO, general counsel, chief financial officer,audit executive, chief compliance executive, chief risk officer, general counsel, secretary,executive, and controller and senior internal audit officer participate in audit committee meetings. Senior business unit and technology executives are present when appropriate. Executive sessions of the committee are scheduled and held throughout the year, including sessions in which the committee meets exclusively with the independent registered public accountant and the senior internalchief audit officer.
Nominating and Governance Committee. Our CEO, general counsel, and secretary participate in nominating and governance committee meetings. The committee regularly meets in executive session without management present.executive.
Compensation and Succession Committee. Our CEO, senior human resources officer, chief financial officer, general counsel, secretary, controller, and senior internal audit officerA number of our executives participate in compensation and succession committee meetings. The committee regularly meets in executive session without management present.
The Allstate Corporation -- under our incentive compensation plans.22
For bothNominating and Governance Committee. Our CEO and general counsel participate in nominating and governance committee meetings. The committee regularly meets in executive session without management present.
Risk and Return Committee. A number of our executives, including the CEO, CFO, general counsel, and chief risk executive, participate in risk and return committee meetings. The committee regularly meets in executive session, including sessions with the chief executive officerrisk executive.
Outside Advisor Participation in Meetings
From time to time, outside experts such as governance specialists, cybersecurity experts, and the chief financial officer, committee meeting participation is one of the ways in which they assure themselves that the Compensation Discussion and Analysis included in this proxy statement is accurate so that they canadvisors attend meetings to provide the certification required by the Sarbanes-Oxley Act of 2002.directors additional information on issues.
21 | The Allstate Corporation
Compensation Committee Interlocks and Insider Participation
There were no related person transactions identified for 2012.
Nominee Independence Determinations
The Board has determined that all nominees other than Mr. Wilson are independent according to applicable law, the NYSE listing standards, and the Board'sDirector Independence Standards. In accordance with theDirector Independence Standards, the Board has determined that the nature of the relationships with the corporation that are set forth in Appendix A do not create a conflict of interest that would impair a director's independence.
23 -- The Allstate Corporation | 22
Proposal 2 — | PROXY STATEMENT | |||||
Say-on-Pay: Advisory Vote | ||||||
The Board of Directors recommends that you vote for the resolution to approve the compensation of the named executives. | • Strong oversight by compensation and succession committee. • Excellent 2013 business results. • Enhanced alignment with stockholders through expanded equity retention requirements for senior executives beginning with 2014 awards. | |||||
We will conduct a say-on-pay vote every year at the annual meeting. AThis say-on-pay vote is required by sectionSection 14A of the Securities Exchange Act. AlthoughAct of 1934. While the say-on-pay vote is non-binding, the Board and the compensation and succession committee will consider the voting results as part of their annual evaluation of our executive compensation program.
You may vote to approve or not approve the following advisory resolution on the executive compensation of the named executives.executives:
RESOLVED, on an advisory basis, the stockholders of The Allstate Corporation approve the compensation of the named executives, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis and accompanying tables and narrative on pages 25-5724-59 of the Notice of 20132014 Annual Meeting and Proxy Statement.
To be approved, a majority of shares present in person or represented by proxy at the meeting and entitled to vote on the proposal must be voted "FOR." Abstentions will be counted as shares present at the meeting and will have the effect of a vote against the proposal. Broker non-votes will not be counted as shares entitled to vote on the matter and will have no impact on the vote's outcome.
The Board of Directors recommends that you vote FOR the resolution to approve the compensation of the named executives. Please read the followingExecutive Compensationsection for information necessary to inform your vote on this proposal.
23 | The Allstate Corporation -- 24
PROXY STATEMENT | ||||||
Executive Compensation |
Compensation Discussion and Analysis
Our Compensation Discussion and Analysis describes Allstate's executive compensation program, including total 20122013 compensation for our named executives, who are listed below with titles as of December 31, 2012:2013:
Compensation Program Changes for 2012
25 -- The Allstate Corporation | 24
Allstate's Executive Compensation Practices
Allstate's executive compensation program features many "bestbest practices."
ü | Pay for performance. A significant percentage | |
ü | Linkage between performance measures and strategic objectives. Performance measures for incentive compensation are linked to | |
ü | Independent compensation consultant. The Committee retains an independent compensation consultant to review the executive compensation program and practices. | |
ü | No tax gross ups. We do not provide tax gross ups beyond | |
ü | ||
ü | No repricing or exchange of underwater stock options. Our equity incentive plan does not permit repricing or exchange of underwater stock options or stock appreciation rights without stockholder approval, except in connection with certain corporate transactions involving Allstate or a change-in-control. | |
ü | No employment | |
ü | Policy on insider trading that prohibits hedging of Allstate securities. | |
ü | Moderate change-in-control benefits. Change-in-control severance benefits are three times target cash compensation for the CEO and two times target cash compensation for senior executives. | |
ü | No dividends or dividend equivalents paid on | |
ü | Maximum payout caps for annual cash incentive compensation and | |
ü | ||
ü | Robust | |
ü | No inclusion of equity awards in pension calculations. | |
ü | Limited executive perquisites. |
Elements of 20122013 Executive Compensation Program Design
The following table lists the elements of target direct compensation for our 20122013 executive compensation program. The program uses a mix of fixed and variable compensation elements and provides alignment with both short- and long-term business goals through annual and long-term incentives. Our incentives are designed to drive overall corporate performance, specific business unit strategies, and individual performance using performance and operational measures that correlate to stockholder value and align with our strategic vision and operating priorities. The BoardCommittee establishes the
The Allstate Corporation -- 26
performance measures and ranges of performance for the variable compensation elements.elements for overall company incentive compensation awards. An individual's awardparticipation in our incentives is based primarily on corporate performance, market basedmarket-based compensation levels and individualactual performance.
25 | The Allstate Corporation
PROXY STATEMENT | Executive Compensation — Design |
| Element | Key Characteristics | Why We Pay This Element | How We Determine Amount | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Fixed | Base salary | Fixed compensation component payable in cash. Reviewed annually and adjusted when appropriate. | Provide a base level of competitive cash compensation for executive talent. | Experience, job scope, market data, individual performance. | | |||||
Variable | Annual cash incentive awards | Variable compensation component payable in cash based on performance against annually established goals and assessment of individual performance. | Motivate and reward executives for performance on key strategic, operational, and financial measures during the year. | • Adjusted • Total • Net Individual | Strong performance on all three measures resulted in corporate funding at
| |||||
Performance stock awards | PSAs vest on the third anniversary of the grant date. | | Target awards based on job scope, market data, and
| Strong performance resulted in the maximum number of earned PSAs for the | ||||||
Stock options | Nonqualified stock options that expire in ten years and become exercisable over four years: 50% on the second anniversary of the grant date and 25% on each of the third and fourth anniversary dates.(1) | | Job scope, market data, individual performance. | | ||||||
27 -- The Allstate Corporation | 26
Pay for PerformanceCompensation Structure and Goal Setting
Our executive compensation program is designed to deliver compensation in accordance with corporate, business unit, and individual performance. Aperformance with a large percentage of each named executive's target total direct compensation is "pay at risk"risk through long-term equity awards and annual cash incentive awards. These awards are linked to actual performance, consistent with our belief that a significant amount of executive compensation should be in the form of equity and that a greater percentage of compensation should be tied to performance for executives who bear higher levels of responsibility for Allstate's performance. The Committee determined the mix of target direct compensation for the named executives based on job scope, market data, and investor feedback regarding the link between pay and performance. The mix of compensation for 20122013 for our CEO and the average of our other named executives is shown in the chart below.
Compensation Mix — Target
Salary
Annual Cash Incentive Awards
27 | The Allstate Corporation
Since Allstate created a corporate pool for annual cash incentive awards in 2011, the Committee has not exercised its discretion to increase the amount of the corporate pool beyond the calculated amount. During the first quarter of the year, the Committee establishes the measures that determine the aggregate amount of funds in the corporate pool available to be paid as awards for that year. The Committee has discretion to determine the amount of awards paid from the corporate pool to the named executives. Awards are paid in the following year.
The Allstate Corporation | 28
Performance Stock Awards and Stock Options
29 | The Allstate Corporation
2014-2016 Performance Stock Awards Range of Performance | ||||||
---|---|---|---|---|---|---|
| Three-Year Average Annual Adjusted Operating Income Return on Equity | |||||
| Threshold | Target | Maximum | |||
Measurement Period 2014-2016 | 6.0% | 13.0% | 14.5% | |||
Payout | 0% | 100% | 200% | |||
|
Equity Ownership and Retention Requirements
Instituted in 1996, stock ownership guidelines require each of the named executives to own Allstate common stock worth a multiple of base salary to link management and stockholders' interests. The following charts below.show the salary multiple guidelines and the equity holdings that count towards the requirement. The current stock ownership guidelines apply to approximately half of officers and require these executives to hold 75% of net after-tax shares received as a result of equity compensation awards until his or her salary multiple guideline is met.
Stock Ownership as Multiple of Base Salary as of December 31, 2013 | ||||
---|---|---|---|---|
Named Executive | Guideline | Actual | ||
Mr. Wilson | 6 | 20 | ||
Mr. Shebik | 3 | 6 | ||
Mr. Civgin | 3 | 4 | ||
Ms. Greffin | 3 | 5 | ||
Mr. Winter | 3 | 4 | ||
•
• Shares held in the Allstate 401(k) Savings Plan • Restricted stock units | •
• Performance stock awards |
BecauseBeginning with awards granted in 2014, Allstate added a large portionrequirement that, regardless of executive compensation isa senior executive's stock ownership level, senior executives must retain at least 75% of net after-tax shares for an additional year after the three-year vesting period, in the formcase of incentive compensation that is tied to actual performance, compensation realized by the named executives will vary from the compensation targeted by the Committee. Allstate's unique strategy of offering differentiated products and services to the four consumer segments of the insurance market is working to deliver stockholder value. Allstate's total stockholder return relative to the market cap weighted average of the peer group usedPSAs, or for compensation benchmarking (identified on page 29) over one-, three-, and five-year periods is demonstratedan additional year after exercised, in the following chart.case of stock options. This new retention requirement applies to senior executives who receive both PSAs and stock options, which is approximately 9% of officers.
We also have a policy on insider trading that prohibits all officers, directors, and employees from engaging in transactions in securities issued by Allstate or any of its subsidiaries that might be considered speculative or hedging, such as selling short or buying or selling options.
ComparisonTiming of Total Shareholder ReturnEquity Awards and Grant Practices
The Allstate Corporation --| 2830
Our strong performance, both relative and absolute, combined with our compensation program design that emphasizes incentive compensation tied to performance, resulted in a strong linkage between performance and compensation for the named executives in 2012.
Compensation PracticesPeer Benchmarking
Peer Benchmarking
The Committee monitors performance toward goals throughout the year and reviews executive compensation program design and executive pay levels annually. As part of that evaluation, an independent compensation consultant, Towers WatsonCompensation Advisory Partners, provided executive compensation data, information on current market practices, and alternatives to consider when determining compensation for our named executives. The Committee benchmarked our executive compensation program design, executive pay, and performance against a group of peer insurance companies that are publicly traded and comparable to Allstate in product offerings,traded. Product mix, market segment, annual revenues, premiums, assets, and market value.value were considered when identifying peer companies. The Committee believes Allstate competes against these companies for executive talent and stockholder investment. The Committee established the current peer group in 2009. The Committee reviews the composition of the peer group annually with the assistance of its compensation consultant. There were no modificationsIn late 2013, we removed Lincoln National Corporation reflecting the pending sale of Lincoln Benefit Life Company and added American International Group, Inc. as it has now returned to public ownership. We used this updated peer group for 2014 compensation benchmarking.
The following table reflects the peer group used for 2012.2013 compensation benchmarking.
PEER INSURANCE COMPANIES(1) | PEER INSURANCE COMPANIES(1) | PEER INSURANCE COMPANIES(1) | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company Name | Revenue ($ in billions) | Market Cap ($ in billions) | Assets ($ in billions) | Premiums ($ in billions) | Property and Casualty Insurance Products | Life Insurance and Financial Products | Revenue ($ in billions) | Market Cap ($ in billions) | Assets ($ in billions) | Premiums ($ in billions) | Property and Casualty Insurance Products | Life Insurance and Financial Products | ||||||||||||
ACE Ltd. | 18.0 | 27.2 | 92.5 | 15.7 | ü | 19.2 | 35.2 | 94.5 | 16.6 | ü | ||||||||||||||
AFLAC Inc. | 25.4 | 24.8 | 131.1 | 22.1 | ü | 23.9 | 30.7 | 121.3 | 20.1 | ü | ||||||||||||||
The Chubb Corporation | 13.6 | 19.7 | 52.2 | 11.8 | ü | 13.9 | 24.0 | 50.4 | 12.1 | ü | ||||||||||||||
The Hartford Financial Services Group, Inc. | 26.4 | 9.8 | 298.5 | 17.5 | ü | ü | 26.2 | 16.4 | 277.9 | 15.4 | ü | ü | ||||||||||||
Lincoln National Corporation | 11.5 | 7.0 | 218.9 | 6.2 | ü | 12.0 | 13.6 | 236.9 | 6.8 | ü | ||||||||||||||
Manulife Financial Corporation | 36.3 | 24.9 | 488.8 | 18.1 | ü | 16.0 | 34.3 | 454.2 | 16.0 | ü | ||||||||||||||
MetLife Inc. | 68.2 | 36.0 | 836.8 | 46.5 | ü | ü | 68.2 | 60.5 | 885.3 | 47.1 | ü | ü | ||||||||||||
The Progressive Corporation | 17.1 | 12.8 | 22.7 | 16.0 | ü | 18.2 | 16.2 | 24.4 | 17.1 | ü | ||||||||||||||
Prudential Financial, Inc. | 84.8 | 24.8 | 709.3 | 69.8 | ü | 41.5 | 42.7 | 731.8 | 31.7 | ü | ||||||||||||||
The Travelers Companies, Inc. | 25.7 | 27.1 | 104.9 | 22.4 | ü | 26.2 | 32.0 | 103.8 | 22.6 | ü | ||||||||||||||
Allstate | 33.3 | 19.2 | 126.9 | 29.0 | ü | ü | 34.5 | 24.5 | 123.5 | 30.0 | ü | ü | ||||||||||||
Allstate Ranking | 4 of 11 | 8 of 11 | 7 of 11 | 3 of 11 | ||||||||||||||||||||
Allstate Ranking Relative to Peers: | ||||||||||||||||||||||||
— Property and Casualty Insurance | 2 of 7 | 4 of 7 | 3 of 7 | 2 of 7 | ||||||||||||||||||||
— Life Insurance and Financial Products | 3 of 7 | 5 of 7 | 6 of 7 | 3 of 7 | ||||||||||||||||||||
— All Peer Insurance Companies | 3 of 11 | 7 of 11 | 6 of 11 | 3 of 11 | ||||||||||||||||||||
2931 --| The Allstate Corporation
Executive salariesTo remain competitive with other employers and to attract, retain, and motivate highly talented executives and other employees, we offer the benefits listed in the following table.
Benefit or Perquisite | Named Executives | Other Officers and Certain Managers | All Full-time and Regular Part-time Employees | |||
---|---|---|---|---|---|---|
401(k)(1) and defined benefit pension | • | • | • | |||
Supplemental retirement benefit | • | • | ||||
Health and welfare benefits(2) | • | • | • | |||
Supplemental long-term disability | • | • | ||||
Deferred compensation | • | • | ||||
Tax preparation and financial planning services | • | •(3) | ||||
Personal use of aircraft, ground transportation, and mobile devices(4) | • | • | ||||
Each named executive participates in two different defined benefit pension plans. The Allstate Retirement Plan (ARP) is a guideline. An annual merit increase for the CEO istax qualified defined benefit pension plan available to all of our regular full-time and regular part-time employees who meet certain age and service requirements. The ARP provides an assured retirement income based on an evaluationemployee's level of his performancecompensation and market conditions bylength of service at no cost to the Committeeemployee. As the ARP is a tax qualified plan, federal tax law limits (1) the amount of an individual's compensation that can be used to calculate plan benefits and (2) the Board.
Annual Cash Incentive Awards
In 2012 executives could earntotal amount of benefits payable to a plan participant on an annual basis. For certain employees, these limits may result in a lower benefit under the ARP than would have been payable otherwise. Therefore, the Supplemental Retirement Income Plan (SRIP) is used to provide ARP-eligible employees whose compensation or benefit amount exceeds the federal limits with an additional defined benefit in an amount equal to what would have been payable under the ARP if the federal limits did not exist.
Change-in-Control and Post-Termination Benefits
Consistent with our compensation objectives, we offer these benefits to attract, motivate, and retain executives. A change-in-control of Allstate could have a disruptive impact on both Allstate and our executives. Change-in-control benefits and post-termination benefits are designed to mitigate that impact and to maintain alignment between the interests of our executives and our stockholders.
We substantially reduced change-in-control benefits in 2011. Compared with the previous arrangements, the change-in-control severance plan (CIC Plan) eliminates all excise tax gross ups and eliminates the lump sum cash incentive awardpension enhancement based on Allstate's achievementadditional years of performance measures duringage, service, and compensation. For the yearCEO, the amount of cash severance payable is three times the sum of base salary and assessmentstarget annual incentive. For the other named executives, the amount of individual performance.
cash severance payable is two times the sum of base salary and target annual incentive. In order to qualify annualreceive the cash severance benefits under the CIC Plan following a change-in-control, a participant must have been terminated (other than for cause, death, or disability) or the participant must have terminated employment
The Allstate Corporation | 32
for good reason (such as adverse changes in the terms or conditions of employment, including a material reduction in base compensation, a material change in authority, duties, or responsibilities, or a material change in job location) within two years following a change-in-control. In addition, long-term equity incentive awards granted after 2011 will vest on an accelerated basis due to a change-in-control only if either Allstate terminates the executive's employment (other than for cause, death, or disability) or the executive terminates his or her employment for good reason within two years after the change-in-control (so-called double-trigger vesting).
The change-in-control and post-termination arrangements which are described in thePotential Payments as deductible performance-baseda Result of Termination or Change-in-Control section are not provided exclusively to the named executives. A larger group of management employees is eligible to receive many of the post-termination benefits described in that section.
Impact of Tax Considerations on Compensation
We may take a tax deduction of no more than $1 million per executive for compensation under Internal Revenue Code section 162(m), a pool equalpaid in any year to 1.0% of Adjusted Operating Income (defined on page 56) was established. The maximum amount payable toour CEO and the three other most highly compensated executives, excluding any named executive whoindividual that served as CFO during the year, is an amount equal to 15%as of the award pool.last day of the fiscal year in which the compensation is paid, unless the compensation meets specific standards. We may deduct more than $1 million in compensation if the compensation is performance-based and paid under a plan that meets certain requirements. The maximum amount payableCommittee considers the impact of this rule in developing, implementing, and administering our compensation programs. However, the Committee balances this consideration with our primary goal of structuring compensation programs to attract, motivate, and retain highly talented executives.
Our compensation programs are designed and administered so that payments to affected executives can be fully tax-deductible. However, in light of the CEObalance mentioned above and the three most highly compensated executives, excludingneed to maintain flexibility in administering compensation programs, we may authorize compensation in any named executive who served as CFO duringyear that exceeds $1 million and does not meet the year, is the lesser of a stockholder approved maximum of $8.5 million under the Annual Executive Incentive Plan or a percentage, which varies by executive, of the award pool.required standards for deductibility. The CEO can earn up to 40% of the pool, while the maximum percentage for each other named executive is 15% of the pool. These limits established the maximum annual cash incentive awards that could be paid while preserving deductibility under section 162(m). The Committee retained complete discretion to pay less than these maximum amounts, with actual awards based on the named executive's target annual incentive award opportunity and the achievement of performance measures and assessments of individual performance. The target annual incentive award opportunity for each named executive was determined based on market data pay levels at peer insurance companies and our benchmark target for total direct compensation at the 50th percentile.
Long-term Equity Incentive Awards
We grant equity awards to executives based on scope of responsibility, consistent with our philosophy that a significant amount of executive compensation should bepaid in the form of equity and2013 that a greater percentage of compensation should be tied to performancewas not deductible for executives who bear higher levels of responsibility for Allstate's performance. Additionally, from time to time, equity awards are also granted to attract new executives. The Committee annually reviews the mix of equity incentives provided to the named executives. Beginning with awards made to our senior executives in 2012, the mix of equity incentives changed to 50% performance stock awards and 50% stock options. We believe stock options are a form of performance-based incentive compensation because they require stock price growth to deliver any value to an executive, while performance stock awards provide direct alignment with stockholder interests.
Timing of Equity Awards and Grant Practices
Typically, the Committee approves grants of equity awards during a meeting in the first fiscal quarter. The timing allows the Committee to align awards with our performance and business goals. Throughout the year, the Committee may grant equity incentive awards to newly hired or promoted executive officers.tax purposes was $13,141,261.
The Committee approves grants of equity awards to executive officers. Under authority delegated by the Board and Committee, an equity award committee may grant, to employees other than executive officers, restricted stock units and stock options to newly hired and promoted executives and in recognition of outstanding achievements. At each regularly scheduled meeting the Committee reviews equity awards granted by the equity award committee. The grant date for awards to newly hired or promoted executives is fixed as the first business day of a month following the later of committee action or the date of hire or promotion. For additional information on the Committee's practices, see theCorporate Governance Practices33 section of this proxy statement.
| The Allstate Corporation -- 30
PROXY STATEMENT | Executive Compensation — Earned Awards |
2013 Performance Measures for 2012and Compensation
The performancecompany's strong 2013 operating and financial results led to above-target annual incentive compensation payments for the named executives in 2013. Total shareholder return for 2013 was 38%.
Performance measures are based on Allstate's strategy of providing differentiated products and services to distinct consumer segments, 20122013 priorities, and the profitability commitments made to investors.2013 operating plan.
Our unique strategy | ||
• Grow insurance premiums. • Maintain auto • Raise returns in homeowners and
• Proactively manage • Reduce our cost structure. |
In 2012,2013, Allstate continued to deliver on its customer-focused strategy and operating priorities. Net income available to common shareholders for 20122013 was $2.26 billion, or $4.81 per diluted common share, compared with $2.31 billion, or $4.68 per diluted common share, in 2012. Operating income* was $2.67 billion, or $5.68 per diluted common share, compared to $787 million,$2.15 billion, or $1.50$4.36 per diluted common share in 2011. The increase was primarily2012, due in part to higher property-liability and Allstate Financial operating income,lower 2013 catastrophe losses partially offset by lower net realized capital gains.the $150 million in after-tax pension settlement charges. Book value per common share increased 6.9% to $45.31 at year-end 2013.
Allstate Protection made progress on achievingachieved its five operating priorities in 2012.2013:
definitive agreement to sell Lincoln Benefit Life Company and its life insurance business generated through independent master brokerage agencies, deferred fixed annuity and long-term care insurance business. Allstate Financial increased sales through Allstate agencies with a 9.3% increase in issuedis now focused on providing life insurance policies written in 2012. Allstate Benefits, Allstate Financial'sand voluntary employee benefits unit, had a successful annual enrollment season, achieving a 6.5% increase in new business written forproducts through the year.
Allstate agency and Allstate Benefits channels.
The Allstate Corporation | 34
Allstate's total stockholder return relative to the market cap-weighted average of the peer group used for 2013 compensation benchmarking, property and casualty insurance company peers, and life insurance company peers (each identified on page 31) over one-, three-, and five-year periods is demonstrated in the following chart.
Comparison of Total Stockholder Return
TheIn 2013, the total annual cash incentive funding for 2012 annual incentive awards ispool was calculated based on three measures: Adjusted Operating Income, Total Premiums, and Net Investment Income. These measures were selected based on their strong correlation with overall stockholder value creation through profitable growth, business unit performance, or achievementFor a description of strategic priorities. All ofhow these measures are defined in detail oncalculated, see pages 56-57.58-59. The ranges of performance and 2013 actual results are shown in the following table.
31 -- The Allstate Corporation
2012 Annual Cash Incentive Award Performance Measures | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2013 Annual Cash Incentive Award Performance Measures | 2013 Annual Cash Incentive Award Performance Measures | ||||||||||||||||||
Measure | Threshold | Target | Maximum | Actual Results | Threshold | Target | Maximum | Actual Results | |||||||||||
Adjusted Operating Income(in millions) | $2,650 | $3,100 | $3,500 | Above Maximum $3,685 | $1,500 | $1,900 | $2,300 | $2,315 | |||||||||||
Total Premiums(in millions) | $28,100 | $28,800 | $29,500 | Between Target and Maximum $29,248 | $29,600 | $30,000 | $30,400 | $30,510 | |||||||||||
Net Investment Income(in millions) | $3,600 | $3,765 | $3,900 | Between Target and Maximum $3,879 | $3,400 | $3,600 | $3,750 | $3,941 | |||||||||||
Payout Percentages | |||||||||||||||||||
CEO | 50%* | 100% | 200% | 187% payout | 50%* | 100% | 200% | 200% payout | |||||||||||
Other Named Executives | 50%* | 100% | 250% | 229% payout | 50%* | 100% | 250% | 250% payout |
Targets were set based on the 2012 operating plan, which was extensively reviewed, discussed, and assented to by the Board. The ranges for threshold and maximum were then informed by statistical modeling and probability testing. Our models measured the variability of actual results so that the measures require superior performance to achieve maximum levels. The performance ranges were then calibrated against expectations of business operations, risks, and industry and economic trends.
In the event of a net loss, the annual cash incentive award pool would have been reduced by 50% of actual performance. For example, if performance measures ordinarily would fund the pool at 60%and35 there was a net loss, then the pool would be funded at 30%. This mechanism would have prevented a misalignment between pay and performance in the event of a natural catastrophe or extreme financial market conditions.
The Committee approved the annual incentive award performance measures and the threshold, target, and maximum ranges in the first quarter of 2012. Beginning in the second quarter, the Committee reviewed the extent to which performance measures were achieved, and it approved the final results in the first quarter of 2013. Actual performance on the three performance measures determined the overall funding level of the pool and the aggregate total award budget for eligible employees. Individual awards are based on actual performance on the three performance measures and the resulting payout percentage, each named executive officers' target annual incentive award opportunity percentage, and considerations of individual performance. The Committee evaluated each executive officer's individual performance and contributions and approved the actual amount of all cash incentive awards for our executive officers, including the named executives. Further information on annual incentive award decisions can be found in theCompensation Decisions for 2012 section below. We paid the cash incentive awards in March 2013.
Performance Stock Awards
Beginning in 2012, we granted one-half of our long-term equity incentive awards to senior executives in the form of performance stock awards (PSAs) tied to achievement of performance measures. The PSAs were granted instead of time-based restricted stock units as they more closely align compensation with stockholder interests and Allstate's long-term performance.
In March 2012, each of the named executives was awarded a target number of PSAs. The PSAs granted in 2012 have a three-year performance cycle (2012-2014). The number of PSAs which become earned and vested at the end of the three-year performance cycle depends on our annual adjusted operating income return on equity attained during each year of the performance cycle. Annual adjusted operating income return on equity ("Adjusted Operating Income ROE") is defined on page 57. Adjusted Operating Income ROE includes a minimum and maximum amount of after-tax catastrophe losses if actual catastrophe losses are less than or exceed those amounts, respectively, which serves to decrease volatility and stabilize the measure by limiting the impact of extreme weather conditions. The Committee selected
| The Allstate Corporation -- 32
Adjusted Operating Income ROE asis the performance measure because it —
Performance is measured in three separate one-year periods. The actual number of PSAs earnedcalculated for each measurement period varies from 0% to 200% of that period's target PSAs based on Adjusted Operating Income ROE for the period.performance cycle, see page 59. The measurement periods and levels of Adjusted Operating Income ROE needed to earn the threshold, target, and maximum number of PSAs for the measurement period as well as actual results are set forth in the table below. The annually increasing performance goals and a 13% maximum in 2014 are consistent with the corporation's return objectives and recognize the inherent earnings volatility of Allstate's business.
2012-2014 Performance Stock Awards Ranges of Performance | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Performance Stock Awards Ranges of Performance | Performance Stock Awards Ranges of Performance | |||||||||||||||||||||
Annual Adjusted Operating Income Return on Equity | Threshold | Target | Maximum | Actual Results | ||||||||||||||||||
| Annual Adjusted Operating Income Return on Equity | |||||||||||||||||||||
| Threshold | Target | Maximum | Actual Results | ||||||||||||||||||
2012-2014 PSA Performance Cycle | ||||||||||||||||||||||
Measurement Period 2012 | 4.0 | % | 10.0 | % | 11.5 | % | 12.3% | 4.0 | % | 10.0 | % | 11.5 | % | 12.3% | ||||||||
Measurement Period 2013 | 4.5 | % | 10.5 | % | 12.25 | % | To be determined 2014 | 4.5 | % | 10.5 | % | 12.25 | % | 13.1% | ||||||||
Measurement Period 2014 | 5.0 | % | 11.0 | % | 13.0 | % | To be determined 2015 | 5.0 | % | 11.0 | % | 13.0 | % | To be determined in 2015 | ||||||||
2013-2015 PSA Performance Cycle | ||||||||||||||||||||||
Measurement Period 2013 | 6.0 | % | 11.0 | % | 12.5 | % | 13.4% | |||||||||||||||
Measurement Period 2014 | 6.0 | % | 12.0 | % | 13.5 | % | To be determined in 2015 | |||||||||||||||
Measurement Period 2015 | 6.0 | % | 13.0 | % | 14.5 | % | To be determined in 2016 | |||||||||||||||
Payout | 0 | % | 100 | % | 200 | % | 0 | % | 100 | % | 200 | % | ||||||||||
|
The Committee included a requirementAllstate Corporation | 36
At the end of each measurement period, the Committee certifies the level of our Adjusted Operating Income ROE achievement, as well as the resulting number of PSAs earned by each named executive for that measurement period. The Committee does not have the discretion to adjust the performance achievement upward for any measurement period. PSAs earned will vest following the end of the three year performance cycle, subject to continued employment (other than in the event of death, disability, retirement, or a qualifying termination following a change in control).
Based on our Adjusted Operating Income ROE of 12.3% for 2012, 200% of the target number of PSAs for the 2012 measurement period were earned by our named executives and will be received on the conversion date in 2015, subject to continued employment (other than in the event of death, disability, retirement, or a qualifying termination following a change in control). The following table shows the target number of PSAs granted to each of our named executives for the 2012-2014 and 2013-2015 performance cycle,cycles, the target number of PSAs for the 2012each measurement period, and the number of PSAs earned based on achievement of the performance measure.
2012-2014 Performance Cycle | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2012 Measurement Period | 2013 Measurement Period | 2014 Measurement Period | ||||||||||||||||||||||||
Named Executive | Target Number of PSAs for 2012-2014 Performance Cycle | Target Number of PSAs | Actual Result | Number of PSAs Earned | Target Number of PSAs | Actual Result | Number of PSAs Earned | Target Number of PSAs | Actual Result | Number of PSAs Earned | ||||||||||||||||||
Mr. Wilson | 124,194 | 41,398 | Maximum | 82,796 | 41,398 | Maximum | 82,796 | 41,398 | ||||||||||||||||||||
Mr. Shebik | 9,736 | 3,245 | Maximum | 6,490 | 3,245 | Maximum | 6,490 | 3,246 | To be determined | |||||||||||||||||||
Mr. Civgin | 30,645 | 10,215 | Maximum | 20,430 | 10,215 | Maximum | 20,430 | 10,215 | in 2015. | |||||||||||||||||||
Ms. Greffin | 29,032 | 9,677 | Maximum | 19,354 | 9,677 | Maximum | 19,354 | 9,678 | ||||||||||||||||||||
Mr. Winter | 40,323 | 13,441 | Maximum | 26,882 | 13,441 | Maximum | 26,882 | 13,441 | ||||||||||||||||||||
2013-2015 Performance Cycle | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2013 Measurement Period | 2014 Measurement Period | 2015 Measurement Period | ||||||||||||||||||||||||
Named Executive | Target Number of PSAs for 2013-2015 Performance Cycle | Target Number of PSAs | Actual Result | Number of PSAs Earned | Target Number of PSAs | Actual Result | Number of PSAs Earned | Target Number of PSAs | Actual Result | Number of PSAs Earned | ||||||||||||||||||
Mr. Wilson | 84,411 | 28,137 | Maximum | 56,274 | 28,137 | 28,137 | ||||||||||||||||||||||
Mr. Shebik | 19,733 | 6,577 | Maximum | 13,154 | 6,578 | To be determined | 6,578 | To be determined | ||||||||||||||||||||
Mr. Civgin | 23,021 | 7,673 | Maximum | 15,346 | 7,674 | in 2015. | 7,674 | in 2016. | ||||||||||||||||||||
Ms. Greffin | 20,061 | 6,687 | Maximum | 13,374 | 6,687 | 6,687 | ||||||||||||||||||||||
Mr. Winter | 27,817 | 9,272 | Maximum | 18,544 | 9,272 | 9,273 | ||||||||||||||||||||||
3337 --| The Allstate Corporation
Named Executive | Target Number of PSAs (2012-2014 Performance Cycle) | Target Number of PSAs (2012 Measurement Period) | Achievement for 2012 Measurement Period | Number of PSAs Earned (2012 Measurement Period) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Wilson | 124,194 | 41,398 | Maximum | 82,796 | |||||||||
Mr. Shebik | 9,736 | 3,245 | Maximum | 6,490 | |||||||||
Mr. Civgin | 30,645 | 10,215 | Maximum | 20,430 | |||||||||
Ms. Greffin | 29,032 | 9,677 | Maximum | 19,354 | |||||||||
Mr. Gupta | 21,169 | 7,056 | Maximum | 14,112 | |||||||||
Mr. Winter | 40,323 | 13,441 | Maximum | 26,882 | |||||||||
In response to stockholder feedback, we are disclosing the ranges of performance for the 2013-2015 PSA performance cycle. The 2013-2015 performance cycle uses the same design as the 2012-2014 cycle adjusted to reflect an updated maximum and minimum amount of catastrophe losses. The Committee considered historical and expected performance when approving the ranges of performance for the 2013-2015 performance cycle.
2013-2015 Performance Stock Awards Ranges of Performance | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Annual Adjusted Operating Income Return on Equity | Threshold | Target | Maximum | |||||||
Measurement Period 2013 | 6.0 | % | 11.0 | % | 12.5 | % | ||||
Measurement Period 2014 | 6.0 | % | 12.0 | % | 13.5 | % | ||||
Measurement Period 2015 | 6.0 | % | 13.0 | % | 14.5 | % | ||||
Payout | 0 | % | 100 | % | 200 | % | ||||
Compensation Decisions for 20122013
Mr. Wilson, Chairman, President and Chief Executive Officer
As stated in its charter, one of the Committee's most important responsibilities is to recommend the CEO's compensation to the Board. The Committee establishes the CEO's goals and, in conjunction with the nominating and governance committee, evaluates performance based on predetermined goals and actual results. When reviewing performance relative to these goals, the Board discusses the Committee's recommendations in executive session, without the CEO present. The Committee fulfills its oversight responsibilities and provides meaningful recommendations to the Board by analyzing competitive compensation data provided by its independent compensation consultant and company performance data. The Committee reviews the various elements of the CEO's compensation in the context of the total compensation package, including salary, annual cash incentive awards, and long-term incentive awards, and then presents its recommendations to the Board within this total compensation framework.
The Allstate Corporation -- 34
compensation at the median of its insurance industry peer group. Mr. Wilson's total target direct compensation has historically been significantly below the 50th50th percentile of our peer group. Because of Mr. Wilson's leadership responsibilities, experience, and ultimate accountability for company performance, the Committee set a higher level of target total direct compensation for him than for other executive officers.
The Committee approved an annual cash incentive award of $6,164,730 for Mr. Wilson based on its assessment of his performance in improving overall returns.
Under the new target and reduced maximum, the payout was $6,164,730, while under the old methodology it would have been $5,046,360. The new target resulted in an increase of $1,118,370.
The Committee approved an annual cash incentive award of $6,600,000 for Mr. Wilson based on its assessment of his performance in improving overall returns in 2013. This was in-line with the corporate pool funding at 200% of target. No positive discretion was utilized.
Other Named Executives
After year-end, Mr. Wilson evaluatedevaluates the performance and contributions of each member of his senior leadership team, including each of the other named executive.executives. Based on his review, Mr. Wilson recommendedrecommends specific adjustments to salary and incentive targets as well as actual incentive awards. The recommendations wereare considered and approved by the Committee.
Mr. Shebik, Executive Vice President and Chief Financial Officer
The Allstate Corporation |
35 -- The Allstate Corporation
$2,100,000 for Mr. Shebik based on its assessment of his performance in establishing and executing against our customer value propositions, delivering improved returns, and driving excellent capital management results.
Mr. Civgin, President and Chief Executive Officer, Allstate Financial
Ms. Greffin, Executive Vice President and Chief Investment Officer of Allstate Insurance Company
Mr. Gupta,Winter, Executive Vice President, — Technology & Operations of Allstate Insurance CompanyPersonal Lines
The Allstate Corporation -- 36
technology development, testing, and deployment processes at Allstate. The Committee approved an annual cash incentive award of $1,209,822 for Mr. Gupta based on its assessment of his performance in delivering excellent operating results, enhancing customer service, and managing expenses related to information technology and operations infrastructure.
Mr. Winter, President, Allstate Auto, Home, and Agencies
39 | The Allstate Corporation
Other Elements of Compensation
To remain competitive with other employers and to attract, retain, and motivate highly talented executives and other employees, we provide the benefits listed in the following table.
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37 -- The Allstate Corporation
Retirement Benefits
Each named executive participates in two different defined benefit pension plans. The Allstate Retirement Plan (ARP) is a tax qualified defined benefit pension plan available to all of our regular full-time and regular part-time employees who meet certain age and service requirements. The ARP provides an assured retirement income based on an employee's level of compensation and length of service at no cost to the employee. As the ARP is a tax qualified plan, federal tax law limits (1) the amount of an individual's compensation that can be used to calculate plan benefits and (2) the total amount of benefits payable to a plan participant on an annual basis. For certain employees, these limits may result in a lower benefit under the ARP than would have been payable otherwise. Therefore, the Supplemental Retirement Income Plan (SRIP) was formed to provide ARP-eligible employees whose compensation or benefit amount exceeds the federal limits with an additional defined benefit in an amount equal to what would have been payable under the ARP if the federal limits did not exist.
Change-in-Control and Post-Termination Benefits
Consistent with our compensation objectives, we offer these benefits to attract, motivate, and retain highly talented executives. A change-in-control of Allstate could have a disruptive impact on both Allstate and our executives. Change-in-control benefits and post-termination benefits are designed to mitigate that impact and to maintain alignment between the interests of our executives and our stockholders.
We substantially reduced change-in-control benefits in 2011. The named executives who had previously been parties to certain change-in-control agreements agreed to become participants in a new change-in-control severance plan (CIC Plan). Compared with the previous arrangements, the CIC Plan eliminates all excise tax gross ups; eliminates the lump sum cash pension enhancement based on additional years of age, service, and compensation; and reduces for named executives other than the CEO the amount of cash severance payable from three to two times the sum of base salary and target annual incentive. In order to receive the cash severance benefits under the CIC Plan following a change-in-control, a participant must have been terminated (other than for cause, death, or disability) or the participant must have terminated employment for good reason (such as adverse changes in the terms or conditions of employment, including a material reduction in base compensation, a material change in authority, duties, or responsibilities, or a material change in job location) within two years following a change-in-control. In addition, long-term equity incentive awards granted after 2011 will vest on an accelerated basis due to a change-in-control only if either Allstate terminates the executive's employment (other than for cause, death, or disability) or the executive terminates his or her employment for good reason within two years after the change-in-control (so-called "double-trigger" vesting).
The change-in-control and post-termination arrangements which are described in thePotential Payments as a Result of Termination or Change-in-Control section are not provided exclusively to the named executives. A larger group of management employees is eligible to receive many of the post-termination benefits described in that section.
Stock Ownership Guidelines
Because we believe management's interests must be linked with those of our stockholders, we instituted stock ownership guidelines in 1996 that require each of the named executives to own Allstate common stock worth a multiple of base salary. We adjusted the stock ownership guidelines to accommodate the shift to performance stock awards beginning in 2012. The new guidelines provide that an executive must hold 75% of net after-tax shares received as a result of equity compensation awards until his or her salary multiple guideline is met. The chart
The Allstate Corporation -- 38
below shows the salary multiple guidelines and the equity holdings that count towards the requirement.
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We also have a policy on insider trading that prohibits all officers, directors, and employees from engaging in transactions in securities issued by Allstate or any of its subsidiaries that might be considered speculative or hedging, such as selling short or buying or selling options.
Impact of Tax Considerations on Compensation
We may take a tax deduction of no more than $1 million per executive for compensation paid in any year to our CEO and the three other most highly compensated executives, excluding any individual that served as CFO during the year, as of the last day of the fiscal year in which the compensation is paid, unless the compensation meets specific standards. We may deduct more than $1 million in compensation if the standards are met, including that the compensation is performance-based and paid under a plan that meets certain requirements. The Committee considers the impact of this rule in developing, implementing, and administering our compensation programs. However, the Committee balances this consideration with our primary goal of structuring compensation programs to attract, motivate, and retain highly talented executives.
Our compensation programs are designed and administered so that payments to affected executives can be fully deductible. However, in light of the balance mentioned above and the need to maintain flexibility in administering compensation programs, we may authorize compensation in any year that exceeds $1 million and does not meet the required standards for deductibility. The amount of compensation paid in 2012 that was not deductible for tax purposes was $3,106,436.
The Compensation and Succession Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained on pages 25 through 3924-39 of this proxy statement, with management and, basedstatement. Based on such review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
THE COMPENSATION AND SUCCESSION COMMITTEE
John W. Rowe | ||
Andrea Redmond |
39 -- The Allstate Corporation | 40
Executive Compensation — Tables | ||||||
PROXY STATEMENT | ||||||
The following table summarizes the compensation of the named executives for the last three fiscal years.
Name and Principal Position(1) | Year | Salary ($) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | Year | Salary ($) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Thomas J. Wilson | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Chairman, President | 2012 | 1,100,000 | — | 3,850,014 | 3,850,000 | 6,164,730 | 1,982,607 | (6) | 111,204 | 17,058,555 | 2013 | 1,100,000 | — | 3,849,986 | 4,350,006 | 6,600,000 | 2,720,160 | (6) | 53,571 | 18,673,723 | ||||||||||||||||||||||||||||||||||||
and Chief Executive | 2011 | 1,100,000 | — | 2,310,005 | 4,290,001 | 2,252,800 | 1,157,562 | 69,448 | 11,179,816 | 2012 | 1,100,000 | — | 3,850,014 | 3,850,000 | 6,164,730 | 1,982,607 | 111,204 | 17,058,555 | ||||||||||||||||||||||||||||||||||||||
Officer) | 2010 | 1,093,846 | — | 2,225,995 | 4,134,002 | 1,091,096 | 679,359 | 75,322 | 9,299,620 | 2011 | 1,100,000 | — | 2,310,005 | 4,290,001 | 2,252,800 | 1,157,562 | 69,448 | 11,179,816 | ||||||||||||||||||||||||||||||||||||||
Steven E. Shebik | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Executive Vice President and | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Financial Officer) | 2012 | 545,330 | — | 531,099 | 531,108 | 1,175,994 | 563,812 | (7) | 33,904 | 3,381,247 | ||||||||||||||||||||||||||||||||||||||||||||||
(Executive Vice | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
President and Chief | 2013 | 600,000 | — | 900,022 | 900,000 | 2,100,000 | 1,070,582 | (7) | 34,165 | 5,604,769 | ||||||||||||||||||||||||||||||||||||||||||||||
Financial Officer) | 2012 | 545,330 | — | 531,099 | 531,108 | 1,175,994 | 563,812 | 33,904 | 3,381,247 | |||||||||||||||||||||||||||||||||||||||||||||||
Don Civgin | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(President and Chief | 2012 | 690,000 | — | 949,995 | 949,998 | 2,000,000 | 48,581 | (8) | 28,302 | 4,666,876 | 2013 | 700,000 | — | 1,049,988 | 1,049,996 | 2,000,000 | 69,422 | (8) | 27,902 | 4,897,308 | ||||||||||||||||||||||||||||||||||||
Executive Officer | 2011 | 624,231 | — | 594,998 | 1,104,996 | 750,000 | 29,270 | 23,532 | 3,127,027 | |||||||||||||||||||||||||||||||||||||||||||||||
Executive Officer, | 2012 | 690,000 | — | 949,995 | 949,998 | 2,000,000 | 48,581 | 28,302 | 4,666,876 | |||||||||||||||||||||||||||||||||||||||||||||||
Allstate Financial) | 2010 | 562,692 | — | 596,759 | 1,108,246 | 400,000 | 20,648 | 27,013 | 2,715,358 | 2011 | 624,231 | — | 594,998 | 1,104,996 | 750,000 | 29,270 | 23,532 | 3,127,027 | ||||||||||||||||||||||||||||||||||||||
Judith P. Greffin | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Executive Vice | 2012 | 606,538 | — | 899,992 | 899,998 | 1,700,000 | 952,989 | (9) | 25,450 | 5,084,967 | 2013 | 634,807 | — | 914,982 | 914,999 | 1,400,000 | 271,815 | (9) | 33,580 | 4,170,183 | ||||||||||||||||||||||||||||||||||||
President and Chief | 2011 | 577,692 | — | 535,486 | 994,500 | 750,000 | 616,936 | 32,156 | 3,506,770 | 2012 | 606,538 | — | 899,992 | 899,998 | 1,700,000 | 952,989 | 25,450 | 5,084,967 | ||||||||||||||||||||||||||||||||||||||
Investment Officer) | 2010 | 502,684 | — | 485,567 | 901,771 | 230,526 | 397,608 | 30,890 | 2,549,046 | 2011 | 577,692 | — | 535,486 | 994,500 | 750,000 | 616,936 | 32,156 | 3,506,770 | ||||||||||||||||||||||||||||||||||||||
Suren K. Gupta | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Executive Vice | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
President—Technology & | 2012 | 537,404 | 400,000 | (10) | 656,239 | 656,250 | 1,209,822 | 11,519 | (11) | 72,944 | 3,544,178 | |||||||||||||||||||||||||||||||||||||||||||||
Operations) | 2011 | 383,654 | 350,000 | (10) | 674,991 | �� | 975,004 | 500,000 | 0 | 18,896 | 2,902,545 | |||||||||||||||||||||||||||||||||||||||||||||
Matthew E. Winter | 2013 | 745,673 | — | 1,268,733 | 1,268,748 | 3,000,000 | 102,174 | (10) | 35,150 | 6,420,478 | ||||||||||||||||||||||||||||||||||||||||||||||
(President, Allstate | 2012 | 721,154 | — | 1,250,013 | 1,249,997 | 3,000,000 | 52,425 | (12) | 37,400 | 6,310,989 | 2012 | 721,154 | — | 1,250,013 | 1,249,997 | 3,000,000 | 52,425 | 37,400 | 6,310,989 | |||||||||||||||||||||||||||||||||||||
Auto, Home, and | 2011 | 654,231 | — | 770,012 | 1,429,997 | 1,000,000 | 48,100 | 44,180 | 3,946,520 | |||||||||||||||||||||||||||||||||||||||||||||||
Agencies) | 2010 | 600,000 | — | 734,994 | 1,365,002 | 1,212,300 | 3,833 | 35,159 | 3,951,288 | |||||||||||||||||||||||||||||||||||||||||||||||
Personal Lines) | 2011 | 654,231 | — | 770,012 | 1,429,997 | 1,000,000 | 48,100 | 44,180 | 3,946,520 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2012 | 2011 | 2010 | ||||
---|---|---|---|---|---|---|---|
Weighted average expected term | 9.0 years | 7.9 years | 7.8 years | ||||
Expected volatility | 20.2 - 53.9% | 22.1 - 53.9% | 23.7 - 52.3% | ||||
Weighted average volatility | 34.6% | 35.1% | 35.1% | ||||
Expected dividends | 2.2 - 3.0% | 2.5 - 3.7% | 2.4 - 2.8% | ||||
Weighted average expected dividends | 2.8% | 2.7% | 2.6% | ||||
Risk-free rate | 0.0 - 2.2% | 0.0 - 3.5% | 0.1 - 3.9% |
| 2013 | 2012 | 2011 | ||||
---|---|---|---|---|---|---|---|
Weighted average expected term | 8.2 years | 9.0 years | 7.9 years | ||||
Expected volatility | 19.1 - 48.1% | 20.2 - 53.9% | 22.1 - 53.9% | ||||
Weighted average volatility | 31.0% | 34.6% | 35.1% | ||||
Expected dividends | 1.9 - 2.2% | 2.2 - 3.0% | 2.5 - 3.7% | ||||
Weighted average expected dividends | 2.2% | 2.8% | 2.7% | ||||
Risk-free rate | 0.0 - 2.9% | 0.0 - 2.2% | 0.0 - 3.5% |
The Allstate Corporation -- 40
41 | The Allstate Corporation
ALL OTHER COMPENSATION FOR 20122013 — SUPPLEMENTAL TABLE
(In dollars)
The following table describes the incremental cost of other benefits provided in 20122013 that are included in the "All Other Compensation" column.
Name | Personal Use of Aircraft(1) | 401(k) Match(2) | Other(3) | Total All Other Compensation | Personal Use of Aircraft(1) | 401(k) Match(2) | Other(3) | Total All Other Compensation | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Wilson | 67,032 | 9,250 | 34,922 | 111,204 | 16,609 | 7,140 | 29,822 | 53,571 | ||||||||||||||||||
Mr. Shebik | 0 | 9,250 | 24,654 | 33,904 | 0 | 7,140 | 27,025 | 34,165 | ||||||||||||||||||
Mr. Civgin | 0 | 9,250 | 19,052 | 28,302 | 0 | 7,140 | 20,762 | 27,902 | ||||||||||||||||||
Ms. Greffin | 0 | 9,250 | 16,200 | 25,450 | 0 | 7,140 | 26,440 | 33,580 | ||||||||||||||||||
Mr. Gupta | 0 | 3,700 | 69,244 | 72,944 | ||||||||||||||||||||||
Mr. Winter | 0 | 9,250 | 28,150 | 37,400 | 0 | 7,140 | 28,010 | 35,150 | ||||||||||||||||||
41 -- The Allstate Corporation
cost per flight hour is then multiplied by the flight hours flown for personal use to derive the incremental cost. This method of calculating the incremental cost excludes fixed costs that do not change based on usage, such as pilots' and other employees' salaries, costs incurred in purchasing the aircraft, and non-trip related hangar expenses.
The Allstate Corporation | 42
long-term disability plan and whose annual earnings exceed the level which produces the maximum monthly benefit provided by the long-term disability plan. This coverage is self-insured (funded and paid for by Allstate when obligations are incurred). No obligations for the named executives were incurred in 2012,2013, and therefore, no incremental cost is reflected in the table.
GRANTS OF PLAN-BASED AWARDS AT FISCAL YEAR-END 20122013(1)
The following table provides information about non-equity incentive plan awards and equity awards granted to our named executives during fiscal year 2012.2013.
| | | | | | | | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | | | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Date of Committee Action for Equity Incentive Plan Awards | | | | | | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | | ||||||||||||||||||||||||||||
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | Exercise or Base Price of Option Awards ($/Shr)(4) | Grant Date Fair Value ($)(5) | |||||||||||||||||||||||||||||||||||
Name | Grant Date | Plan Name | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Stock Awards | Option Awards | |||||||||||||||||||||||||||||||
Mr. Wilson | — | — | Annual cash incentive | 1,650,000 | 3,300,000 | 8,500,000 | |||||||||||||||||||||||||||||||||||
3/6/2012 | 3/6/2012 | Performance stock awards | 0 | 124,194 | 248,388 | 3,850,014 | |||||||||||||||||||||||||||||||||||
2/21/2012 | 2/20/2012 | Stock options | 444,060 | 31.56 | 3,850,000 | ||||||||||||||||||||||||||||||||||||
Mr. Shebik | — | — | Annual cash incentive | 256,033 | 512,065 | 5,527,500 | |||||||||||||||||||||||||||||||||||
3/6/2012 | 3/6/2012 | Performance stock awards | 0 | 9,736 | 19,472 | 301,816 | |||||||||||||||||||||||||||||||||||
3/6/2012 | 3/6/2012 | Stock options | 35,014 | 31.00 | 301,821 | ||||||||||||||||||||||||||||||||||||
2/21/2012 | 2/20/2012 | Restricted stock units | 7,265 | 229,283 | |||||||||||||||||||||||||||||||||||||
2/21/2012 | 2/20/2012 | Stock options | 26,446 | 31.56 | 229,287 | ||||||||||||||||||||||||||||||||||||
Mr. Civgin | — | — | Annual cash incentive | 423,315 | 846,630 | 5,527,500 | |||||||||||||||||||||||||||||||||||
3/6/2012 | 3/6/2012 | Performance stock awards | 0 | 30,645 | 61,290 | 949,995 | |||||||||||||||||||||||||||||||||||
2/21/2012 | 2/20/2012 | Stock options | 109,573 | 31.56 | 949,998 | ||||||||||||||||||||||||||||||||||||
Ms. Greffin | — | — | Annual cash incentive | 333,596 | 667,192 | 5,527,500 | |||||||||||||||||||||||||||||||||||
3/6/2012 | 3/6/2012 | Performance stock awards | 0 | 29,032 | 58,064 | 899,992 | |||||||||||||||||||||||||||||||||||
2/21/2012 | 2/20/2012 | Stock options | 103,806 | 31.56 | 899,998 | ||||||||||||||||||||||||||||||||||||
Mr. Gupta | — | — | Annual cash incentive | 241,832 | 483,663 | 5,527,500 | |||||||||||||||||||||||||||||||||||
3/6/2012 | 3/6/2012 | Performance stock awards | 0 | 21,169 | 42,338 | 656,239 | |||||||||||||||||||||||||||||||||||
2/21/2012 | 2/20/2012 | Stock options | 75,692 | 31.56 | 656,250 | ||||||||||||||||||||||||||||||||||||
Mr. Winter | — | — | Annual cash incentive | 527,164 | 1,054,327 | 5,527,500 | |||||||||||||||||||||||||||||||||||
3/6/2012 | 3/6/2012 | Performance stock awards | 0 | 40,323 | 80,646 | 1,250,013 | |||||||||||||||||||||||||||||||||||
2/21/2012 | 2/20/2012 | Stock options | 144,175 | 31.56 | 1,249,997 | ||||||||||||||||||||||||||||||||||||
| | | | | | | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | Exercise or Base Price of Option Awards ($/Shr)(4) | Grant Date Fair Value ($)(5) | |||||||||||||||||||||||||||||||
Name | Grant Date | Plan Name | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Stock Awards | Option Awards | |||||||||||||||||||||||||||
Mr. Wilson | — | Annual cash incentive | 1,650,000 | 3,300,000 | 8,500,000 | ||||||||||||||||||||||||||||||||
2/12/2013 | Performance stock awards | 0 | 84,411 | 168,822 | 3,849,986 | ||||||||||||||||||||||||||||||||
2/12/2013 | Stock options | 363,409 | 45.61 | 4,350,006 | |||||||||||||||||||||||||||||||||
Mr. Shebik | — | Annual cash incentive | 330,000 | 660,000 | 5,458,500 | ||||||||||||||||||||||||||||||||
2/12/2013 | Performance stock awards | 0 | 19,733 | 39,466 | 900,022 | ||||||||||||||||||||||||||||||||
2/12/2013 | Stock options | 75,188 | 45.61 | 900,000 | |||||||||||||||||||||||||||||||||
Mr. Civgin | — | Annual cash incentive | 437,500 | 875,000 | 5,458,500 | ||||||||||||||||||||||||||||||||
2/12/2013 | Performance stock awards | 0 | 23,021 | 46,042 | 1,049,988 | ||||||||||||||||||||||||||||||||
2/12/2013 | Stock options | 87,719 | 45.61 | 1,049,996 | |||||||||||||||||||||||||||||||||
Ms. Greffin | — | Annual cash incentive | 349,144 | 698,288 | 5,458,500 | ||||||||||||||||||||||||||||||||
2/12/2013 | Performance stock awards | 0 | 20,061 | 40,122 | 914,982 | ||||||||||||||||||||||||||||||||
2/12/2013 | Stock options | 76,441 | 45.61 | 914,999 | |||||||||||||||||||||||||||||||||
Mr. Winter | — | Annual cash incentive | 559,255 | 1,118,510 | 5,458,500 | ||||||||||||||||||||||||||||||||
2/12/2013 | Performance stock awards | 0 | 27,817 | 55,634 | 1,268,733 | ||||||||||||||||||||||||||||||||
2/12/2013 | Stock options | 105,994 | 45.61 | 1,268,748 | |||||||||||||||||||||||||||||||||
The Allstate Corporation -- 42
pool. The award pool is equal to 1.0% of Adjusted Operating Income with award opportunities capped at 40% of the pool for Mr. Wilson and 15% of the pool for each other such named executive. Adjusted Operating incomeIncome is defined on page 56.
43 | The Allstate Corporation
Stock options represent an opportunity to buy shares of our stock at a fixed exercise price at a future date. We use them to align the interests of our executives with long-term stockholder value, as the stock price must appreciate from the grant date for the executives to profit.
Under our stockholder-approved equity incentive plan, the exercise price cannot be less than the fair market value of a share on the grant date. Stock option repricing is not permitted. In other words, without an event such as a stock split, if the Committee cancels an award and substitutes a new award, the exercise price of the new award cannot be less than the exercise price of the cancelled award.
All stock option awards have been made in the form of nonqualified stock options. The options granted to the named executives in 20122013 become exercisable over four years: 50% on the second anniversary of the grant date and 25% on each of the third and fourth anniversary dates, and expire in ten years, except in certain change-in-control situations or under other special circumstances approved by the Committee.
Beginning with stock options granted in 2014, stock options will become exercisable over three years to reflect current market practice. One-third of the stock options will become exercisable on the anniversary of the grant date for each of the three years.
Performance stock awards (PSAs)PSAs represent our promise to transfer shares of common stock in the future if certain performance measures are met. Each PSA represents Allstate's promise to transfer one fully vested share in the future for each PSA that vests. PSAs earned will vest following the end of the three yearthree-year performance cycle, subject to continued employment (other than in the event of death, disability, retirement, or a qualifying termination following a change in control)change-in-control). Vested PSAs will be converted into shares of Allstate common stock and dividend equivalents accrued on these shares will be paid in cash. No dividend equivalents will be paid prior to vesting. Performance stock awards were granted to our senior executives.
Restricted stock units
Mr. Shebik was the only named executive to receive an award of restricted stock units in 2012. This award was granted before he became a senior executive. Each restricted stock unit represents our promise to transfer one fully vested share of stock in the future if and when the restrictions expire (when the unit "vests"). Because restricted stock units are based on and payable in stock, they reinforce the alignment of interests of our executives and our stockholders. In addition, restricted stock units provide a retention incentive because they have a real, current value that is forfeited in most circumstances if an executive terminates employment before the restricted stock units vest. Under the terms of the restricted stock unit awards, the executives have only the rights of general unsecured creditors of Allstate and no rights as stockholders until delivery of the underlying shares. The restricted stock units granted to Mr. Shebik in 2012 vest over four years: 50% on the second anniversary of the grant date and 25% on each of the third and fourth anniversary dates, except in certain change-in-control situations or under other special circumstances approved by the Committee. The restricted stock units granted to Mr. Shebik in 2012 include the right to receive previously accrued dividend equivalents when the underlying restricted stock unit vests.
43 -- The Allstate Corporation | 44
Outstanding Equity Awards at Fiscal Year-End 20122013
The following table summarizes the outstanding equity awards of the named executives as of December 31, 2012.2013.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 20122013
| Option Awards(1) | | | Stock Awards | Option Awards(1) | | | Stock Awards(2) | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Option Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(2) | Number of Securities Underlying Unexercised Options (#) Unexercisable(3) | Option Exercise Price | Option Expiration Date | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested (#)(4) | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested (#)(6) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that Have Not Vested ($)(5) | Option Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(3) | Number of Securities Underlying Unexercised Options (#) Unexercisable(4) | Option Exercise Price | Option Expiration Date | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested (#)(5) | Market Value of Shares or Units of Stock That Have Not Vested ($)(6) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested (#)(7) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that Have Not Vested ($)(6) | ||||||||||||||||||||||||||||||||||||
Mr. Wilson | Feb. 06, 2004 | 97,100 | $45.96 | Feb. 06, 2014 | Feb. 22, 2005 | 98,976 | $52.57 | Feb. 22, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2005 | 98,976 | $52.57 | Feb. 22, 2015 | Jun. 01, 2005 | 100,000 | $58.47 | Jun. 01, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||
Jun 01, 2005 | 100,000 | $58.47 | Jun 01, 2015 | Feb. 21, 2006 | 66,000 | $53.84 | Feb. 21, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 21, 2006 | 66,000 | $53.84 | Feb. 21, 2016 | Feb. 21, 2006 | 124,000 | $53.84 | Feb. 21, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 21, 2006 | 124,000 | $53.84 | Feb. 21, 2016 | Feb. 20, 2007 | 262,335 | $62.24 | Feb. 20, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 20, 2007 | 262,335 | $62.24 | Feb. 20, 2017 | Feb. 26, 2008 | 338,316 | $48.82 | Feb. 26, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 26, 2008 | 338,316 | $48.82 | Feb. 26, 2018 | Feb. 27, 2009 | 751,636 | $16.83 | Feb. 27, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 27, 2009 | 563,727 | 187,909 | $16.83 | Feb. 27, 2019 | Feb. 27, 2009 | 132,264 | $5,313,045 | Feb. 22, 2010 | 313,182 | 104,394 | $31.41 | Feb. 22, 2020 | Feb. 22, 2010 | 17,718 | $966,340 | |||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2010 | 208,788 | 208,788 | $31.41 | Feb. 22, 2020 | Feb. 22, 2010 | 35,435 | $1,423,424 | Feb. 22, 2011 | 223,904 | 223,904 | $31.74 | Feb. 22, 2021 | Feb. 22, 2011 | 36,390 | $1,984,711 | �� | ||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2011 | 0 | 447,808 | $31.74 | Feb. 22, 2021 | Feb. 22, 2011 | 72,779 | $2,923,532 | Feb. 21, 2012 | 0 | 444,060 | $31.56 | Feb. 21, 2022 | Mar. 06, 2012 | 165,592 | $9,031,388 | 41,398 | $2,257,847 | |||||||||||||||||||||||||||||||||||||||
Feb. 21, 2012 | 0 | 444,060 | $31.56 | Feb. 21, 2022 | Mar. 06, 2012 | 124,194 | $4,988,873 | Feb. 12, 2013 | 0 | 363,409 | $45.61 | Feb. 12, 2023 | Feb. 12, 2013 | 56,274 | $3,069,184 | 56,274 | $3,069,184 | |||||||||||||||||||||||||||||||||||||||
Aggregate | Aggregate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
$14,648,874 | $20,378,654 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Shebik | Feb. 06, 2004 | 20,265 | $45.96 | Feb. 06, 2014 | Feb. 22, 2005 | 20,836 | $52.57 | Feb. 22, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2005 | 20,836 | $52.57 | Feb. 22, 2015 | Feb. 21, 2006 | 15,464 | $53.84 | Feb. 21, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 21, 2006 | 15,464 | $53.84 | Feb. 21, 2016 | Feb. 21, 2006 | 9,000 | $53.84 | Feb. 21, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 21, 2006 | 9,000 | $53.84 | Feb. 21, 2016 | Feb. 20, 2007 | 15,571 | $62.24 | Feb. 20, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 20, 2007 | 15,571 | $62.24 | Feb. 20, 2017 | Feb. 26, 2008 | 25,763 | $48.82 | Feb. 26, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 26, 2008 | 25,763 | $48.82 | Feb. 26, 2018 | Feb. 27, 2009 | 38,715 | $16.83 | Feb. 27, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 27, 2009 | 44,036 | 14,679 | $16.83 | Feb. 27, 2019 | Feb. 27, 2009 | 10,332 | $415,037 | Feb. 22, 2010 | 25,212 | 8,404 | $31.41 | Feb. 22, 2020 | Feb. 22, 2010 | 883 | $48,159 | |||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2010 | 16,808 | 16,808 | $31.41 | Feb. 22, 2020 | Feb. 22, 2010 | 1,766 | $70,940 | Feb. 22, 2011 | 17,598 | 17,599 | $31.74 | Feb. 22, 2021 | Feb. 22, 2011 | 1,771 | $96,590 | |||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2011 | 0 | 35,197 | $31.74 | Feb. 22, 2021 | Feb. 22, 2011 | 3,541 | $142,242 | Feb. 21, 2012 | 0 | 26,446 | $31.56 | Feb. 21, 2022 | Feb. 21, 2012 | 7,265 | $396,233 | |||||||||||||||||||||||||||||||||||||||||
Feb. 21, 2012 | 0 | 26,446 | $31.56 | Feb. 21, 2022 | Feb. 21, 2012 | 7,265 | $291,835 | Mar. 06, 2012 | 0 | 35,014 | $31.00 | Mar. 06, 2022 | Mar. 06, 2012 | 12,980 | $707,929 | 3,246 | $177,037 | |||||||||||||||||||||||||||||||||||||||
Mar. 06, 2012 | 0 | 35,014 | $31.00 | Mar. 06, 2022 | Mar. 06, 2012 | 9,736 | $391,095 | Feb. 12, 2013 | 0 | 75,188 | $45.61 | Feb. 12, 2023 | Feb. 12, 2013 | 13,154 | $717,419 | 13,156 | $717,528 | |||||||||||||||||||||||||||||||||||||||
Aggregate | Aggregate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
$1,311,149 | $2,860,895 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Civgin | Sep. 08, 2008 | 65,000 | $46.48 | Sep. 08, 2018 | Sept. 8, 2008 | 65,000 | $46.48 | Sept. 8, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 27, 2009 | 151,125 | 50,375 | $16.83 | Feb. 27, 2019 | Feb. 27, 2009 | 35,458 | $1,424,348 | Feb. 22, 2010 | 83,958 | 27,986 | $31.41 | Feb. 22, 2020 | Feb. 22, 2010 | 4,751 | $259,120 | |||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2010 | 55,972 | 55,972 | $31.41 | Feb. 22, 2020 | Feb. 22, 2010 | 9,500 | $381,615 | Feb. 22, 2011 | 57,672 | 57,672 | $31.74 | Feb. 22, 2021 | Feb. 22, 2011 | 9,373 | $511,203 | |||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2011 | 0 | 115,344 | $31.74 | Feb. 22, 2021 | Feb. 22, 2011 | 18,746 | $753,027 | Feb. 21, 2012 | 0 | 109,573 | $31.56 | Feb. 21, 2022 | Mar. 06, 2012 | 40,860 | $2,228,504 | 10,215 | $557,126 | |||||||||||||||||||||||||||||||||||||||
Feb. 21, 2012 | 0 | 109,573 | $31.56 | Feb. 21, 2022 | Mar. 06, 2012 | 30,645 | $1,231,009 | Feb. 12, 2013 | 0 | 87,719 | $45.61 | Feb. 12, 2023 | Feb. 12, 2013 | 15,346 | $836,971 | 15,348 | $837,080 | |||||||||||||||||||||||||||||||||||||||
Aggregate | Aggregate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
$3,789,999 | $5,230,004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ms. Greffin | Feb. 06, 2004 | 4,588 | $45.96 | Feb. 06, 2014 | Mar. 09, 2004 | 20,714 | $45.29 | Mar. 09, 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||
Mar. 09, 2004 | 20,714 | $45.29 | Mar. 09, 2014 | Feb. 22, 2005 | 15,314 | $52.57 | Feb. 22, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||
Mar. 09, 2004 | 2,000 | $45.29 | Mar. 09, 2014 | Feb. 22, 2005 | 4,720 | $52.57 | Feb. 22, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2005 | 15,314 | $52.57 | Feb. 22, 2015 | Feb. 21, 2006 | 19,919 | $53.84 | Feb. 21, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2005 | 4,720 | $52.57 | Feb. 22, 2015 | Feb. 21, 2006 | 4,723 | $53.84 | Feb. 21, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 21, 2006 | 19,919 | $53.84 | Feb. 21, 2016 | Feb. 20, 2007 | 21,291 | $62.24 | Feb. 20, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 21, 2006 | 4,723 | $53.84 | Feb. 21, 2016 | Feb. 20, 2007 | 4,854 | $62.24 | Feb. 20, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 20, 2007 | 21,291 | $62.24 | Feb. 20, 2017 | Jul. 17, 2007 | 3,660 | $60.42 | Jul. 17, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 20, 2007 | 4,854 | $62.24 | Feb. 20, 2017 | Feb. 26, 2008 | 68,365 | $48.82 | Feb. 26, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Jul. 17, 2007 | 3,660 | $60.42 | Jul. 17, 2017 | Feb. 26, 2008 | 28,298 | $48.82 | Feb. 26, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 26, 2008 | 68,365 | $48.82 | Feb. 26, 2018 | Aug. 11, 2008 | 14,250 | $46.56 | Aug. 11, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 26, 2008 | 28,298 | $48.82 | Feb. 26, 2018 | Feb. 27, 2009 | 96,911 | $16.83 | Feb. 27, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aug. 11, 2008 | 14,250 | $46.56 | Aug. 11, 2018 | Feb. 22, 2010 | 68,316 | 22,772 | $31.41 | Feb. 22, 2020 | Feb. 22, 2010 | 3,866 | $210,852 | |||||||||||||||||||||||||||||||||||||||||||||
Feb. 27, 2009 | 105,242 | 35,081 | $16.83 | Feb. 27, 2019 | Feb. 27, 2009 | 24,692 | $991,878 | Feb. 22, 2011 | 51,905 | 51,905 | $31.74 | Feb. 22, 2021 | Feb. 22, 2011 | 8,436 | $460,099 | |||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2010 | 45,544 | 45,544 | $31.41 | Feb. 22, 2020 | Feb. 22, 2010 | 7,730 | $310,514 | Feb. 21, 2012 | 0 | 103,806 | $31.56 | Feb. 21, 2022 | Mar. 06, 2012 | 38,708 | $2,111,134 | 9,678 | $527,838 | |||||||||||||||||||||||||||||||||||||||
Feb. 22, 2011 | 0 | 103,810 | $31.74 | Feb. 22, 2021 | Feb. 22, 2011 | 16,871 | $677,708 | Feb. 12, 2013 | 0 | 76,441 | $45.61 | Feb. 12, 2023 | Feb. 12, 2013 | 13,374 | $729,418 | 13,374 | $729,418 | |||||||||||||||||||||||||||||||||||||||
Feb. 21, 2012 | 0 | 103,806 | $31.56 | Feb. 21, 2022 | Mar. 06, 2012 | 29,032 | $1,166,215 | Aggregate | ||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$4,768,759 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$3,146,315 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
45 | The Allstate Corporation -- 44
| Option Awards(1) | | | Stock Awards | Option Awards(1) | | | Stock Awards(2) | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Option Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(2) | Number of Securities Underlying Unexercised Options (#) Unexercisable(3) | Option Exercise Price | Option Expiration Date | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested (#)(4) | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested (#)(6) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that Have Not Vested ($)(5) | Option Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(3) | Number of Securities Underlying Unexercised Options (#) Unexercisable(4) | Option Exercise Price | Option Expiration Date | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested (#)(5) | Market Value of Shares or Units of Stock That Have Not Vested ($)(6) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested (#)(7) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that Have Not Vested ($)(6) | ||||||||||||||||||||||||||||||||||||
Mr. Gupta | May 02, 2011 | 0 | 92,593 | $33.88 | May 02, 2021 | May 2, 2011 | 19,923 | $800,307 | ||||||||||||||||||||||||||||||||||||||||||||||||
Feb. 21, 2012 | 0 | 75,692 | $31.56 | Feb. 21, 2022 | Mar. 06, 2012 | 21,169 | $850,359 | |||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$1,650,666 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mr. Winter | Nov. 02, 2009 | 25,155 | 8,385 | $29.64 | Nov. 02, 2019 | Nov. 02, 2009 | 5,904 | $237,164 | Nov. 02, 2009 | 8,385 | $29.64 | Nov. 02, 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2010 | 68,939 | 68,940 | $31.41 | Feb. 22, 2020 | Feb. 22, 2010 | 11,700 | $469,989 | Feb. 22, 2010 | 24,620 | 34,471 | $31.41 | Feb. 22, 2020 | Feb. 22, 2010 | 5,850 | $319,059 | |||||||||||||||||||||||||||||||||||||||||
Feb. 22, 2011 | 0 | 149,269 | $31.74 | Feb. 22, 2021 | Feb. 22, 2011 | 24,260 | $974,524 | Feb. 22, 2011 | 74,634 | 74,635 | $31.74 | Feb. 22, 2021 | Feb. 22, 2011 | 12,130 | $661,570 | |||||||||||||||||||||||||||||||||||||||||
Feb. 21, 2012 | 0 | 144,175 | $31.56 | Feb. 21, 2022 | Mar. 06, 2012 | 40,323 | $1,619,775 | Feb. 21, 2012 | 0 | 144,175 | $31.56 | Feb. 21, 2022 | Mar. 06, 2012 | 53,764 | $2,932,289 | 13,441 | $733,072 | |||||||||||||||||||||||||||||||||||||||
Aggregate | Feb. 12, 2013 | 0 | 105,994 | $45.61 | Feb. 12, 2023 | Feb. 12, 2013 | 18,544 | $1,011,390 | 18,545 | $1,011,444 | ||||||||||||||||||||||||||||||||||||||||||||||
Aggregate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$3,301,452 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$6,668,824 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
45 -- The Allstate Corporation | 46
Option Exercises and Stock Vested at Fiscal Year-End 20122013
The following table summarizes the options exercised by the named executives during 20122013 and the restricted stock unit awards that vested during 2012.2013.
OPTION EXERCISES AND STOCK VESTED AT FISCAL YEAR-END 20122013
| Option Awards(1) | Stock Awards | Option Awards(1) | Stock Awards | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||||||||
Mr. Wilson | 101,000 | 950,410 | 72,139 | 2,269,366 | 97,100 | 738,931 | 186,370 | 8,540,254 | ||||||||||||||||||
Mr. Shebik | 17,000 | 162,266 | 4,561 | 143,386 | 40,265 | 832,239 | 12,985 | 594,011 | ||||||||||||||||||
Mr. Civgin | 0 | 0 | 13,799 | 465,252 | 201,500 | 6,541,476 | 49,580 | 2,271,716 | ||||||||||||||||||
Ms. Greffin | 4,960 | 50,046 | 19,716 | 629,770 | 50,000 | 1,431,154 | 36,991 | 1,696,502 | ||||||||||||||||||
Mr. Gupta | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Mr. Winter | 0 | 0 | 11,700 | 369,252 | 103,943 | 2,090,019 | 23,884 | 1,150,096 | ||||||||||||||||||
The following table provides information about the pension plans in which the named executives participate. Each of the named executive participates in two different defined benefit pension plans. The following table summarizes the named executives' pension benefits, which are calculated inAllstate Retirement Plan (ARP) and the same manner as the change in pension value reflected in theSummary Compensation TableSupplemental Retirement Income Plan (SRIP).
PENSION BENEFITS
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit(1)(2) ($) | Payments During Last Fiscal Year ($) | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit(1)(2) ($) | Payments During Last Fiscal Year ($) | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Wilson | Allstate Retirement Plan | 19.8 | 714,755 | 0 | ARP | 20.8 | 733,308 | 0 | ||||||||||||||||
Supplemental Retirement Income Plan | 19.8 | 7,321,764 | 0 | SRIP | 20.8 | 10,023,371 | 0 | |||||||||||||||||
Mr. Shebik | Allstate Retirement Plan | 24.2 | 883,828 | 0 | ARP | 25.2 | 912,535 | 0 | ||||||||||||||||
Supplemental Retirement Income Plan | 24.2 | 1,495,579 | 0 | SRIP | 25.2 | 2,537,454 | 0 | |||||||||||||||||
Mr. Civgin | Allstate Retirement Plan | 4.3 | 21,750 | 0 | ARP | 5.3 | 27,194 | 0 | ||||||||||||||||
Supplemental Retirement Income Plan | 4.3 | 83,378 | 0 | SRIP | 5.3 | 147,356 | 0 | |||||||||||||||||
Ms. Greffin | Allstate Retirement Plan | 22.3 | 749,619 | 0 | ARP | 23.3 | 741,007 | 0 | ||||||||||||||||
Supplemental Retirement Income Plan | 22.3 | 3,254,696 | 0 | SRIP | 23.3 | 3,535,123 | 0 | |||||||||||||||||
Mr. Gupta(4) | Allstate Retirement Plan | 1.8 | 0 | 0 | ||||||||||||||||||||
Supplemental Retirement Income Plan | 1.8 | 11,519 | 0 | |||||||||||||||||||||
Mr. Winter | Allstate Retirement Plan | 3.2 | 13,822 | 0 | ARP | 4.2 | 20,410 | 0 | ||||||||||||||||
Supplemental Retirement Income Plan | 3.2 | 90,536 | 0 | SRIP | 4.2 | 186,122 | 0 | |||||||||||||||||
47 | The Allstate Corporation -- 46
Name | | Plan Name | | Lump Sum Amount ($) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Wilson | SRIP | |||||||||||
Mr. Shebik | SRIP | |||||||||||
Mr. Civgin | SRIP | |||||||||||
Ms. Greffin | SRIP | |||||||||||
| ||||||||||||
Mr. Winter | SRIP | |||||||||||
47 -- The Allstate Corporation | 48
The benefits and value of benefits shown in thePension Benefits table are based on the following material factors:
Allstate Retirement Plan (ARP)
TheContributions to the ARP hasare made entirely by Allstate and are paid into a trust fund from which benefits are paid. Before January 1, 2014, ARP participants earned benefits under one of two different types of benefit formulas (final average pay andor cash balance) which apply to participants based on their date of hire or their choice at the individual choices they made before atime Allstate introduced the cash balance plan was introducedformula. In order to better align our pension benefits with market practices, provide future pension benefits more equitably to Allstate employees, and reduce costs, final average pay benefits were frozen as of December 31, 2013. Beginning on January 1, 2003. Of the named executives, Messrs. Civgin, Gupta, and Winter are2014, all eligible toparticipants earn benefits under a new cash balance benefits. formula only.
Final Average Pay Formula
Benefits under the final average pay formula arewere earned and are stated in the form of a straight life annuity payable at the normal retirement age of 65. Participants who earn final average pay benefits may do so under one or more benefit formulas based on when they became ARP members and their years of service.
Ms. Greffin and Messrs. Shebik and Wilson have earned ARP benefits under the post-1988 final average pay formula that isbenefits equal to the sum of thea Base Benefit and thean Additional Benefit. The Base Benefit defined as follows:
For participants eligibleearly payment from age 55 to earn cash balanceage 62, prorated on a monthly basis based on age at the date payments begin.
Cash Balance Formula
Messrs. Civgin and Winter earned benefits pay credits are added tounder the cash balance accountformula. Under this formula, participants receive pay credits while employed at Allstate, based on a quarterly basis aspercentage of eligible annual compensation and years of service, plus interest credits. Pay credits are allocated to a percenthypothetical account in an amount equal to 0% to 7% of eligible annual compensation, anddepending on years of vesting service. Interest credits are allocated to the hypothetical account based on the participant'sinterest crediting rate in effect for that plan year as published by the Internal Revenue Service. The interest crediting rate is set annually and is currently based on the average yield for 30-year U.S. Treasury securities for August of the prior year. Under the new cash balance formula effective January 1, 2014, all participants receive pay credits in an amount equal to 3% to 5% of eligible annual compensation, depending on years of vesting service as follows:service. No change was made to the method of allocating interest credits.
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Supplemental Retirement Income Plan (SRIP)
SRIP benefits are generally determined using a two-step process: (1) determine the amount that would be payable under the ARP formulaformula(s) specified above if Internal Revenue Code limits did not apply, then (2) reduce the amount described in (1) by the amount actually payable under the applicable ARP formula.formula(s). The normal retirement date under the SRIP is age 65. If eligible for early retirement under the ARP, the employee also is eligible for early retirement under the SRIP. SRIP benefits are not funded and are paid out of Allstate's general assets.
As has generally been Allstate's practice, noNo additional service credit beyond service with Allstate or its predecessors is granted under the ARP or the SRIP.SRIP to any of the named executives. Messrs. Shebik and Wilson have combined service with Allstate and its former parent company, Sears, Roebuck and Co., of 24.225.2 and 19.820.8 years, respectively. As a result, of this prior Sears service, a portion of their retirement benefits will be paid from the Sears pension plan. Consistent with the pension benefits of other employees with prior Sears service who moved to Allstate during the spin-off from Sears in 1995, Messrs. Shebik's and Wilson's final average pay pension benefits under the ARP and the SRIP are calculated as if each had worked his combined Sears-Allstate career with Allstate through December 31, 2013, and then are reduced by amounts earned under the Sears pension plan.
Under both the ARP and SRIP, eligible compensation consists of salary, annual cash incentive awards, pre-tax employee deposits made to our 401(k) plan and our cafeteria plan, holiday pay, and vacation pay. Eligiblecertain other forms of compensation, also includes overtime pay, payment for temporary military
The Allstate Corporation -- 48
service, and payments for short term disability, but does not include long-term cash incentive awards or income related to equity awards. Compensation used to determine benefits under the ARP is limited in accordance with the Internal Revenue Code. For final average pay benefits, average annual compensation is the average compensation of the five highest consecutive calendar years within the last ten consecutive calendar years preceding the actual retirement or termination date.through 2013.
49 | The Allstate Corporation
Payment options under the ARP include a lump sum, straight life annuity, and various survivor annuity options. The lump sum under the final average pay benefit is calculated in accordance with the applicable interest rate and mortality as required under the Internal Revenue Code. The lump sum payment under the cash balance benefit is generally equal to a participant's cash balance account balance. Payments from the SRIP are paid in the form of a lump sum using the same interest rate and mortality assumptions used under the ARP.
Age 65 isEligible employees are vested in the earliest retirement age that a named executive may retire with fullnormal ARP and SRIP retirement benefits on the earlier of the completion of five years of service or upon reaching age 65 (for participants whose benefits are calculated under the ARP and SRIP. However, afinal average pay formula) or the completion of three years of service or upon reaching age 65 (for participants whose benefits are calculated under the cash balance formula).
Final average pay benefits are payable at age 65. A participant earningwith final average pay benefits ismay be entitled to ana reduced early retirement benefit on or after age 55 if he or she terminates employment after completing 20 or more years of vesting service. A participant earning cash balance benefits who terminates employment with at least three years of vesting service is entitled to a lump sum benefit equal to his or her cash balance account balance. Currently, Messrs. Shebik and Wilson are the only named executives eligible for an early retirement benefit.
As defined in the SRIP, SRIP benefits earned through December 31, 2004 (Pre 409A SRIP Benefits) are generally payable at the normal retirement age of 65. Pre 409A SRIP Benefits may be payable at age 50 or later if disabled, following early retirement at age 55 or older with 20 years of vesting service, or following death, in accordance with the terms of the SRIP. SRIP benefits earned after December 31, 2004 (Post 409A SRIP Benefits) are paid on the January 1 following termination of employment after reaching age 55 (a minimum six month deferral period applies), or following death, in accordance with the terms of the SRIP.
Eligible employees are vested in the normal ARP and SRIP retirement benefit on the earlier of the completion of five years of service or upon reaching age 65 (for participants with final average pay benefits) or the completion of three years of service or upon reaching age 65 (for participants whose benefits are calculated under the cash balance formula). The following SRIP payment dates assume a retirement or termination date of December 31, 2012:2013:
49 -- The Allstate Corporation | 50
Non-Qualified Deferred Compensation
The following table summarizes the non-qualified deferred compensation contributions, earnings, and account balances of our named executives in 2012.2013. All amounts relate to The Allstate Corporation Deferred Compensation Plan.
NON-QUALIFIED DEFERRED COMPENSATION AT FISCAL YEAR-END 20122013
Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(2) | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(2) | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Wilson | 0 | 0 | 73,024 | 0 | 526,887 | 0 | 0 | 190,397 | 0 | 717,283 | ||||||||||||||||||||||
Mr. Shebik | 0 | 0 | 14,265 | 0 | 100,913 | 0 | 0 | 33,359 | 0 | 134,271 | ||||||||||||||||||||||
Mr. Civgin | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Ms. Greffin | 0 | 0 | 205,294 | 0 | 1,657,102 | 0 | 0 | 376,925 | 0 | 2,034,027 | ||||||||||||||||||||||
Mr. Gupta | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Mr. Winter | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
In order to remain competitive with other employers, we allow the named executives and other employees whose annual compensation exceeds the amount specified in the Internal Revenue Code ($250,000255,000 in 2012)2013), to defer up to 80% of their salary and/or up to 100% of their annual cash incentive award that exceeds that amount under the Deferred Compensation Plan. Allstate does not match participant deferrals and does not guarantee a stated rate of return.
Deferrals under the Deferred Compensation Plan are credited with earnings or debited for losses based on the results of the investment option or options selected by the participants. The investment options available in 20122013 under the Deferred Compensation Plan are: Stable Value, S&P 500, International Equity, Russell 2000, Mid-Cap, and Bond Funds. Under the Deferred Compensation Plan, deferrals are not actually invested in these funds, but instead are credited with earnings or debited for losses based on the funds' investment returns net of administration and investment expenses.returns. Because the rate of return is based on actual investment measures in our 401(k) plan, no above marketabove-market earnings are paid. Our Deferred Compensation Plan and 401(k) plan allow participants to change their investment elections daily. Investment changes are effective the next business day. The Deferred Compensation Plan is unfunded; participantsunfunded. This means that Allstate does not set aside funds for the plan in a trust or otherwise. Participants have only the rights of general unsecured creditors.creditors and may lose their balances in the event of the company's bankruptcy. Account balances are 100% vested at all times.
Deferrals underAn irrevocable distribution election is required before making any deferrals into the Deferred Compensation Plan are segregated into Pre 409A balances and Post 409A balances. Aplan. Generally, a named executive may elect to begin receiving a distribution of a Pre 409Ahis or her account balance immediately upon separation from service or in one of the first through fifth years after separation from service. The earliest distribution date for Post 409A balances is six months following separation from service. The named executive may elect to receive payment of a Pre 409A balance in a lump sum or in annual cash installment payments over a period of two to ten years. In addition, a named executive may elect an in-service withdrawal of his or her entire Pre 409A balance, subject to forfeiture of 10% of such balance. An irrevocable distribution election is required before making any Post 409A deferrals into the plan. The distribution options available to the Post 409A balances are similar to those available to the Pre 409A balances, except the earliest distribution date is six months following separation from service. Upon proof of an unforeseen emergency, a plan participant may be allowed to access certain funds in a deferred compensation account earlier than the dates specified above.
51 | The Allstate Corporation -- 50
Potential Payments as a Result of Termination or Change-in-Control (CIC)
The following table lists the compensation and benefits that Allstate would provide to the named executives in various scenarios involving a termination of employment, other than compensation and benefits generally available to all salaried employees. The table describes equity granting practices for the 20122013 equity incentive awards. To the extentRelevant prior practices are relevant they are described in the footnotes.
| Compensation Elements | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ||||||||||||||||||
Termination Scenarios | Base Salary | Severance Pay | Annual Incentive(1) | Stock Options(1)(2) | Restricted Stock Units(1)(2) | Performance Stock Awards(1)(2) | Non-Qualified Pension Benefits(3) | Deferred Compensation(4) | Health, Welfare and Other Benefits | |||||||||
Termination(5) | Ceases immediately | None | Forfeited unless terminated on last day of fiscal year | Unvested are forfeited, vested expire at the earlier of three months or normal expiration | Forfeited | Forfeited | Distributions commence per plan | Distributions commence per participant election | None | |||||||||
Retirement | Ceases | None | Awards granted more than 12 months before, and pro rata portion of award granted within 12 months of, retirement continue to vest. All expire at earlier of five years or normal expiration.(7) | Awards granted more than 12 months before, and pro rata portion of award granted within 12 months of retirement continue to | Awards granted more than 12 months before, and pro rata portion of awards granted within 12 months of retirement continue to vest and are paid out based on actual | Distributions commence per plan | Distributions commence per participant election | None | ||||||||||
Termination due to | Ceases | Lump sum equal to two times salary and annual incentive at target, except for CEO who receives three times salary, and annual incentive at target(9) | Pro rated at target (reduced by any actually paid) | Awards vest upon qualifying termination after a | Awards vest upon qualifying termination after a | Awards vest based on performance upon a qualifying termination after | Immediately payable upon a CIC | Immediately payable upon a CIC | Outplacement services provided; lump sum payment equal to additional cost of welfare benefits continuation coverage for 18 months | |||||||||
Death | None | Pro rated for year | Distributions commence per plan | Payable within 90 days | None | |||||||||||||
Disability | Ceases | None | Pro rated for year | Participant may request payment if age 50 or older | Distributions commence per participant election | Supplemental Long Term Disability benefits if enrolled in basic long term disability plan | ||||||||||||
51 -- The Allstate Corporation | 52
| | Date of award prior to February 22, 2011 | Date of award on or after February 22, 2011 and before February 21, 2012 | ||||
---|---|---|---|---|---|---|---|
Definition | Age 55 with 20 years of service | Age 55 with 10 years of service | |||||
Early Retirement | Treatment | Unvested awards are forfeited. Stock options expire at the earlier of five years from the date of retirement or the expiration date of the option. | Prorated portion of unvested awards continue to vest. Stock options expire at the earlier of five years from the date of retirement or the expiration date of the option. | ||||
Definition | Age 60 with at least one year of service | Age 60 with at least one year of service | |||||
Normal Retirement | Treatment | Unvested awards continue to vest and stock options expire at the earlier of five years from the date of retirement or the expiration date of the option. | • Unvested awards not granted within 12 months of retirement continue to vest. • Prorated portion of unvested awards granted within 12 months of the retirement date continue to vest. • Stock options expire at the earlier of five years from the date of retirement or the expiration date of the option. | ||||
53 | The Allstate Corporation -- 52
53 -- The Allstate Corporation | 54
ESTIMATE OF POTENTIAL PAYMENTS UPON TERMINATION(1)
The table below describes the value of compensation and benefits payable to each named executive upon termination that would exceed the compensation or benefits generally available to all salaried employees in each termination scenario. The total column in the following table does not reflect compensation or benefits previously accrued or earned by the named executives, such as deferred compensation and non-qualified pension benefits. The payment of the 20122013 annual cash incentive award and any 20122013 salary earned but not paid in 20122013 due to Allstate's payroll cycle are not included in these tables because these are payable regardless of termination, death, or disability. Benefits and payments are calculated assuming a December 31, 2012,2013, employment termination date.
Name | Severance ($) | Stock Options — Unvested and Accelerated ($) | Restricted Stock Units — Unvested and Accelerated ($) | Performance Stock Awards — Unvested and Accelerated ($) | Welfare Benefits and Outplacement Services ($) | Total ($) | Severance ($) | Stock Options — Unvested and Accelerated ($) | Restricted Stock Units — Unvested and Accelerated ($) | Performance Stock Awards — Unvested and Accelerated ($) | Welfare Benefits and Outplacement Services ($) | Total ($) | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Wilson | ||||||||||||||||||||||||||||||||||||||
Termination/Retirement(2) | 0 | 5,045,039 | 1,358,710 | 5,470,511 | 0 | 11,874,260 | 0 | 15,267,167 | 851,751 | 16,721,255 | 0 | 32,840,173 | ||||||||||||||||||||||||||
Termination due to Change-in-Control(3) | 13,200,000 | 13,813,157 | 9,660,001 | 6,651,831 | 57,836 | (5) | 43,382,825 | 12,783,218 | (4) | 20,969,386 | 2,951,050 | 17,427,603 | 59,850 | (5) | 54,191,107 | |||||||||||||||||||||||
Death | 0 | 13,813,157 | 9,660,001 | 6,651,831 | 0 | 30,124,989 | 0 | 20,969,386 | 2,951,050 | 17,427,603 | 0 | 41,348,039 | ||||||||||||||||||||||||||
Disability | 0 | 13,813,157 | 2,923,532 | 6,651,831 | 15,281,378 | (6) | 38,669,898 | 0 | 20,969,386 | 1,984,711 | 17,427,603 | 29,915,722 | (6) | 70,297,422 | ||||||||||||||||||||||||
Mr. Shebik | ||||||||||||||||||||||||||||||||||||||
Termination/Retirement(2) | 0 | 597,930 | 317,303 | 428,855 | 0 | 1,344,088 | 0 | 2,198,334 | 437,684 | 2,154,766 | 0 | 4,790,784 | ||||||||||||||||||||||||||
Termination due to Change-in-Control(3) | 2,340,836 | (4) | 1,335,335 | 920,054 | 521,447 | 37,836 | (5) | 5,155,508 | 2,200,503 | (4) | 2,699,029 | 540,982 | 2,319,913 | 37,378 | (5) | 7,797,805 | ||||||||||||||||||||||
Death | 0 | 1,335,335 | 920,054 | 521,447 | 0 | 2,776,836 | 0 | 2,699,029 | 540,982 | 2,319,913 | 0 | 5,559,924 | ||||||||||||||||||||||||||
Disability | 0 | 1,335,335 | 434,077 | 521,447 | 2,753,494 | (6) | 5,044,353 | 0 | 2,699,029 | 492,823 | 2,319,913 | 5,995,735 | (6) | 11,507,500 | ||||||||||||||||||||||||
Mr. Civgin | ||||||||||||||||||||||||||||||||||||||
Termination/Retirement(2) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Termination due to Change-in-Control(3) | 3,150,000 | 3,581,841 | 2,558,990 | 1,641,346 | 36,899 | (5) | 10,969,076 | 3,150,000 | 5,263,556 | 770,323 | 4,459,681 | 37,378 | (5) | 13,680,938 | ||||||||||||||||||||||||
Death | 0 | 3,581,841 | 2,558,990 | 1,641,346 | 0 | 7,782,177 | 0 | 5,263,556 | 770,323 | 4,459,681 | 0 | 10,493,560 | ||||||||||||||||||||||||||
Disability | 0 | 3,581,841 | 753,027 | 1,641,346 | 7,853,461 | (6) | 13,829,675 | 0 | 5,263,556 | 511,203 | 4,459,681 | 13,892,063 | (6) | 24,126,503 | ||||||||||||||||||||||||
Ms. Greffin | ||||||||||||||||||||||||||||||||||||||
Termination/Retirement(2) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Termination due to Change-in-Control(3) | 2,562,000 | 2,986,644 | 1,980,100 | 1,554,941 | 37,836 | (5) | 9,121,521 | 1,909,398 | (4) | 4,778,230 | 670,951 | 4,097,808 | 35,734 | (5) | 11,492,121 | |||||||||||||||||||||||
Death | 0 | 2,986,644 | 1,980,100 | 1,554,941 | 0 | 6,521,685 | 0 | 4,778,230 | 670,951 | 4,097,808 | 0 | 9,546,989 | ||||||||||||||||||||||||||
Disability | 0 | 2,986,644 | 677,708 | 1,554,941 | 0 | (6) | 5,219,293 | 0 | 4,778,230 | 460,099 | 4,097,808 | 0 | (6) | 9,336,137 | ||||||||||||||||||||||||
Mr. Gupta | ||||||||||||||||||||||||||||||||||||||
Termination/Retirement(2) | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Termination due to Change-in-Control(3) | 1,740,537 | (4) | 1,234,118 | 800,307 | 1,133,798 | 37,705 | (5) | 4,946,465 | ||||||||||||||||||||||||||||||
Death | 0 | 1,234,118 | 800,307 | 1,133,798 | 0 | 3,168,223 | ||||||||||||||||||||||||||||||||
Disability | 0 | 1,234,118 | 800,307 | 1,133,798 | 5,343,163 | (6) | 8,511,386 | |||||||||||||||||||||||||||||||
Mr. Winter | ||||||||||||||||||||||||||||||||||||||
Termination/Retirement(2) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Termination due to Change-in-Control(3) | 2,838,975 | (4) | 3,191,893 | 1,681,677 | 2,159,700 | 37,836 | (5) | 9,910,081 | 3,750,000 | 6,758,660 | 980,629 | 5,688,195 | 39,850 | (5) | 17,217,334 | |||||||||||||||||||||||
Death | 0 | 3,191,893 | 1,681,677 | 2,159,700 | 0 | 7,033,270 | 0 | 6,758,660 | 980,629 | 5,688,195 | 0 | 13,427,484 | ||||||||||||||||||||||||||
Disability | 0 | 3,191,893 | 974,524 | 2,159,700 | 7,043,714 | (6) | 13,369,831 | 0 | 6,758,660 | 661,570 | 5,688,195 | 14,081,551 | (6) | 27,189,976 | ||||||||||||||||||||||||
The Allstate Corporation -- 54
target for purposes of this table. target. Equity awards granted prior to 2012December 30,
55 | The Allstate Corporation
2011, immediately vest upon a change-in-control. The amounts payable to each named executive in event of a change-in-control would be as follows:
Name | Stock Options— Unvested and Accelerated ($) | Restricted stock units — Unvested and Accelerated ($) | Total — Unvested and Accelerated ($) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Wilson | 9,989,800 | 9,660,001 | 19,649,801 | ||||||||
Mr. Shebik | 786,557 | 628,219 | 1,414,776 | ||||||||
Mr. Civgin | 2,638,417 | 2,558,990 | 5,197,407 | ||||||||
Ms. Greffin | 2,092,874 | 1,980,100 | 4,072,974 | ||||||||
Mr. Gupta | 582,410 | 800,307 | 1,382,717 | ||||||||
Mr. Winter | 1,950,546 | 1,681,677 | 3,632,223 | ||||||||
Name | Stock Options — Unvested and Accelerated ($) | Restricted Stock Units — Unvested and Accelerated ($) | Total — Unvested and Accelerated ($) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Wilson | 7,519,644 | 2,951,050 | 10,470,694 | ||||||||
Mr. Shebik | 595,642 | 144,749 | 740,391 | ||||||||
Mr. Civgin | 1,962,238 | 770,323 | 2,732,561 | ||||||||
Ms. Greffin | 1,710,150 | 670,951 | 2,381,101 | ||||||||
Mr. Winter | 2,498,992 | 980,629 | 3,479,621 | ||||||||
55 -- The Allstate Corporation | 56
Executive Compensation | ||||||
PROXY STATEMENT | ||||||
Risk Management and Compensation
A review and assessment of potential compensation-related risks was conducted by the chief risk officer and reviewed by the compensation and succession committee.executive. We believe that our compensation policies and practices are appropriately structured, and that they avoid providing incentives for employees to engage in unnecessary and excessive risk taking.risk-taking. We believe that executive compensation has to be examined in the larger context of an effective risk management framework and strong internal controls. As described in theBoard Role in Risk Oversight section of theCorporate Governance Practices portion of this proxy statement, the Board and auditrisk and return committee both play an important role in risk management oversight, including reviewing how management measures, evaluates, and manages the corporation's exposure to risks posed by a wide variety of events and conditions. In addition, the compensation and succession committee employs an independent compensation consultant each year to review and assess Allstate's executive pay levels, practices, and overall program design.
57 | The Allstate Corporation
PROXY STATEMENT | Executive Compensation — Performance Measures |
Performance Measures for 20122013
Information regarding our performance measures is disclosed in the limited context of our annual cash incentive awards and performance stock awards and should not be understood to be statements of management's expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.
The following are descriptions of the performance measures used for our annual cashexecutive incentive awards for 2012 and performance stock awards for the 2012-2014 cycle.compensation. These measures are not GAAP measures. They were developed uniquely for incentive compensation purposes and are not reported items in our financial statements. Some of these measures use non-GAAP measures and operating measures. The Committee has approved the use of non-GAAP and operating measures when appropriate to drive executive focus on particular strategic, operational, or financial factors or to exclude factors over which our executives have little influence or control, such as financial market conditions. control.
Adjusted Operating Income: This measure is calculated differently for annual cash incentive awards, the 162(m) pool, and each PSA performance cycle.
For each plan, Adjusted Operating Income is equal to net income available to common shareholders adjusted to exclude the after-tax effect of the items indicated below for the respective plan:
Performance Stock Awards | ||||||||
---|---|---|---|---|---|---|---|---|
ü Indicates excluded from Adjusted Operating Income | Annual Cash Incentive Awards | 162(m) Pool | 2012-2014 Performance Cycle | 2013-2015 Performance Cycle | ||||
Net income available to common shareholders, excluding: | ||||||||
Realized capital gains and losses (which includes the related effect on amortization of deferred acquisition and deferred sales inducement costs) except for periodic settlements and accruals on certain non-hedge derivative instruments | ü | ü | ü | ü | ||||
Valuation changes on embedded derivatives that are not hedged (which includes the related effect on amortization of deferred acquisition and deferred sales inducement costs) | ü | ü | ü | ü | ||||
Business combination expenses and amortization of purchased intangible assets | ü | ü | ü | ü | ||||
(Loss) gain on disposition of operations | ü | ü | ü | ü | ||||
Restructuring or related charges | ü | ü | ü | |||||
Underwriting results of Discontinued Lines and Coverages segment | ü | ü | ü | ü | ||||
After-tax prepayment fees | ü | |||||||
Preferred stock dividends | ü | |||||||
Loss on extinguishment of debt | ü | ü | ü | ü | ||||
Post-retirement benefits curtailment gain | ü | ü | ü | ü | ||||
Settlement charge related to employee pension benefit plans | ü | |||||||
Reduction in pension benefit cost from employee pension plan changes | ü | |||||||
Adjusted Operating Income before catastrophe adjustment | ||||||||
Adjustment for after-tax catastrophe losses | Include planned amount | Exclude actual amount | Adjusted to include a minimum or maximum amount | Adjusted to include a minimum or maximum amount | ||||
Adjusted Operating Income | ||||||||
The compensation and succession committee reviews and assesses the measures used each year to ensure alignment with incentive compensation objectives.Allstate Corporation | 58
Annual Cash Incentive Award Performance Measures for 20122013
Adjusted Operating Income: This measure is used to assess financial performance. ItFor a description of how this measure is equalcalculated, see page 58.
The impact of catastrophe losses on annual cash incentive awards is recognized through a modifier to net income adjusted to exclude the after tax effectsAdjusted Operating Income performance measure payout percentage.
Actual After-Tax Catastrophe Losses | Impact to Adjusted Operating Income Payout Percentage | |
---|---|---|
Within 10% of planned catastrophe losses | None | |
Lower than planned catastrophe losses by more than 10% | Increases payout by up to 20% | |
Higher than planned catastrophe losses by more than 10% | Lowers payout by up to 20% | |
In 2013, actual after-tax catastrophe losses of $813 million were less than planned after-tax catastrophe losses by more than 20%, which would have triggered a 20% increase in the Adjusted Operating Income performance measure payout percentage. However, the maximum Adjusted Operating Income performance measure payout percentage had been achieved without application of the items listed below:
Total Premiums: This measure is used to assess growth within the Allstate Protection and Allstate Financial businesses. It is equal to the sum of Allstate Protection premiums written and Allstate Financial premiums and contract charges as adjusted and described below.
The Allstate Corporation -- 56
Allstate Protection premiums written is equal to the Allstate Protection segment net premiums written adjusted to replace the actual amount of ceded reinsurance premium written for Allstate's voluntary reinsurance programs and dispositions, if any, with the amount included in the target. Voluntary reinsurance programs include all reinsurance placed through the reinsurance market including through reinsurance brokers and investment bankers, and catastrophe treaties, facultative and quota share agreements, catastrophe bonds, and other types of arrangements. Allstate Protection premiums written is reported in management's discussion and analysis in the annual report on Form 10-K.
Allstate Financial premiums and contract charges is equal to life and annuity premiums and contract charges reported in the consolidated statement of operations adjusted to exclude premiums and contract charges related to structured settlement annuities.modifier.
Net Investment Income: This measure is used to assess the financial operating performance provided from investments. It is equal to net investment income as reported in the consolidated statement of operations, adjusted to eliminate the effects of differences between actual monthly average assets under management (actual AUM) and the monthly average assets under management assumed in determining the company's performance measure target for net investment income (target AUM). It also excludes amounts for prepayment feesIn 2013, the AUM adjustment resulted in a decrease to be consistent with the incentive measure target.net investment income measure.
Actual net investment income is adjusted by the amount equal to the amount of net investment income included in the company's performance measure target divided by the target AUM timesbased on the difference between the target and actual amounts of AUM. The netAUM, excluding the difference between target and actual amounts of securities lending assets. Net investment income actual result was decreased becausewill be increased using the target portfolio rate if the actual AUM wasis below the target amounts and decreased using market rates at which new investments were originated during the month if the actual AUM is above the target AUM.amount.
Actual AUM equals the average of the thirteen month end13 month-end total investments, including the beginning and end of the annual period, as reported in the consolidated statement of financial position, adjusted to exclude the unrealized gain (loss) for fixed income, equity, and short term securities and securities lending assets for each month. Total investments is reported quarterly in the consolidated statement of financial position.
Total Premiums: This measure is used to assess growth within the Allstate Protection and Allstate Financial businesses. It is equal to the sum of Allstate Protection premiums written and Allstate Financial premiums and contract charges as adjusted and described below.
Allstate Protection premiums written is equal to the Allstate Protection segment net premiums written. Allstate Protection premiums written is reported in management's discussion and analysis in the annual report on Form 10-K.
Allstate Financial premiums and contract charges is equal to life and annuity premiums and contract charges reported in the consolidated statement of operations adjusted to exclude premiums and contract charges related to structured settlement annuities.
Performance Stock Award Performance Measures for the 2012-2014 cyclePerformance Cycle and the 2013-2015 Performance Cycle
Annual Adjusted Operating Income Return on Equity: This measure is used to assess financial performance. The annual adjusted operating income return on equityIt is calculated as the ratio of annual adjusted operating incomeAdjusted Operating Income for the applicable PSA performance cycle divided by the average of stockholder'sshareholders' equity excluding the effects of unrealized net capital gains and losses at the beginning and at the end of the year. For a description of how Adjusted Operating Income is calculated, see page 58.
Annual adjusted operating incomeAdjusted Operating Income is equal to net income adjusted to exclude the after tax effects of the items listed below.
In addition in computing annual adjusted operating income ROE, catastrophe losses will be adjusted to reflectinclude a minimum or maximum amount of after-tax catastrophe losses if actual after-tax catastrophe losses are less than $1.1 billion or exceed $1.6 billion.those amounts, respectively. In the 2012 measurement period after tax2013, Adjusted Operating Income was adjusted to include a minimum amount of catastrophe losses were $1.5 billion and did not require adjustment. Catastrophe losses are defined andlosses.
Net Income: This measure is used to assess Allstate's financial performance. It is equal to net income available to common shareholders as reported in The Allstate Corporation annual report on Form 10-K.
Net Income: Net income will be calculated as reported in The Allstate Corporation annual report on Form 10-K financial statements.
5759 --| The Allstate Corporation
PROXY STATEMENT | Director Compensation |
Director Compensation Program Generally
The following table describes the components of our non-employee director compensation program for 2013. No meeting fees or other professional fees were paid to the directors.
Director Stock Ownership Guidelines
The Allstate Corporation | 60
The following table summarizes the 2013 compensation offor each of our non-employee directors during 2012 for his or her serviceswho served as a member of the Board and its committees. Messrs. Crawford and Henkel areMr. Mehta is not included because theyhe did not join the Board until 2013.2014.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | Committee Chair Roles Held During 2013 | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Ackerman | 110,000 | 150,006 | 260,006 | Nominating and Governance Committee Chair | 113,846 | 150,026 | 0 | 263,872 | |||||||||||||||||||||||||
Mr. Beyer | 90,000 | 150,006 | 240,006 | Risk and Return Committee Chair, May-December | 105,604 | 150,026 | 0 | 255,630 | |||||||||||||||||||||||||
Mr. Farrell(3) | 110,000 | 150,006 | 260,006 | ||||||||||||||||||||||||||||||
Mr. Crawford | 97,418 | 200,028 | 0 | 297,446 | |||||||||||||||||||||||||||||
Mr. Farrell | Compensation and Succession Committee Chair, January-May | 27,500 | 0 | 5,000 | 32,500 | ||||||||||||||||||||||||||||
Mr. Greenberg | 90,000 | 150,006 | 240,006 | Compensation and Succession Committee Chair, May-December | 105,604 | 150,026 | 0 | 255,630 | |||||||||||||||||||||||||
Mr. Henkel | 90,000 | 187,570 | 0 | 277,570 | |||||||||||||||||||||||||||||
Mr. LeMay | 90,000 | 150,006 | 240,006 | 90,000 | 150,026 | 0 | 240,026 | ||||||||||||||||||||||||||
Ms. Redmond | 90,000 | 150,006 | 240,006 | 90,000 | 150,026 | 0 | 240,026 | ||||||||||||||||||||||||||
Mr. Riley, Jr.(4) | 115,000 | 150,006 | 265,006 | ||||||||||||||||||||||||||||||
Mr. Riley, Jr. | Lead Director | 115,000 | 150,026 | 0 | 265,026 | ||||||||||||||||||||||||||||
Mr. Rowe(5) | 95,687 | 187,507 | 283,194 | ||||||||||||||||||||||||||||||
Mr. Rowe | 90,000 | 150,026 | 0 | 240,026 | |||||||||||||||||||||||||||||
Mr. Smith | 90,000 | 150,006 | 240,006 | 22,500 | 0 | 5,000 | 27,500 | ||||||||||||||||||||||||||
Ms. Sprieser(6) | 115,000 | 150,006 | 265,006 | ||||||||||||||||||||||||||||||
Ms. Sprieser | Audit Committee Chair | 115,000 | 150,026 | 0 | 265,026 | ||||||||||||||||||||||||||||
Mrs. Taylor | 90,000 | 150,006 | 240,006 | 90,000 | 150,026 | 0 | 240,026 | ||||||||||||||||||||||||||
The Allstate Corporation -- 58
On March 1, June 1, September 1, and December 1, 2012, each non-employee director received a $22,500 quarterly cash retainer, and each committee chair received an additional $5,000 quarterly cash retainer, except for the audit committee chair, who received an additional $6,250 quarterly cash retainer. The independent lead director received an additional $6,250 quarterly cash retainer. On June 1, 2012, each non-employee director received an annual award of restricted stock unitscash. Also, under the 2006 Equity Compensation Plan for Non-Employee Directors. The number of restricted stock units granted to each director was equal to $150,000 divided by the fair market value of a share of our stock on June 1, 2012, rounded to the nearest whole share. No meeting fees or other professional fees are paid to the directors. Under Allstate's Deferred Compensation Plan for Non-Employee Directors, directors may elect to defer their retainers to an account that generates earnings based on (a) the market value of, and dividends paid on, Allstate common shares (common share units); (b) the average interest rate payable on 90-day dealer commercial paper; (c) Standard & Poor's 500 Composite Stock Price Index, with dividends reinvested; or (d) a money market fund. No director has voting or investment powers in common share units, which are payable solely in cash. Subject to certain restrictions, amounts deferred under the plan, together with earnings thereon, may be transferred between accounts and are distributed after the director leaves the Board in a lump sum or over a period not in excess of ten years.years in accordance with the director's instructions.
61 | The Allstate Corporation
Outstanding Restricted Stock Units and Stock Options at Fiscal Year-End 2013 | ||||||||
---|---|---|---|---|---|---|---|---|
Name | Restricted Stock Units (#) | Stock Options (#) | ||||||
Mr. Ackerman | 33,371 | 20,000 | ||||||
Mr. Beyer | 29,371 | 10,667 | ||||||
Mr. Crawford | 4,241 | 0 | ||||||
Mr. Farrell | 8,000 | 0 | ||||||
Mr. Greenberg | 33,371 | 16,000 | ||||||
Mr. Henkel | 3,920 | 0 | ||||||
Mr. LeMay | 33,371 | 20,000 | ||||||
Ms. Redmond | 19,713 | 0 | ||||||
Mr. Riley, Jr. | 33,371 | 20,000 | ||||||
Mr. Rowe | 8,862 | 0 | ||||||
Mr. Smith | 8,000 | 16,000 | ||||||
Ms. Sprieser | 33,371 | 16,000 | ||||||
Mrs. Taylor | 33,371 | 20,000 | ||||||
In accordance with
As detailed in ourCorporate Governance Guidelines, the corporation maintains stock ownership guidelines for our non-employee directors. Within five years of joining the Board, each director is expected to accumulate an ownership position in Allstate securities equal to five times the value of the annual cash retainer paid for board service. Every director has met the ownership guideline, except for Messrs. Crawford and Henkel, who joined the Board in 2013 and have until January 30, 2018, and March 1, 2018, respectively, to meet the guideline.
59 -- The Allstate Corporation | 62
Security Ownership | ||||||
PROXY STATEMENT | ||||||
Security Ownership of Directors and Executive Officers
The following table shows the number of shares of Allstate common stock beneficially owned by each director and named executive individually, and by all executive officers and directors of Allstate as a group. Shares reported as beneficially owned include shares held indirectly through the Allstate 401(k) Savings Plan and other shares held indirectly, as well as shares subject to stock options exercisable on or before April 30, 2013,2014, and restricted stock units with restrictions that expire on or before April 30, 2013.2014. The following share amounts are as of March 1, 2013.2014. As of March 1, 2013,2014, none of these shares were pledged as security.
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership of Allstate Common Stock(1) (a) | Common Stock Subject to Options Exercisable and Restricted Stock Units for which restrictions expire on or prior to April 30, 2013 — Included in Column (a) (b) | Amount and Nature of Beneficial Ownership of Allstate Common Stock(1) (a) | Common Stock Subject to Options Exercisable and Restricted Stock Units for which restrictions expire on or prior to April 30, 2014 — Included in Column (a) (b) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
F. Duane Ackerman | 46,296 | 24,000 | 43,346 | 20,000 | |||||||||
Robert D. Beyer | 60,233 | 10,667 | 60,233 | 10,667 | |||||||||
Kermit R. Crawford | 0 | 0 | 0 | 0 | |||||||||
W. James Farrell | 30,546 | 20,000 | |||||||||||
Jack M. Greenberg | 22,500 | 20,000 | 18,500 | 16,000 | |||||||||
Herbert L. Henkel | 0 | 0 | 0 | 0 | |||||||||
Ronald T. LeMay | 30,070 | 24,000 | 26,070 | 20,000 | |||||||||
Siddharth N. Mehta | 0 | 0 | |||||||||||
Andrea Redmond | 4,000 | 0 | 4,000 | 0 | |||||||||
H. John Riley, Jr. | 44,375 | 24,000 | 44,375 | 20,000 | |||||||||
John W. Rowe | 6,025 | 0 | 6,025 | 0 | |||||||||
Joshua I. Smith | 22,666 | 22,666 | |||||||||||
Judith A. Sprieser | 25,244 | 24,000 | 17,244 | 16,000 | |||||||||
Mary Alice Taylor | 46,348 | 24,000 | 42,348 | 20,000 | |||||||||
Thomas J. Wilson | 2,722,905 | 2,375,449 | 3,089,812 | 2,716,725 | |||||||||
Steven E. Shebik | 279,051 | 216,092 | |||||||||||
Don Civgin | 447,980 | 408,130 | 364,628 | 318,238 | |||||||||
Judith P. Greffin | 521,853 | 473,240 | 537,461 | 483,153 | |||||||||
Suren K. Gupta | 160 | 0 | |||||||||||
Steven E. Shebik | 267,388 | 208,424 | |||||||||||
Matthew E. Winter | 223,058 | 203,197 | 235,773 | 192,423 | |||||||||
All directors and executive officers as a group | 5,547,387 | 4,762,073 | 5,773,935 | 4,901,111 | |||||||||
63 | The Allstate Corporation -- 60
Security Ownership of Certain Beneficial Owners
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||
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Common | Northern Trust Corporation 50 S. LaSalle Street Chicago, IL 60603 | 25,943,542 | (1) | 5.38 | % | ||||
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||
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Common | BlackRock, Inc. 40 East 52nd Street New York, NY 10022 | 27,833,429(1) | 6.1% | |||
Common | Northern Trust Corporation 50 S. LaSalle Street Chicago, IL 60603 | 22,750,671(2) | 5.0% | |||
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Allstate's executive officers, directors, and persons who beneficially own more than ten percent10% of Allstate's common stock to file reports of securities ownership and changes in such ownership with the SEC.Securities and Exchange Commission.
Based solely upon a review of copies of such reports, or written representations that all such reports were timely filed, Allstate believes that each of its executive officers, directors, and greater than ten-percent10% beneficial owners complied with all Section 16(a) filing requirements applicable to them during 2012.2013 with the exception of Donald Bailey, former President, Emerging Businesses of Allstate Insurance Company, who failed to report timely on a Form 4 the execution of two cashless exercise transactions in November 2013.
61 -- The Allstate Corporation | 64
We are asking stockholders to approve The Allstate Corporation 2013 Equity Incentive Plan (the Plan), which amends and restates the 2009 Equity Incentive Plan. The Board approved the Plan and recommends approval by stockholders. The Plan is an important part of our pay-for-performance compensation program. The Board considers equity compensation to be a significant component of total compensation for Allstate's officers and other employees.
To approve the Plan, a majority of shares present in person or represented by proxy at the meeting and entitled to vote on the proposal must be voted "FOR," provided that the total number of votes cast on the proposal represents over 50% of the total outstanding shares. Abstentions will be counted as shares present at the meeting and as votes cast on the proposal and will have the effect of a vote against the proposal. Broker non-votes will not be counted as shares entitled to vote on the matter or as votes cast on the proposal, but will be counted in the number of outstanding shares. So, failure to instruct your brokerage firm how to vote shares held in a brokerage account could impair our ability to get the Plan approved. If stockholders do not approve Proposal 3, the amendment and restatement of the 2009 Equity Incentive Plan as the 2013 Equity Incentive Plan will not become effective, but the 2009 Equity Incentive Plan will continue to remain in effect.
The Board recommends that stockholders vote FOR the approval of the Plan.
Additional Shares to be Authorized Under the Plan
As described above, equity compensation is a significant component of the total compensation of our officers and other employees. The Plan supports this overall compensation strategy by providing a means for granting equity awards to attract and retain talent. The material change to the Plan approved by the Committee and the Board is an increase in the number of shares of common stock authorized under the Plan from 70,380,000 shares to 90,230,000 shares. This amounts to a proposed increase of 19,850,000 shares. In addition, the Plan includes 6,815,597 unused shares that were available for awards under a previously terminated plan, The Allstate Corporation Equity Incentive Plan.
The Allstate Corporation -- 62
Factors Considered
In setting the number of proposed additional shares issuable under the Plan, the Committee and the Board considered a number of factors. These factors, each of which is discussed in greater detail below, included:
Shares Currently Available under the Plan. As of March 1, 2013, we had 466,636,067 shares of common stock issued and outstanding (not including treasury shares) and 11,094,713 shares of common stock were available for future awards under the Plan, assuming performance stock awards at target (9,522,014 with such awards at maximum). The Committee and the Board considered that the shares currently available under the Plan may not be sufficient to cover future equity awards in the near term if material fluctuations in our stock price or material changes from historical granting practices occur. As of March 1, 2013, the proposed 19,850,000 additional shares would represent approximately 4.3% of the then-issued and outstanding shares of common stock, and, assuming the approval by stockholders of this Proposal 3, the aggregate of approximately 30,944,713 shares available under the Plan would represent approximately 6.6% of the then-issued and outstanding shares of common stock. The proposed additional shares, together with shares currently available under the Plan are expected to be sufficient, based on historical granting practices and the recent trading price of the common stock, to cover awards for approximately four to five years.
Historical Equity Award Granting Practices. In setting and recommending to stockholders the increase in the number of shares authorized under the Plan, the Committee and the Board also considered the historical number of equity awards granted under the Plan in the past two years. In 2011 and 2012, we used 6,942,708 and 8,183,435, respectively, of the shares authorized under the Plan to grant equity awards. Further, the Committee and the Board considered our three-year average burn rate of 1.46%, which is lower than the industry thresholds established by certain major proxy advisory firms.
Burn Rate | ||||
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2012 | 1.64% | |||
2011 | 1.46% | |||
2010 | 1.27% | |||
Three-year average | 1.46% | |||
Impact of Total Outstanding Equity Awards under the Plan. The Committee and the Board also considered the total number of equity awards outstanding under the Plan. Since the inception of the Plan in 2001, stockholders have approved the issuance of up to 70,380,000 shares, in addition to 6,815,597 unused shares that were available for awards under a previously terminated plan. The table below lists the total shares authorized under the Plan as of March 1, 2013.
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Authorized but unissued shares or treasury shares may be used to provide common stock for awards. On March 1, 2013, the closing price of our common stock as reported
63 -- The Allstate Corporation
on the New York Stock Exchange Composite Tape was $46.35.
Expected Value Transfer and Dilution. In addition, the Committee and the Board considered the shareholder value transfer and dilution policies of certain institutional investors and major proxy advisory firms. They also considered the fact that the additional 19,850,000 shares proposed to be authorized under the Plan are expected to result in basic dilution of less than 15%. Basic dilution is calculated as shown below.
Compliance with Internal Revenue Code section 162(m). Performance-based awards granted under the Plan are intended to be eligible to qualify as "performance-based compensation" that would be fully deductible under Internal Revenue Code section 162(m). The Committee and the Board further considered that stockholders last approved the Plan in 2009 and that, in order for awards issuable under the Plan to be eligible to qualify as "performance-based compensation" (and therefore qualify for exemption from the tax deduction limitations under Internal Revenue Code section 162(m)), the performance goals and other material terms of the Plan must be approved by stockholders at least every five years.
In addition to satisfying New York Stock Exchange requirements and requirements under the Internal Revenue Code relating to incentive stock options, stockholder approval of the Plan will also constitute reapproval of the performance goals and other material terms of the Plan in order to be eligible to qualify as "performance-based" compensation for purposes of Internal Revenue Code section 162(m), as described below.
Summary of 2013 Equity Incentive Plan
The following is a summary of the material features of the Plan. This summary is qualified in its entirety by reference to Appendix B, which contains the complete text of the Plan.
The Plan provides that the compensation and succession committee or another committee appointed by the Board consisting solely of two or more non-employee members of the Board will administer the Plan. Because the Committee is currently performing administration duties, throughout the following discussion we refer to the administrator as the Committee. The Committee has full and final authority under the Plan to determine eligibility and types and terms of awards and to interpret and administer the Plan. In 2008 the Board delegated to the equity award committee, consisting of the person who at any time holds the office of CEO provided such person is an Allstate director, the authority to grant restricted stock units and nonqualified stock options to eligible employees who are not subject to Section 16 of the Securities Exchange Act of 1934, in certain new hire situations, in connection with promotions, and to recognize key contributions that occur between regularly scheduled Committee meetings.
Prohibition on Repricing and Buy-Outs of Options and Stock Appreciation Rights
Without stockholder approval, the Committee may not amend outstanding options or stock appreciation rights to reduce the exercise price or base value of the award or cancel options or stock appreciation rights in exchange for either cash or other securities or other awards or options or stock appreciation rights with an exercise price or base value that is less than the exercise price or base value of the original options or stock appreciation rights, except in connection with a change of control or a corporate transaction involving Allstate, including, for example, a stock dividend, stock split, spin off, rights offering, recapitalization through a large, nonrecurring cash dividend, or other transaction or event described in the Plan's award adjustment provisions,
Awards may be made to any of our employees or employees of any of our subsidiaries, approximately 38,500 people, who are on the payroll system of Allstate or any of its subsidiaries and who are not covered by a collective bargaining agreement. In determining which employees will receive awards, the Committee will consider such factors as it deems relevant in order to promote the purposes of the Plan. In 2013, we anticipate
The Allstate Corporation -- 64
that approximately 800 employees will receive awards under the Plan.
Awards may be in the form of stock options, stock appreciation rights, unrestricted stock, restricted stock, restricted stock units, performance units, performance stock, and other awards including the payment of stock in lieu of cash under our other incentive or bonus programs or otherwise and payment of cash based on attainment of performance goals. Share-based awards relate to shares of our common stock. To date, only nonqualified stock options, restricted stock, restricted stock units, and performance stock have been granted under the Plan.
Stock Options
The Plan permits the Committee to grant nonqualified options and incentive stock options. To date, only nonqualified options have been granted under the Plan. Subject to the limits in the Plan, the Committee has discretion to determine the number of options to be awarded and the terms and conditions of the awards. Each award is evidenced by an agreement that specifies the number of shares subject to the award, the exercise price, the option term and exercise periods, the vesting schedule, and other terms the Committee may deem appropriate such as provisions relating to a change of control and vesting and forfeiture upon a participant's termination of employment. No dividend equivalents may be provided with respect to options.
The option exercise price may not be less than the fair market value of a share of our common stock on the grant date, and the option term may not exceed ten years. Options may be exercised by delivery of a notice of intent to purchase a specific number of shares. Payment may be made in cash or its equivalent, by tendering previously acquired shares of common stock, by share withholding, by means of a broker-assisted cashless exercise, or any combination of the foregoing.
Options may not be granted with a reload feature, which entitles the option holder to receive additional options when exercising options by tendering shares. The Committee may not reprice any options without stockholder approval, including the cancellation of options in exchange for options with a lower exercise price or for cash or other securities (other than in connection with certain corporate transactions involving Allstate or a change in control).
Stock Appreciation Rights
The Plan permits the Committee to grant stock appreciation rights. To date, no stock appreciation rights have been granted under the Plan. Subject to the limits in the Plan, the Committee has discretion to determine the number of stock appreciation rights to be awarded and the terms and conditions of the awards. Each award is evidenced by an agreement that specifies the number of shares subject to the award, the base value of the award, the award's term and exercise periods, the vesting schedule, and other terms the Committee may deem appropriate such as provisions relating to a change of control and vesting and forfeiture upon a participant's termination of employment. A stock appreciation right's base value may not be less than the fair market value of a share of our common stock on the grant date, and a stock appreciation right's term may not exceed ten years. No dividend equivalents may be provided with respect to stock appreciation rights.
Stock appreciation rights may be granted alone or in tandem with options or in any combination of these forms. Upon exercise of a stock appreciation right, an employee will receive payment in an amount equal to the product of the excess of the fair market value of a share of our common stock on the date of exercise over the base value multiplied by the number of shares with respect to which the stock appreciation right is exercised. The Committee may not reduce the base value of a stock appreciation right without stockholder approval, including canceling a stock appreciation right in exchange for an award with a lower base value or for cash or other securities (other than in connection with certain corporate transactions involving Allstate or a change in control).
Unrestricted Stock, Restricted Stock, and Restricted Stock Units
The Committee may also award restricted and unrestricted shares of our common stock and restricted stock units. Subject to the limits in the Plan, the Committee has discretion to determine the number of shares or units to be awarded and the terms and conditions of the awards. The right to vest or receive distributions or payments with respect to restricted stock and restricted stock unit awards may be conditioned upon attainment of performance goals or continued service. Each award is evidenced by an agreement that specifies the number of shares or units being awarded, any restrictions or vesting conditions, any applicable performance goals, and other terms the Committee may deem appropriate such as provisions relating to a change of control and a participant's termination of employment.
65 -- The Allstate Corporation
Restricted stock units may be settled in shares of our common stock or cash of equal value, or a combination of stock and cash.
During the restricted period, restricted stock and restricted stock units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated. Employees holding restricted stock may exercise full voting rights with respect to those shares during the restriction period and, subject to the Committee's right to determine otherwise at the time of grant, will receive regular cash dividends during the restricted period. The Committee may include dividend equivalent rights on awards of restricted stock units. With respect to any restricted stock or restricted stock unit awards with performance-based vesting, any dividends or dividend equivalent rights based on the performance-based vesting of such awards are only paid to the participant upon satisfaction of the performance-based vesting conditions.
Performance Units and Performance Stock
The Committee may also award performance units and performance stock awards. Subject to the limits in the Plan, the Committee has discretion to determine the number of performance units and performance stock awards to be awarded and the terms and conditions of the awards, including the applicable performance period and specific performance goals. The value of performance stock is based on the fair market value of a share of our common stock. The value of a performance unit is determined in the discretion of the Committee at the time of grant. The extent to which the performance goals are met during the performance periods established by the Committee will determine the number and/or value of performance units or performance stock that will be paid to employees. Payment of the value of earned performance units or performance stock after the end of the performance period will be made in cash or stock having an aggregate fair market value equal to the value of the performance units or performance stock at the end of the performance period, or a combination of stock and cash. The awards may be granted subject to such other restrictions and terms as the Committee determines. Each award is evidenced by an agreement that specifies the number of shares or units being awarded, any restrictions or vesting conditions, the performance goals, and any other terms the Committee may deem appropriate such as provisions relating to a change of control and dividend equivalent rights. To date, no performance units have been granted under the Plan. Any dividends or dividend equivalent rights under such awards are paid to the participant only if the applicable performance goals are achieved.
Other Awards
The Committee may grant other awards which may include the payment of stock in lieu of cash, including cash payable under our other incentive or bonus programs, and the payment of cash based on attainment of performance goals established by the Committee. None of these other awards have been granted to date under the Plan.
Section 162(m); Performance Goals
Internal Revenue Code section 162(m) generally limits income tax deductions of publicly-traded companies to the extent total compensation (including base salary, annual bonus, stock option exercises) for certain executive officers exceeds $1 million in any one taxable year. Under Section 162(m), the deduction limit does not apply to certain "performance-based" compensation which conforms to certain restrictive conditions stated under the Code and related regulations. The Plan has been structured with the intent that awards granted under the Plan may meet the requirements for "performance-based" compensation and Section 162(m). Options and stock appreciation rights granted under the Plan are intended to qualify as "performance-based" under Section 162(m) so long as they are granted at an exercise price not less than the value of our common stock on the grant date. Other awards under the Plan may qualify as "performance-based" under Section 162(m) if they vest or become payable only upon attainment of pre-established performance goals.
Certain awards under the Plan may be based on achievement of performance goals. These goals are established by the Committee and will be based on one or more of the following measures: sales, revenues, premiums, financial product sales, earnings per share, stockholder return and/or value, funds from operations, operating income, gross income, net income, combined ratio, underwriting income, cash flow, return on equity, return on capital, return on assets, values of assets, market share, net earnings, earnings before interest, operating ratios, stock price, customer satisfaction, customer retention, customer loyalty, strategic business criteria based on meeting specified revenue goals, market penetration goals, investment performance goals, business expansion goals or cost targets, accomplishment of mergers, acquisitions, dispositions, or similar extraordinary business transactions, profit returns and margins, financial return ratios, market performance, and/or risk-based
The Allstate Corporation -- 66
capital goals or returns. Performance goals may be measured solely on a corporate, subsidiary, business unit, or other grouping basis, or a combination thereof. Performance goals may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure.
The Committee may, in its sole discretion, permit a participant to defer the receipt of the payment of cash or the delivery of stock that would otherwise be due to such participant under the Plan. If any such deferral election is permitted, the Committee will establish rules and procedures for the deferrals.
Equity Incentive Plans of Foreign Subsidiaries
The Committee may authorize any foreign subsidiary to adopt a plan for granting awards, and awards granted under such foreign plans may be treated as awards under the Plan, if the Committee so determines. In such case, such foreign plans will have such terms and provisions as the Committee permits not inconsistent with the provisions of the Plan and which may be more restrictive than those contained in the Plan. Awards granted under such foreign plans are governed by the terms of the Plan except to the extent the provisions of the foreign plans are more restrictive than the terms of the Plan, in which case such terms of the foreign plans control.
Each share issued pursuant to an option or stock appreciation right (and, if granted before May 19, 2009, any other form of award) will reduce the number of shares available under the Plan by one share, and each share issued pursuant to awards granted on or after May 19, 2009, other than options and stock appreciation rights, will reduce the number of shares available by 2.1 shares. Shares of stock underlying awards that are lapsed or forfeited restricted stock awards, that are expired or canceled, that are settled in cash, or that are otherwise settled without delivery of shares of stock will not be treated as having been issued under the Plan. Shares which are used to pay the exercise price for an option or base value for a stock appreciation right and shares withheld to pay taxes will be treated as having been issued under the Plan. With respect to stock-settled stock appreciation rights, the full number of shares underlying the exercised portion of the stock appreciation right will be treated as having been issued under the Plan (regardless of the number of shares actually used to settle the stock appreciation right upon exercise).
No more than 5,500,000 shares may be issued pursuant to incentive stock options. So that awards will qualify as "performance-based compensation" under Internal Revenue Code section 162(m), the Plan also contains the following per-participant limitations on awards granted under the Plan:
An employee may irrevocably elect to have shares withheld with a fair market value in an amount required to satisfy the minimum federal, state, and local tax withholding requirements upon the exercise of an option or stock appreciation right, the vesting of a restricted stock or restricted stock unit award, or any other taxable event in respect to an award granted under the Plan.
67 -- The Allstate Corporation
In general, awards are not assignable or transferable other than by will or the laws of descent and distribution. Vested portions of nonqualified options may be transferred to certain family members or to a trust, foundation, or any other entity meeting certain ownership requirements. However, in no event may a transfer be made for consideration.
Unless otherwise provided by the Committee or in an award agreement, if a participant has a termination of employment, all awards will terminate and be forfeited on the date of such termination of employment. Typically, the Committee has prescribed that, subject to exceptions for death, disability, and retirement, an employee will forfeit all unexercised vested options three months after termination of employment (unless the Committee determines otherwise), and all other unvested awards will terminate and be forfeited on the date of an employee's termination of employment or failure to achieve specific performance goals.
In the event of a restatement of our financial results to correct a material error or inaccuracy resulting in whole or in part from the fraud or intentional misconduct of an officer who is subject to Section 16 of the Securities Exchange Act of 1934, to the extent permitted by applicable law, we may take such actions as we determine to be appropriate to recover compensation provided to such officer under the Plan, including without limitation cancellation of outstanding awards or recovery of all or a portion of any gain realized upon vesting, settlement, or exercise of an award or recovery of all or a portion of any proceeds resulting from any disposition of shares received pursuant to an award.
The Plan also contains nonsolicitation covenants that apply to all participants while they are employed and for the one-year period following termination of employment. Noncompetition covenants apply to participants who received awards between February 21, 2012, and May 20, 2013, for the two year period following termination of employment and apply to participants who received awards after May 20, 2013 for the one year period following termination of employment. If a participant violates any of these restrictive covenants, as determined by our Board or a committee of our Board, to the extent permitted by applicable law we may take such actions as we determine to be appropriate to recover compensation provided to the participant under the Plan, including without limitation cancellation of outstanding awards or, upon a violation of the noncompetition covenants, recovery of all or a portion of any gain realized upon vesting, settlement, or exercise of an award or recovery of all or a portion of any proceeds resulting from any disposition of shares received pursuant to an award if the vesting, settlement, or exercise of the award or the receipt of the sale proceeds occurred during the 12-month period prior to the violation.
Adjustments for Certain Events
The Committee will make proportional adjustments to the maximum number of shares of common stock that may be delivered under the Plan and to outstanding awards to reflect stock dividends, stock splits, spin-offs, rights offerings, recapitalizations, mergers, consolidations, reorganizations, liquidations, or similar events. The Committee may provide in awards for accelerated vesting and other rights in the event of a change of control.
Amendment, Modification, and Termination of the Plan
The Board may amend, alter, suspend, or terminate the Plan at any time and in any respect, provided that no amendment will (1) increase the total number of shares of common stock that can be issued under the Plan, (2) materially modify the requirements for participation in the Plan, or (3) materially increase the benefits accruing to employees under the Plan, unless in each instance the amendment is approved by our stockholders. No amendment, modification, or termination of the Plan may materially affect in an adverse way any award then outstanding under the Plan, without an employee's written consent, unless otherwise provided in the Plan or required by applicable law.
The Plan will remain in effect until the shares are exhausted or until such earlier time as the Board may determine.
Federal Income Tax Consequences
The following is a general summary of the United States federal income tax consequences related to awards that have been or may be granted under the Plan. The federal tax laws may change, and the federal, state, and local tax consequences for any employee will depend upon his or her individual circumstances. This summary does not address all potential tax consequences related to awards,
The Allstate Corporation -- 68
such as estate and gift taxes, foreign taxes, and state and local taxes.
Nonqualified Stock Options
Generally an employee will not have any taxable income, and we are not entitled to any deduction on the grant of a nonqualified stock option. Upon the exercise of a nonqualified stock option (or, generally, upon the exercise of an incentive stock option followed by a disqualifying disposition, described below), the employee recognizes ordinary income equal to the excess of the fair market value of the shares acquired over the option exercise price, if any, on the date of exercise. We are generally entitled to a deduction equal to the compensation taxable to the employee as ordinary income, except to the extent such deduction is limited by applicable provisions of the Internal Revenue Code. Any such income is also considered wages and, as such, is subject to income, Social Security, and Medicare taxes. If an employee disposes of shares of our common stock acquired upon exercise of a nonqualified stock option in a taxable transaction, the employee will recognize capital gain or loss in an amount equal to the difference between the employee's basis in the shares sold and the total amount realized upon disposition.
Incentive Stock Options
Generally an employee does not recognize taxable income on the grant or exercise of an incentive stock option, and no federal income, Social Security, or Medicare taxes will be withheld upon such grant or exercise. However, the excess of the fair market value on the exercise date over the option exercise price is included in alternative minimum taxable income and thus may trigger alternative minimum tax.
Upon the disposition of shares of common stock acquired on exercise of an incentive stock option more than one year after the exercise date, and more than two years after the grant date, the employee will normally recognize a capital gain or loss, as the case may be. This gain or loss is measured by the difference between the common stock's sale price and the exercise price. We will not be entitled to a tax deduction on the grant or exercise of an incentive stock option or on the disposition of common stock acquired upon the exercise of an incentive stock option.
If, however, an employee disposes of the shares of common stock acquired upon the exercise of an incentive stock option either before the one year period after exercise, or before the two year period after the grant date, the difference between the exercise price of such shares and the lesser of (i) the fair market value of the shares on the date of exercise or (ii) the sale price will constitute compensation taxable to the employee as ordinary income. We are generally allowed a corresponding tax deduction equal to the amount of the compensation taxable to the employee. If the sale price of common stock exceeds the fair market value on the exercise date, the excess will be taxable to the employee as capital gain. We are not allowed a deduction with respect to any such capital gain recognized by the employee.
Use of Common Stock to Pay Option Exercise Price of Nonqualified Option
If an employee delivers previously acquired common stock in payment of all or part of the option exercise price of a nonqualified stock option, there will be no recognition of taxable income or loss of any appreciation or depreciation in value of the tendered common stock. The employee's tax basis in, and capital gain holding period for, the tendered stock carries over to an equal number of the option shares received. The fair market value of the shares received in excess of the tendered shares constitutes compensation taxable to the employee as ordinary income. We may be entitled to a tax deduction equal to the compensation income recognized by the employee.
Use of Common Stock to Pay Option Exercise Price of Incentive Stock Option
If an employee delivers previously acquired common stock in payment of all or part of the incentive stock option exercise price (other than stock acquired on exercise and not held for the required holding periods), the employee will not recognize as taxable income or loss any appreciation or depreciation in the value of the tendered stock after its acquisition date. The employee's tax basis in, and capital gain holding period for, the tendered stock carries over to an equal number of the option shares received. Shares received in excess of the tendered shares have a tax basis equal to the amount paid, if any, in excess of the tendered shares, and such shares' holding period will begin on the date of exercise.
If an employee delivers previously acquired common stock that was acquired upon the exercise of an incentive stock option that was not held for the required holding periods, ordinary income will be recognized by the employee, and we will generally be entitled to a corresponding compensation deduction. The employee's basis in the shares received in exchange for the tendered shares will
69 -- The Allstate Corporation
be increased by the amount of ordinary income recognized.
Stock Appreciation Rights
An employee will not have any taxable income on the grant of stock appreciation rights. Upon the exercise of stock appreciation rights, the employee recognizes ordinary income equal to the fair market value of the shares and cash received. We will be entitled to a corresponding compensation deduction. Any such ordinary income is also considered wages and, as such, is subject to income, Social Security, and Medicare taxes. If stock appreciation rights are settled in shares of our common stock, then upon a subsequent disposition of such shares the employee will recognize capital gain or loss in an amount equal to the difference between the employee's basis in the shares sold and the total amount realized upon disposition.
Unrestricted Stock and Restricted Stock Awards
Generally, an employee will not have any taxable income on the grant of restricted stock, and we will not be entitled to a deduction at the time of grant. When shares of restricted stock are no longer subject to a substantial risk of forfeiture, the employee will recognize ordinary income in an amount equal to the fair market value of the shares, less the amount paid, if any, for the shares. Alternatively, an employee may elect to be taxed at the time of grant, in which case the employee will recognize ordinary income on the grant date equal to the fair market value of the shares on the grant date. In either case, we will generally be entitled to a deduction in an amount equal to the ordinary income recognized by the employee. Unless the employee elects to be taxed on the grant date of restricted stock, any dividends paid on restricted stock are taxed as ordinary income (rather than dividend income) to the employee and are deductible by us. If an employee elects to be taxed on the grant date of restricted stock, any dividends paid on the restricted stock will be taxed as dividend income, rather than ordinary income. With respect to unrestricted stock, an employee will recognize ordinary income at the time of grant in an amount equal to the fair market value of the stock on that date, and we will generally be entitled to a deduction in the same amount. Compensation with respect to restricted stock and unrestricted stock is subject to income, Social Security, and Medicare taxes. Upon the disposition of any shares acquired pursuant to an unrestricted stock or restricted stock award, any gain or loss, based on the difference between the employee's basis in the shares sold and the total amount realized upon disposition, will be taxed as capital gain or loss.
Restricted Stock Units, Performance Units, and Performance Stock Awards
An employee will not have any taxable income on the grant of restricted stock units, performance units, or performance stock. Upon the delivery of shares or payment of cash with respect to restricted stock units, performance units, or performance stock, the employee generally will be required to include as ordinary income in the year of receipt an amount equal to the cash received and/or the fair market value of shares of stock received, and we will be entitled to a deduction in an amount equal to the same amount. Compensation with respect to restricted stock units, performance units, and performance stock is subject to income, Social Security, and Medicare taxes. If shares of our common stock are received in settlement of any restricted stock units, performance units, or performance stock award, then upon a subsequent disposition of such shares the employee will recognize capital gain or loss in an amount equal to the difference between the employee's basis in the shares sold and the total amount realized upon disposition.
Internal Revenue Code Section 409A
Certain awards under the Plan, depending in part on the specific terms and conditions of such awards, may be considered "non-qualified deferred compensation" subject to the requirements of Internal Revenue Code section 409A, which regulates deferred compensation arrangements. If the terms of such awards do not meet the requirements of Internal Revenue Code section 409A, then the violation may result in an additional 20% tax obligation, plus penalties and interest for such participant.
New Plan Benefits Resulting From Approval of Plan
It is not possible at this time to determine the benefits or amounts of awards that will be made in the future as a result of the increased number of shares of common stock authorized and the other revised provisions of the Plan.
Options Granted Under the Existing Plan
Since the initial approval of the Plan in 2001 through March 1, 2013, the following number of stock options have been granted to the individuals and groups described in the table. No other options have been granted to any other individuals or groups under the Plan.
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The entire text of the Plan is set forth in Appendix B.
The Board recommends that stockholders vote FOR the approval of The Allstate Corporation 2013 Equity Incentive Plan.
71 -- The Allstate Corporation
Securities Authorized for Issuance Under Equity Compensation Plans | PROXY STATEMENT | |||||
The following table provides certain information as of December 31, 2012,2013, about our existing equity compensation plans:
Securities Authorized for Issuance Under Equity Compensation Plans | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a) | Weighted-average exercise price of outstanding options, warrants, and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||
Equity compensation plans approved by security holders(1) | 34,532,061 | (2) | $ | 39.81 | 16,242,524 | (3) | ||||
Total | 34,532,061 | (2) | $ | 39.81 | 16,242,524 | (3) | ||||
Securities Authorized for Issuance Under Equity Compensation Plans | ||||||
---|---|---|---|---|---|---|
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a) | Weighted-average exercise price of outstanding options, warrants, and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||
Equity compensation plans approved by security holders(1) | 28,243,743(2) | $40.60 | 32,297,872(3) | |||
Total | 28,243,743(2) | $40.60 | 32,297,872(3) | |||
65 | The Allstate Corporation -- 72
PROXY STATEMENT | ||||||
Proposal 3 — Approve Incentive Plan |
Approval of the Material Terms of the Annual Executive Incentive Plan | ||||
The Board recommends that stockholders vote for the approval of the material terms of the Plan. | • Well-structured market-based program. • Administered by an independent committee. • Designed to preserve financial benefits of section 162(m) deduction. | |||
We are asking stockholders to approve the material terms of The Allstate Corporation Annual Executive Incentive Plan (the Plan). The Board approved the Plan and recommends approval by stockholders. The Plan is an important part of our pay-for-performance compensation program. The Board considers annual cash incentive awards to be a significant component of total compensation for Allstate's executives.
To approve the Plan, a majority of shares present in person or represented by proxy at the meeting and entitled to vote on the proposal must be voted "FOR." Abstentions will be counted as shares present at the meeting and will have the effect of a vote against the proposal. Broker non-votes will not be counted as shares entitled to vote on the matter and will have no impact on the vote's outcome.
If stockholders do not approve the material terms of the Plan, beginning with the 2015 performance year, cash incentive awards in excess of $1 million may not qualify for a tax deduction, and the Committee may consider alternatives for preserving the tax-deductibility of the cash incentive awards.
ü | Administered by an independent committee.The Plan is administered by the Committee, which is made up entirely of independent directors. | |
ü | Limit on awards.The maximum annual award intended to qualify as performance-based compensation for any participant is $10 million. | |
ü | Clawback in the event of restatement.Awards to officers made after December 31, 2008 are subject to clawback in the event of certain financial restatements. | |
ü | Intended to preserve financial benefits of section 162(m) tax deduction.The Plan is intended to meet the requirements of section 162(m) of the Internal Revenue Code and preserve the financial benefits of the tax deduction under that section. |
Summary of Annual Executive Incentive Plan
The following is a summary of the material terms of the Plan. This summary is qualified in its entirety by reference to Appendix B, which contains the complete text of the Plan.
The Plan is important to our ability to attract and retain highly qualified employees. It also allows us to link compensation to the company's annual financial goals and provide participating employees with cash incentive compensation designed to promote the success of our organization. The Plan is intended to permit the granting of awards that will constitute tax-deductible, "performance-based compensation" under the Internal Revenue Code.
The Plan provides that the Committee or another committee appointed by the Board will administer the Plan. Because the Committee currently performs administration duties, throughout the following discussion we refer to the administrator as the Committee. In accordance with the Plan, the Committee has authority to make all determinations it considers necessary or advisable for the administration of the Plan, including the following:
All decisions of the Committee and its actions with respect to the Plan are binding and conclusive.
Prior to the payment of any award, the Committee will certify in writing that the performance goals and any other material terms were satisfied.
We anticipate that the Committee will select approximately 10-20 officers of Allstate Insurance Company or its affiliates to receive awards on an annual basis. However, all of our employees and employees of our subsidiaries, approximately 39,400
The Allstate Corporation | 66
people, are eligible to be selected to receive awards under the Plan.
Awards under the Plan that are intended to qualify as tax-deductible performance-based compensation will be contingent upon the achievement of objective performance goals, which may be expressed as an incentive pool or as separate formulas or standards. The performance goals will be established in writing within 90 days after the beginning of each fiscal year (or, if the service period relating to the award is less than a full year, within the first 25% of such service period) and while the outcome of the performance goals is substantially uncertain.
The measures of performance for these awards must include one or more of the following: sales; revenues; premiums; financial product sales; earnings per share; stockholder return or value; funds from operations; operating income; gross income; net income; combined ratio; underwriting income; cash flow; return on equity; return on capital; return on assets; values of assets; market share; net earnings; earnings before interest; operating ratios; stock price; customer satisfaction; customer retention; customer loyalty; strategic business criteria based on meeting specified revenue goals, market penetration goals, investment performance goals, business expansion goals or cost targets; accomplishment of mergers, acquisitions, dispositions or similar extraordinary business transactions; profit returns and margins; financial return ratios; market performance; or risk-based capital goals or returns.
The performance goals may be measured solely on a corporate, subsidiary, business unit, or other grouping basis, or on a combination of these. Performance goals may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure. The Committee may condition payment of the amounts that would otherwise be payable due to satisfaction of the preestablished performance goals upon satisfaction of additional objective or subjective goals or standards that it determines to be appropriate. However, it may not increase the amount otherwise payable upon satisfaction of preestablished performance goals. The Committee also may reduce the amount of any award that would otherwise be payable, including a reduction to zero.
Under the Plan, the maximum annual award intended to qualify as tax-deductible, performance-based compensation for any participant is $10 million. This amount is consistent with the $10 million maximum annual cash award for any participant under the 2013 Equity Incentive Plan approved by stockholders in 2013.
Under the Annual Executive Incentive Plan that was approved by stockholders in 2009, the maximum annual award intended to qualify as tax-deductible performance-based compensation for any participant is $8.5 million.
In the event of a restatement of our financial results to correct a material error or inaccuracy resulting in whole or in part from fraud or intentional misconduct of an officer who is subject to Section 16 of the Securities Exchange Act of 1934, we will review all of the officer's awards paid under the Plan on the basis of having met or exceeded performance measures for fiscal years beginning after December 31, 2008, to the extent the awards relate to the periods for which the financial statements are restated. If a lesser award would have been paid to the officer based upon the restated financial results, we may, to the extent permitted by applicable law, recover the amount by which the officer's award for the restated period exceeded such lesser award, plus a reasonable rate of interest. To the extent permitted by applicable law, we also may take additional actions deemed by our Board or the Committee to be appropriate, including, without limitation, cancellation of the officer's outstanding award opportunities and recovery of additional amounts relating to prior awards paid to the officer under the Plan.
Tax-Deductible Performance-Based Compensation
Awards under the Plan that are not intended to qualify as tax-deductible performance-based compensation may be based on terms and conditions established by the Committee. Such awards may, but need not, be expressed as an incentive pool and may be based upon attainment of the performance measures listed above or other measures or goals the Committee may select. The Committee may condition payment of such awards upon the satisfaction of objective or subjective standards that it determines to be appropriate and may increase or reduce the amount of the award that would otherwise be payable, including a reduction to zero.
Internal Revenue Code section 162(m) generally limits income tax deductions of publicly traded companies to the extent total compensation (including base salary, annual bonus, stock option exercises) for certain executive officers exceeds $1 million in any one taxable year. The deduction limit does not apply to
67 | The Allstate Corporation
certain performance-based compensation which conforms to conditions stated under the Internal Revenue Code and related regulations. Performance-based awards granted under the Plan that are intended to be eligible to qualify as performance-based compensation may be fully deductible under Internal Revenue Code section 162(m). In order for awards under the Plan to qualify as performance based compensation (and therefore qualify for exemption from the tax deduction limitations under Internal Revenue Code section 162(m)), the material terms of the Plan must be approved by stockholders at least every five years, in addition to satisfaction of other conditions under Internal Revenue Code section 162(m). Stockholders last approved the Plan in 2009.
All awards will be paid in cash in the year following the year of performance. The Committee may elect, without participant consent, to defer the payment of all or part of one or more awards, provided it establishes the terms of such deferred payment in a manner that does not cause an amount to be subject to taxation under Section 409A of the Internal Revenue Code. Participants also may be permitted to defer payment of all or part of the awards. Any deferred awards would be paid in accordance with the terms of the applicable deferred compensation arrangement.
The Plan also contains nonsolicitation covenants that apply to all participants while they are employed and for one year after termination of employment. If a participant violates any of the nonsolicitation provisions, to the extent permitted by applicable law, we may cancel the participant's outstanding award opportunities and recover prior awards paid under the Plan within the one-year period before the participant first violated the nonsolicitation provisions.
Because the determination of whether to make awards, the selection of Plan participants, and the selection of performance measures and other material terms applicable to awards take place each year in the Committee's discretion, it is not possible at this time to determine the benefits or amounts that will be paid under the Plan in the future.
Amendment and Termination of the Plan
The Board may, at any time and from time to time, suspend, terminate, modify, or amend the Plan. However, the Board will not make any amendment without stockholder approval if this approval is required to maintain the qualification of awards as performance-based compensation pursuant to Section 162(m).
The entire text of the Plan is set forth in Appendix B.
The Allstate Corporation | 68
Proposal 4 — Ratification of Auditors | PROXY STATEMENT |
Ratification of the Appointment of Independent Registered Public Accountant | ||||
The Board of Directors recommends that stockholders vote for ratification of the appointment of Deloitte & Touche LLP as Allstate's independent registered public accountant for 2014. | • Independent with few ancilliary services. • Reasonable fee. |
Deloitte & Touche has been Allstate's independent registered public accountant since Allstate became a publicly traded entity in 1993. In fulfillment of the audit committee's obligations to assist the Board in its oversight of the integrity of Allstate's financial statements and other financial information, the audit committee has established strong practices to evaluate the qualifications, performance, and independence of the independent registered public accountant both on an ongoing basis throughout the year, and through the completion of an annual evaluation.
As a starting point for the annual evaluation, a survey is administered by a Deloitte & Touche partner who is not affiliated with the Allstate account and by our chief risk executive to assess Allstate's general satisfaction with the quality and efficiency of the services provided. The results of this survey are reported by the chief risk executive to the audit committee for its discussion and analysis.
In addition, the audit committee reviews and discusses the results of the firm's reports on its quality controls and external assessments, including results of inspections conducted by the Public Company Accounting Oversight Board.
Rotation of the independent registered public accounting firm is explicitly considered each year by the committee in addition to the regular mandated rotation of audit partners.
Based on the results of these reviews, the audit committee has appointed Deloitte & Touche LLP as Allstate's independent registered public accountant for 2013. The Board submits the selection of Deloitte & Touche LLP to stockholders for ratification, consistent with its longstanding practice. If Deloitte & Touche is not ratified by the stockholders, the committee may reconsider its selection. Deloitte & Touche LLP has been Allstate's independent registered public accountant continuously since 1993.2014.
The audit committee has adopted aPolicy Regarding Pre-Approval of Independent Registered Public Accountant's Services. (See Appendix C.) All services provided by Deloitte & Touche LLP in 20122013 and 20112012 were approved by the committee. To ensure continuing auditor independence, the committee periodically considers whether there should be a rotation of the independent registered public accountant. Further, in conjunctionaccordance with the mandated rotation of the independent registered public accountant's lead engagement partner, the committee and its chair are directly involved in the selection of Deloitte & Touche LLP's new lead engagement partner.pre-approval policy.
The following fees have been, or are anticipated to be, billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates, for professional services rendered to Allstate for the fiscal years ending December 31, 2012,2013, and December 31, 2011.2012.
| 2012 | 2011(5) | 2013 | 2012(5) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Audit fees(1) | $9,224,695 | $9,185,288 | $9,621,085 | $9,292,002 | ||||||||||
Audit-related fees | $1,187,000 | $1,620,400 | $1,632,977 | $1,187,000 | ||||||||||
Tax fees(3) | $6,000 | $26,000 | $226,000 | $6,000 | ||||||||||
All other fees(4) | — | — | $201,750 | — | ||||||||||
Total fees | $10,417,695 | $10,831,688 | $11,681,812 | $10,485,002 | ||||||||||
69 | The Allstate Corporation
| 2012 | 2011 | ||||||
---|---|---|---|---|---|---|---|---|
Audits and other attest services for non-consolidated entities | $412,000 | $347,000 | ||||||
Adoption of new accounting standards | $72,000 | $307,000 | ||||||
Other audit-related fees | $703,000 | $966,400 | ||||||
Audit-related fees(6) | $1,187,000 | $1,620,400 | ||||||
| 2013 | 2012 | ||||||
---|---|---|---|---|---|---|---|---|
Audits and other attest services for non-consolidated entities | $422,000 | $412,000 | ||||||
Adoption of new accounting standards | — | $72,000 | ||||||
Other audit-related fees | $1,210,977 | $703,000 | ||||||
Total audit-related fees | $1,632,977 | $1,187,000 | ||||||
73 -- The Allstate Corporation
Representatives of Deloitte & Touche LLP will be present at the 20132014 annual meeting to respond to questions and may make a statement if they choose. To be approved, a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal must be voted "FOR." Abstentions will be counted as shares present at the meeting and will have the effect of a vote against the proposal.
The Board of Directors recommends that stockholders vote FOR ratification of the appointment of Deloitte & Touche LLP as Allstate's independent registered public accountant for 2013.
Deloitte & Touche LLP (Deloitte) was Allstate's independent registered public accountant for the year ended December 31, 2012.2013.
The audit committee reviewed and discussed with management the audited financial statements for the fiscal year ended December 31, 2012.2013.
The committee discussed with Deloitte the matters required to be discussed by the statement of Auditing StandardsStandard No. 61, as amended (AICPA,Professional Standards, Vol. 1. AU section 380)16, as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
Board. The committee received the written disclosures and letter from Deloitte required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte's communications with the committee concerning independence and has discussed with Deloitte its independence.
Based on these reviews and discussions and other information considered by the committee in its judgment, the committee recommended to the Board of Directors that the audited financial statements be included in Allstate's annual report on Form 10-K for the fiscal year ended December 31, 2012,2013, for filing with the Securities and Exchange Commission, and furnished to stockholders with this Notice of Annual Meeting and Proxy Statement.
Judith A. Sprieser (Chair) | ||||||
F. Duane Ackerman Robert D. Beyer | Mary Alice Taylor |
The Allstate Corporation --| 7470
Stockholder proposal on equity retention by senior executives | ||||||
The Board recommends that stockholders vote against this proposal. | • Existing stock ownership guidelines require significant equity ownership. • Named executives' equity holdings exceed stock ownership guidelines. • Retention guidelines were expanded for all prospective grants beginning in 2014. | |||||
Mr. Kenneth Steiner, 14 Stoner Ave., 2M, Great Neck, NY 11021, beneficial owner of 2,700no less than 500 shares of Allstate common stock as of December 12, 2012,10, 2013, intends to propose the following resolution at the annual meeting.
To be approved, a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal must be voted "for." Abstentions will be counted as shares present at the meeting and will have the effect of a vote against the proposal. Broker non-votes will not be counted as shares entitled to vote on the matter and will have no impact on the vote's outcome.
The Board of Directors does not support the adoption of this proposal and asks stockholders to consider management's response following the proponent's statement.The Board recommends that stockholders voteagainstthis proposal.
Proposal 5 — Executives To Retain Significant Stock
Resolved: Shareholders requesturge that our executive pay committee adopt a policy requiring that senior executives to retain a significant percentage of shares acquired through equity pay programs until reaching normal retirement age.age and to report to shareholders regarding the policy before our Company's next annual meeting. For the purpose of this policy, normal retirement age shallwould be definedan age of at least 60 and determined by the Company's qualified retirement plan that has the largest number of plan participants. The shareholdersour executive pay committee. Shareholders recommend that the committee adopt a share retention percentage requirement of 25%50% of suchnet after-tax shares.
TheThis single unified policy shouldshall prohibit hedging transactions for shares subject to this policy which are not sales but reduce the risk of loss to the executive. Otherwise our directors would be able to avoid the impact of this proposal. This policy shall supplement any other share ownership requirements that have been established for senior executives, and should be implemented so as not to violate our Company's existing contractual obligations or the terms of any pay or benefit plan currently in effect.
Requiring senior executives to hold a significant portion of stock obtained through executive pay plans would focus our executives on our company's long-term success. A Conference Board Task Force report on executive pay stated that hold-to-retirement requirements give executives "an ever-growing incentive to focus on long-term stock price performance."
It mayThis proposal should also be helpfulmore favorably evaluated due to consider this proposal in the context of our Company's overallclearly improvable corporate governance performance as reported in 2012:2013:
GMI/The Corporate Library,GMI Ratings, an independent investment research firm, downgradedrated our company to "D" with "High Governance Risk." Also "High Concern" in director qualifications and "High Concern" in Executive PayF for executive pay — $11$17 million for our CEO Thomas Wilson.
AnnualWilson and shareholders faced a potential 10% stock dilution. GMI said Allstate could give long-term incentive pay to Mr. Wilson for below-median performance. Plus Mr. Wilson had an excessive pension compared to peers.
In regard to our highest paid executives included a bonus pool with actual amounts given subjectively — undermining pay-for-performance. Long-term incentive pay consisted of market-priced stock options. Market-priced stock options could pay offdirectors Judith Sprieser was negatively flagged by GMI due to a rising market alone, regardless of an executive's job performance. Mr. Wilson was potentially entitled to $22 million under a change in control.
Seven of our directors had 10 to 14 years long-tenure. Long-tenured directors controlled 14 of the 19 seats on our most powerfulher director duties at USG Corporation board committees. Director independence erodes after 10-years. GMI said long-tenure could hinder director ability to provide effective oversight. A more independent perspective would be a priceless assetwhen it filed for our directors.
Judith Sprieser, our audit committee chair, was involved with the USG Corporation bankruptcy. Ronald LeMay also on our audit committee, was involved withhad director duties at Sprint when Sprint tried to give $1.7 billion in stock options while the merger with Worldcom was falling apart. Mr.sinking. For some reason Both Sprieser and LeMay was alsowere put on our executive payaudit committee even after his dubious executive pay episode with Sprint. Seated with Mr. LeMayand had a total of 4 seats on our executive pay committee was James Farrell who was involved withmost important board committees.
John Riley, our Lead Director, had 15-years long-tenure and such long-tenure leads to just the UAL Corporation bankruptcy. Sixopposite of our directors were potentially overboarded — each working on the boards of 3 to 5 large companies.
Judith Sprieserincreased independence. Jack Greenberg received our highest negative votes except for Jack Greenberg, whoand was also on our audit committee. Joshua Smith received our 3rdover-burdened with director duties at 5 companies. Judith Sprieser was next highest in negative votes and was onover-burdened with director duties at 6 companies.
Returning to the core topic of this proposal from the context of our executive pay and nomination committees.
Pleaseclearly improvable corporate performance, please vote to protect shareholder value:
Executives To Retain Significant Stock — Proposal 5
7571 --| The Allstate Corporation
The Board recommends that stockholders voteagainst AGAINST this proposal for the following reasons:
Allstate executives already have significant equity ownership.
Stock Ownership as Multiple of Base Salary as of December 31, 2013 | |||||||
---|---|---|---|---|---|---|---|
Named Executive | Guideline | Actual | |||||
Mr. Wilson | 6 | 20 | |||||
Mr. Shebik | 3 | 6 | |||||
Mr. Civgin | 3 | 4 | |||||
Ms. Greffin | 3 | 5 | |||||
Mr. Winter | 3 | 4 | |||||
Allstate recently increased its equity retention requirements. In response to feedback from stockholders last year, equity retention guidelines were expanded in 2014 for all future equity grants.
Existing Requirements
Expanded Requirements
Beginning with awards granted in 2014, Allstate added a new requirement that applies after stock ownership guidelines in place since 1996 in order to further align executives' interests with those of stockholders, encourage a focus on long-term performance, and discourage imprudent risk-taking. In 2012, Allstate conducted an extensive examination of the guidelines, compared Allstate's requirements to the policies of peer companies, and adopted the following:
have been attained:
Under theThe proposal an executive would reach his or her salary multiple guideline more slowly than under Allstate's existing stock ownership guidelines. Under Allstate's existing stock ownership guidelines, it is estimated that a new executive would reach the salary multiple guideline in six years while in contrast, under the proposal, it would take approximately 11 years for an executive to reach the same level of stock holdings through equity awards granted by Allstate, assuming that the performance stock awards payout at target levels.
The Allstate Corporation --| 7672
Stockholder proposal on reporting lobbying expenditures | ||||||
The Board recommends that stockholders vote against this proposal. | • Board oversees and reviews public policy initiatives. • Allstate already provides significant transparency through public policy report. • Less than 10% of shares voted supported a similar proposal in 2013. | |||||
The American Federation of Labor and Congress of Industrial Organizations Reserve Fund, 815 Sixteenth Street, N.W., Washington, DC, 20006, beneficial owner of 360345 shares of Allstate common stock as of December 11, 2012,9, 2013, intends to propose the following resolution at the annual meeting.
To be approved, a majority ofWhereas, corporate lobbying exposes our company to risks that could adversely affect the shares present in person or represented by proxy at the meetingcompany's stated goals, objectives, and entitled to voteultimately shareholder value, and
Whereas, we rely on the proposal must be voted "for." Abstentions will be counted as shares present atinformation provided by our company to evaluate goals and objectives, and we, therefore, have a strong interest in full disclosure of our company's lobbying to assess whether our company's lobbying is consistent with its expressed goals and in the meetingbest interests of shareholders and will have the effect of a vote against the proposal. Broker non-votes will not be counted as shares entitled to vote on the matter and will have no impact on the vote's outcome.
The Board of Directors does not support the adoption of this proposal and asks stockholders to consider management's response following the proponent's statement.The Board recommends that stockholders voteagainstthis proposal.long-term value.
Resolved:Resolved, Shareholdersthe shareholders of The Allstate Corporation ("Allstate") urgerequest the Board of Directors (the "Board") to authorize the preparation of a report, updated annually, disclosing:
For purposes of this proposal, a "grassroots lobbying communication" is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. "Indirect lobbying" is lobbying engaged in by a trade association or other organization of which Allstate is a member.
Both "direct and indirect lobbying" and "grassroots lobbying communications" include efforts at the local, state and federal levels.
The report shall be presented to the Audit Committee of the Board or other relevant oversight committees of the Board and posted on Allstate's website.
Supporting Statement
We encourage our Board to require comprehensive disclosure related to direct, indirect and grassroots lobbying. Corporate lobbying can expose Allstate to risks that could affect the company's stated goals, objectives, and ultimately shareholder value. Shareholders have a strong interest in full disclosure of our company's lobbying to assess whether Allstate's lobbying is consistent with its expressed goals and in the best interests of shareholders.
As shareholders, we encourage transparency and accountability in the use of staff time and corporate funds to influence legislation and regulation both directly and indirectly. We believe such disclosure is in shareholders' best interests. Absent a system of accountability, company assets could be used for objectives contraryAccording to Allstate's long-term interests.
According to2012 Corporate Responsibility Report, our company spent $15.6 million on "the public policy process at the state and federal levels." The Center for Responsive Politics reports that Allstate spent $3.3$2.9 million onin direct federal lobbying activities in 2011. (http://www.opensecrets.org/lobby/clientsum.php?id=D000000632&year=2011). These figures do2012 — but this may not include lobbying expenditures in states.grassroots lobbying. Allstate also had 109 lobbyists in 39 states in 2011, according to the National Institute on Money in State Politics. (http://www.followthemoney.org/database/lobbyistclient.phtml?lc=101065&y=2011&s=0#11ink). states.
Allstate also contributed almost $3.2 million to national trade associations in 2011, of which $1.5 million was attributed to lobbying efforts, according to the Allstate Corporate Involvement in Public Policy 2011 Annual Report. (http://www.allstate.com/Allstate/content/refreshattachments/Social-Responsibility/Allstate_CIPP_2011.pdf).
We welcome the fact that Allstate has disclosed the total amount of its 2011 lobbying contributions, including the names of trade associations that Allstate is a member. However, Allstate hasdoes not disclosed a breakdown ofdisclose how much it contributes to each individual trade association for lobbying activities. We believe that providing this information will ensure thatlobbying. For example, Allstate is fully transparenta member of the U.S. Chamber of Commerce, which spent more than $136 million on lobbying in 2012. Moreover, Allstate does not disclose membership in or contributions to tax-exempt organizations that write and accountable to shareholders for its lobbying activities.endorse model legislation, such as the American Legislative Exchange Council.
For these reasons, weWe urge you to vote FOR this resolution.proposal.
7773 --| The Allstate Corporation
The Board recommends that stockholders voteagainst AGAINST this proposal for the following reasons:
The Allstate Corporation | 74
Stockholder proposal on reporting political expenditures | ||||
The Board recommends that stockholders vote against this proposal. | • Board oversees and reviews public policy initiatives. • Allstate already provides significant transparency through public policy report. • Less than 10% of shares voted supported a similar proposal in 2013. | |||
The Comptroller of the State of New York, Thomas P. DiNapoli, the sole Trustee of the New York State Common Retirement Fund (the "Fund") and the administrative head of the New York State and Local Employees' Retirement System and the New York State Police and Fire Retirement System, 633 Third Avenue-31st Floor, New York, 10017, beneficial owner of 1,937,554 shares of Allstate common stock as of December 4, 2013, intends to propose the following resolution at the annual meeting.
Resolved, that the shareholders of Allstate Corporation ("Company") hereby request that the Company provide a report, updated semiannually, disclosing the Company's:
The report shall be presented to the board of directors or relevant board committee and posted on the Company's website.
Payments used for lobbying are not encompassed by this proposal.
Supporting Statement
As long-term shareholders of Allstate, we support transparency and accountability in corporate spending on political activities. These include any activities considered intervention in any political campaign under the Internal Revenue Code, such as direct and indirect contributions to political candidates, parties, or organizations; independent expenditures; or electioneering communications on behalf of federal, state or local candidates.
Disclosure is in the best interest of the company and its shareholders and critical for compliance with federal ethics laws. Moreover, the Supreme Court'sCitizens United decision recognized the importance of political spending disclosure for shareholders when it said, "[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages." Gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value.
Allstate contributed at least $6,335,152 in corporate funds since the 2003 election cycle. (CQ: http://moneyline.cq.com and National Institute on Money in State Politics: http://www.followthemoney.org)
Relying on publicly available data does not provide a complete picture of the Company's political spending. For example, the Company's payments to trade associations used for political activities are undisclosed and unknown. In some cases, even management does not know how trade associations use their company's money politically. The proposal asks the Company to disclose all of its political spending, including payments to trade associations and other tax exempt organizations used for political purposes. This would bring our Company in line with a growing number of leading companies, including Exelon, Merck and Microsoft that support political disclosure and accountability and present this information on their websites.
The Company's Board and its shareholders need comprehensive disclosure to be able to fully evaluate the political use of corporate assets. We urge your support for this critical governance reform.
75 | The Allstate Corporation
The Board recommends that stockholders vote AGAINST this proposal for the following reasons:
Counting of Votes for Stockholder Proposals
To be approved, a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on all entities.the stockholder proposal must be voted "for." Abstentions will be counted as shares present at the meeting and will have the effect of a vote against the proposal. Broker non-votes will not be counted as shares entitled to vote on the matter and will have no impact on the vote's outcome.
Stockholder Proposals for the 20142015 Annual Meeting
Proposals that stockholders would like to include in Allstate's proxy materialmaterials for presentation at the 20142015 annual meeting of stockholders must be received by the Office of the Secretary, The Allstate Corporation, 2775 Sanders Road, Suite A2W, Northbrook, Illinois 60062-6127 by December 11, 2013,8, 2014, and must otherwise comply with Securities and Exchange Commission rules in order to be eligible for inclusion in the proxy material for the 20142015 annual meeting.
If a stockholder would like to bring a matter before the meeting which is not the subject of a proposal that meets the SECSecurities and Exchange Commission proxy rule requirements for inclusion in the proxy statement, the stockholder must follow procedures in Allstate's bylaws in order to personally present the proposal at the meeting. A copy of these procedures is available upon request from the Office of the Secretary or can be accessedfound on Allstate's website, www.allstate.com.allstate.com. One of the procedural requirements in the bylaws is timely notice in writing of the business the stockholder proposes to bring before the meeting. Notice of business proposed to be brought before the 20142015 annual meeting must be received by the Office of the Secretary no earlier than the close of business on January 21, 2014,20, 2015, and no later than February 20, 2014.19, 2015. Among other things, the notice must describe the business proposed to be brought before the meeting, the reasons for conducting the business at the meeting, and any material interest of the stockholder in the business.
The Allstate Corporation --| 7876
Other Items | ||||||
PROXY STATEMENT | ||||||
Allstate 401(k) Savings Plan Participants
If you hold Allstate common shares through the Allstate 401(k) Savings Plan, your proxy card/voting instruction form for those shares will instruct the plan trustee how to vote those shares. If you received your annual meeting materials electronically, and you hold Allstate common shares both through the plan and also directly as a registered stockholder, the voting instructions you provide electronically will be applied to both your plan shares and your registered shares. If you return a signed proxy card/voting instruction form or vote by telephone or the Internet on a timely basis, the trustee will follow your voting instructions for all Allstate common shares allocated to your plan account unless that would be inconsistent with the trustee's duties.
If your voting instructions are not received on a timely basis, the shares allocated to your plan account will be considered "unvoted." If you return a signed proxy card/voting instruction form but do not indicate how your shares should be voted on a given matter, the shares represented by your proxy card/voting instruction form will be voted as the Board of Directors recommends. The trustee will vote all unvoted shares and all unallocated shares held by the plan as follows:
Plan votes receive the same high level of confidentiality as all other votes. You may not vote the shares allocated to your plan account by voting in person at the meeting. You must instruct The Northern Trust Company, as trustee for the plan, how to vote your shares.
Proxy Statement and Annual Report Delivery
Allstate has adopted the "householding" procedure approved by the Securities and Exchange Commission, which allows us to deliver one set of documents to a household of stockholders instead of delivering a set to each stockholder in a household, unless we have been instructed otherwise. This procedure is more environmentally friendly and cost-effective because it reduces the number of copies to be printed and mailed. Stockholders who receive proxy materials in paper form will continue to receive separate proxy cards/voting instruction forms to vote their shares. Stockholders who receive the Notice of Internet Availability of Proxy Materials will receive instructions on submitting their proxy cards/voting instruction form via the Internet.
If you would like to change your householding election, request that a single copy of the proxy materials be sent to your address, or request a separate copy of the proxy materials, please contact our distribution agent, Broadridge Financial Solutions, by calling (800) 542-1061 or by writing to Broadridge Householding Department, 51 Mercedes Way, Edgewood, NY 11717. We will promptly deliver the proxy materials to you upon receipt of your request. If you hold your shares in street name, please contact your bank, broker, or other record holder to request information about householding.
If you receive more than one proxy card/voting instruction form, your shares probably are probably registered in more than one account or you may hold shares both as a registered stockholder and through the Allstate 401(k) Savings Plan. You should vote each proxy card/voting instruction form you receive.
7977 --| The Allstate Corporation
Procedures for Attending the Annual Meeting in Person
If you plan to attend the meeting, you must be a holder of Allstate shares as of the record date of March 22, 2013.21, 2014. We encourage you to request an admission ticket in advance. You may request admission tickets by:
At the entrance to the meeting, we will request to see your admission ticket and valid photo identification, such as a driver's license or passport.
If you do not request an admission ticket in advance, at the entrance to the meeting we will request to see your photo identification.identification at the entrance to the meeting. We will then determine if you owned common stock on the record date by:
If you are acting as a proxy, we will need to review a valid written legal proxy to you signed by the owner of the common stock.stock granting you the required authority to vote the owner's shares.
Officers and other employees of Allstate and its subsidiaries may solicit proxies by mail, personal interview, telephone, facsimile, electronic means, or via the Internet. None of these individuals will receive special compensation for soliciting votes, which will be performed in addition to their regular duties, and some of them may not necessarily solicit proxies. Allstate also has made arrangements with brokerage firms, banks, record holders, and other fiduciaries to forward proxy solicitation materials to the beneficial owners of shares they hold on your behalf. Allstate will reimburse these intermediaries for reasonable out-of-pocket expenses. Georgeson Inc., 480 Washington Boulevard,Blvd., 26th Floor, Jersey City, NJ 07310 has been retained to assist in the solicitation of proxies for a fee not to exceed $16,500 plus expenses. Allstate will pay the cost of all proxy solicitation.
By order of the Board, | ||
Secretary | ||
The Allstate Corporation --| 8078
Appendix A | ||||||
PROXY STATEMENT | ||||||
Categorical Standards of IndependenceCATEGORICAL STANDARDS OF INDEPENDENCE
In accordance with theDirector Independence Standards, the Board has determined that the nature of the following relationships with the corporation do not create a conflict of interest that would impair a director's independence.
A-1 --| The Allstate Corporation
Appendix B | ||||||
PROXY STATEMENT | ||||||
Appendix B
THE ALLSTATE CORPORATION2013 EQUITYANNUAL EXECUTIVE INCENTIVE PLAN
Article 1. Establishment, Purpose and Duration
1.1 Establishment of the Plan. The Allstate Corporation, a Delaware corporation (hereinafter, together with any successor as provided in Article 18 herein, referred to as the "Company"), hereby establishes an incentive compensation plan for employees, as set forth in this document. The Plan permits the grant of nonqualified stock options (NQSOs), incentive stock options (ISOs), stock appreciation rights (SARs), unrestricted stock, restricted stock, restricted stock units, performance units, performance stock, and other awards.Purposes.
The Plan was formerly known as "The Allstate Corporation 2001 Equity Incentive Plan." The Plan was approved by the Board of Directors on March 13, 2001, and became effective when approved by the Company's stockholders on May 15, 2001 (the "Effective Date"). The Plan was amended by the Board of Directors on March 9, 2004. On March 14, 2006 the Plan was amended and restated effective upon approval by stockholders at the 2006 Annual Meeting of Stockholders on May 16, 2006. The Plan was further amended and restated by the Board at meetings held on September 10, 2006, February 20, 2007, and September 15, 2008. On March 10, 2009, the Plan was amended, restated, and renamed as "The Allstate Corporation 2009 Equity Incentive Plan," effective upon approval by stockholders at the 2009 Annual Meeting of Stockholders on May 19, 2009. The Plan was further amended and restated on February 22, 2011, and February 21, 2012. On February 18, 2013, the Plan was amended, restated, and renamed The Allstate Corporation 2013 Equity Incentive Plan effective upon approval by stockholders at the Company's 2013 annual stockholders meeting, and shall thereafter remain in effect as provided in Section 1.3 herein. If the Plan is not approved by stockholders at the Company's 2013 annual stockholders meeting, the Plan as in effect prior to the February 18, 2013, amendment and restatement will continue to be effective according to its terms then in effect.
1.2 Purpose of the Plan. The primary purpose of the Plan is to enhance the Company's ability to attract and retain highly qualified executives, link compensation with the Company's annual financial and operating goals, and provide a means by which employees of the Company and its Subsidiaries can acquire and maintain stock ownership, thereby strengthening their commitmentsuch executives with cash incentives to link the success of the Company and its Subsidiaries and their desire to remain employed by the Company and its Subsidiaries.with compensation. The Plan also is intended to attract and retain employees and to provide such employees with additional incentive and reward opportunities designed to encourage them to enhancepermit the profitable growthgranting of Awards that will constitute "performance-based compensation" under Section 162(m) of the CompanyCode and its Subsidiaries.the regulations promulgated thereunder.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as described in Section 1.1 herein, and shall remain in effect subject to the right of the Board of Directors to terminate the Plan at any time pursuant to Article 15 herein, until all Stock subject to it shall have been purchased or acquired according to the Plan's provisions.
Article 2. DefinitionsDefinitions.
WheneverThe following terms when used in the Plan shall, for the purposes of the Plan, have the following terms shall havemeanings:
2.1 Award means, individually or collectively, an award under the Plan of NQSOs, ISOs, SARs, Unrestricted Stock, Restricted Stock, Restricted Stock Units, Performance Units, Performance Stock, or any other type of award permitted under Article 10terms of the Plan.
2.2 Award Agreement means an agreement setting forth the terms and provisions applicable to an Award granted to a Participant under the Plan.
2.3 Base Value of an SAR means the Fair Market Value of a share of Stock on the date the SAR is granted.
2.4 Beneficiary means a person or entity designated as a beneficiary in accordance with Section 6.6 or other applicable Section of the Plan.
2.5 Beneficiary Designation Form means a form provided by the Company for the purpose of designating a beneficiary in accordance with Section 6.6 or other applicable Section of the Plan.
B-1 -- The Allstate Corporation
2.6 Board orBoard of Directors
2.7 Codeproperty and casualty business, the life business, the investments business, or the international business.
2.8 Committeeamended.
2.9 Company has the meaning provided in Section 1.1 herein.
2.10
2.11 Disability means an impairment which renders a Participant disabled within the meaning of Code Section 409A(a)(2)(C).
2.12 Dividend Equivalent means, with respect to Stock subject to an Award (other than an Option or SAR), a right to be paid an amount equal to cash dividends, other than large, nonrecurring cash dividends, declared on an equal number of outstanding shares of Stock.
2.13 Eligible Person means a Person who is eligible to participate in the Plan, as set forth in Section 5.1 herein.
2.14 Employee means any individual designated by the Company or any Subsidiary as an employee, who is on the local payroll records thereof and who is not covered by any collective bargaining agreement to which the Company or any Subsidiary is a party. An EmployeeEmployee" shall not include any individual during any period he or she is classified or treated by the Company or any Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting, or temporary agency, or any other entity other than the Company or any Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified as a common-lawmean each employee of the Company or anya Subsidiary during such period.
2.15 Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
2.16 Exercise Period means the period during which an SAR or Optionwho is exercisable, as set fortha "covered employee" (as defined in the related Award Agreement.
2.17 Fair Market Value means the price at which a share of the Stock was last sold in the principal United States market for the Stock as of the date for which fair market value is being determined. Notwithstanding anything herein to the contrary, with respect to any Award that constitutes deferred compensation for purposes of Section 409A, Fair Market Value shall be determined in accordance with Treasury Regulation Section 1.409A-1(b)(5)(iv).
2.18 Family Member means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, domestic partner, or sibling, including adoptive relationships, a trust in which these persons have more than fifty (50) percent of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than fifty (50) percent of the voting interests.
2.19 Freestanding SAR means an SAR that is not a Tandem SAR.
2.20 Full-Value Award means an Award granted on or after May 19, 2009, other than an Option or a SAR.
2.21 Incentive Stock Option orISO means an option to purchase Stock, granted under Article 6 herein, which is designated as an Incentive Stock Option and satisfies the requirements of Section 422 of the Code.
2.22 Minimum Consideration means the $.01 par value per share or such larger amount determined pursuant to resolution of the Board to be capital within the meaning of Section 154 of the Delaware General Corporation Law.
2.23 Nonqualified Stock Option orNQSO means an option to purchase Stock, granted under Article 6 herein, which is not intended to be an Incentive Stock Option under Section 422 of the Code.
2.24 Option means an Incentive Stock Option or a Nonqualified Stock Option.
2.25 Option Exercise Price means the price at which a share of Stock may be purchased by a Participant pursuant to an Option, as determined by the Committee and set forth in the Option Award Agreement.
The Allstate Corporation -- B-2
2.26 Participant means an Eligible Person who has outstanding an Award granted under the Plan.
2.27 Performance-Based Compensation means an Award intended to qualify for the exemption from the limitation on deductibility imposed by Section 162(m) of the Code as set forth in Section 162(m)(4)(C) ofCode) for the Code.
2.28 Performance Goals means the performance goals establishedapplicable Fiscal Year, and any other employee designated by the Committee, which shallin its sole discretion.
2.29 Performance Period means the time period during which Performance Unit/Performance Stock Performance Goals must be met.
2.30 Performance Stock means an Award described in Article 9 herein.
2.31 Performance Unit means an Award described in Article 9 herein.
2.32 Period of Restriction means the period during which the transfer of Restricted Stock or Restricted Stock Units is limited in some way, as provided in Article 8 herein.
2.33 Person
2.34 Plan
2.35 Plan, as may be amended from time to time.
2.36 Qualified Restricted Stock Unit means an Awardperformance-based compensation under Section 162(m) of Restricted Stock Units designated as Qualified Restricted Stock Units by the Committee at the time of grant and intended to qualify as Performance-Based Compensation.
2.37 Restricted Stock means an Award described in Article 8 herein.
2.38 Restricted Stock Unit means an Award described in Article 8 herein.
2.39 Retirement,Code.
(a) Early Retirement Date —
B-3B-1 --| The Allstate Corporation
(b) Normal Retirement Date
2.40 Section 409A shall have the meaning set forth in Section 19.5 herein.
2.41
Officer" means any Participant who Officerwas designated by the Board asis an "executive officer" or as an officer for purposes of Section 16"officer" of the Exchange Act.
2.42 Securities Act meansCompany or a Subsidiary as that term is defined in Rule 16a-1(f) under the Securities Exchange Act of 1933,1934, as amended.
2.43 Stock means the common stock, $.01 par value, of the Company.
2.44 Stock Appreciation Right orSAR means a right, granted alone or in connection with a related Option, designated as an SAR, to receive a payment on the day the right is exercised, pursuant to the terms of Article 7 herein. Each SAR shall be denominated in terms of one share of Stock.
2.45 Subsidiary
2.46 Tandem SAR means an SAR that is granted in connection with a related Option, the exercise of which shall require forfeiture of the right to purchase Stock under the related Option (and when Stock is purchased under the Option, the Tandem SAR shall be similarly canceled).
2.47 Termination of Employment occurs the first day on which an individual is for any reason no longer employed by the Company or any of its Subsidiaries, or with respect to an individual who is an Employee of a Subsidiary, the first day on which the Company no longer owns, directly or indirectly, at least 50% of the equity interests or partnership interests in, or
2.48 Unrestricted Stock means an Award of Stock not subject to restrictions described in Article 8 herein.
2.49 Voting PowerPower" means the combined voting power of the then-outstanding Voting Securities entitled to vote generally in the election of directors.
2.50
Article 3. Administration of the Plan.
3.1 The Committee.(the "Committee") as the Board of Directors shall select, consisting solely of two or more nonemployee members of the Board.select. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors.
3.2 Authority of the Committee.Board.full power except as limited by law or the articles of incorporation or the bylaws of the Company, subject to such other restricting limitations or directions as may be imposed
The Allstate Corporation -- B-4
by the Board and subject to the provisions herein, to determine the Eligible Persons to receive Awards; to determine when Awards may be granted and to grant Awards under the Plan; to determine the size and types of Awards; to determine the terms and conditions of such Awards; to assess whether Performance Goals have been met; to construe and interpret the Plan and any agreement or instrument entered into under the Plan; to establish, amend, or waive rules and regulations for the Plan's administration; to amend the terms and conditions of any outstanding Award, including but not limited to amendments with respect to exercisability and non-forfeitability of Awards upon a Termination of Employment;authority to make such adjustments or modifications to Awards to Participants working outside the United States as are necessary or advisable to fulfill the purposes of the Plan; to accelerate the exercisability of, and to accelerate or waive any or all of the restrictions and conditions applicable to, any Award; and to authorize any action of or make any determination by the Company as the Committee shall deem necessary or advisable for carrying out the purposes of the Plan;provided,however, that the Committee may not amend the terms and conditions of any outstanding Award so as to adversely affect in any material way such Award without the written consent of the Participant holding such Award (or if the Participant is not then living, the Participant's personal representative or estate), unless such amendment is required by applicable law; andprovided,further, that any discretion exercised by the Committee pursuant to Section 4.2 shall not be deemed to adversely affect in any material way an Award. The Committee may designate which Subsidiaries participate in the Plan and may authorize foreign Subsidiaries to adopt plans as provided in Article 14. Further, the Committee shall interpret and make all other determinations which may beit deems necessary or advisable for the administration of the Plan. As permitted by law, the Committee may delegate its authorities as identified hereunder.
3.3 DelegationPlan, including, without limitation, (i) selection of Authority. Notwithstanding the general authorityParticipants, (ii) interpretation of the Committee to grant Awards under the Plan, the Board may, by resolution, expressly delegate to another committee, established by the Board and consisting of one or more employee or non-employee directors, the authority, within parameters specified by the Board, to determine the Eligible Persons to receive Awards; to determine when Awards may be granted and to grant Awards under the Plan; to determine the size and types of Awards; and to determine the terms and conditions of such Awards;provided,however that such committee may not grant Awards to Eligible Persons who (i) are subject to Section 16 of the Exchange Act at the time of grant, or (ii) are at the time of grant, or are anticipated to become during the term of the Award, "covered employees" as defined in Section 162(m)(3) of the Code. Such committee shall report regularly to the Committee, who shall report to the Board, regarding any Awards so granted.
3.4 Delivery of Stock by Company; Restrictions on Stock. Notwithstanding any other provision of the Plan, (iii) subject to the Company shall have no liability to deliver any Stock or benefits under the Plan unless the Participant's tax obligations have been satisfied aslimitations set forth in Article 16herein, determination of the timing and unless such delivery would comply with allamount of Awards made to each Participant, (iv) selection of Performance Measures and other material terms applicable laws (including, without limitation, the Code, the Securities Act, and the Exchange Act) and applicable requirements of any securities exchange or similar entity; provided, however, that if the Company cannot deliver any Stock or benefits under the Plan due to such laws or requirements, the Company shall provide equivalent value to any affected Participant.
The Committee may impose such restrictions on any Stock acquired pursuant to Awards, underand (v) certification that the Plan as it may deem advisable, including, without limitation, restrictions to comply with applicable Federal securities laws, with the requirementsperformance goals and any other material terms of any stock exchange or market upon which such Stock is then listed and/or traded, and with any blue sky or state securities laws applicable to such Stock.
4. Awards. 3.5 Decisions Binding.Qualified Performance-Based Awards were satisfied. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders or resolutions of the Board shall be final, conclusive and binding on all persons, including the Company, its Subsidiaries, its stockholders, Eligible Persons, Employees,the Participants, and their Beneficiariesestates and estates. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award.beneficiaries. 3.6 Costs.In General. The Company shall pay all costs of administration of the Plan.
Article 4. Stock Subject to the Plan
4.1 Number of Shares. Subject to Section 4.2 herein, the maximum number of shares of Stock available for awardsAwards under the Plan shall consist of annual incentive awards payable in cash. All employees of the Company and its Subsidiaries are eligible to be 90,230,000 shares (which includes 37,000,000 shares originally providedselected to be Participants. The Committee will select the employees who will receive Awards. Only employees who are selected by the Committee to receive Awards shall be Participants in the PlanPlan.
B-5 -- The Allstate Corporation | B-2
shares of Stock remaining for awards pursuant to the terms of The Allstate Corporation Equity Incentive Plan. The number of shares of Stock to which an Award pertains shall be counted against the maximum share limitation of this Section 4.1 as two and one-tenth (2.1) shares of Stock for each Full Value Award and as one (1) share of Stock for each other type of Award. Shares of Stock underlying lapsed or forfeited Awards of Restricted Stockstandards shall not be treateddeemed to give the Committee the discretion to increase the amount otherwise payable upon attainment of the preestablished performance goals. The Committee shall retain the discretion to reduce the amount of any Award that would otherwise be payable to a Covered Employee, including a reduction in such amount to zero, based on the degree of achievement of such additional goals or standards or such other factors as having been issuedthe Committee may determine in its sole discretion; provided, however, that in no event shall the exercise of such negative discretion with respect to a Covered Employee's Award result in an increase in the amount payable to another Covered Employee. The maximum amount that may be paid to any one Covered Employee pursuant to ana Qualified-Performance-Based Award under the Plan. Shares of Stock that are potentially deliverable under an Award that expires or is cancelled, forfeited, settled in cash or otherwise settled without delivery of shares of Stock shall not be treated as having been issued under the Plan. With respect to an SAR that is settled in Stock, the full number of shares underlying the exercised portion of the SARfor any Fiscal Year shall be treated as having been issued$10,000,000.
4.2 Adjustments in Authorized Stock and Awards. In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 718) that causes the per share value of shares of Stock to change, such as a stock dividend, stock split, spin off, rights offering, or recapitalization through a large, nonrecurring cash dividend, the Committee shall cause there to be made an equitable adjustment to (i) the number and kind of shares available for grant under the Plan, (ii) the number of shares or Awards that may be granted to any individual under the Plan or that may be granted pursuant to any Articles or types of Awards, and (iii) the number and kind of shares or units subject to and the Option Exercise Price or Base Value (if applicable) of any then outstanding Awards of or related to shares of Stock. In the event of any other change in corporate capitalization, such as a merger, consolidation, any reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code) or any partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence shall be made as may be determined to be appropriate and equitableconditions established by the Committee in its sole discretion. Such Awards may, but need not, be expressed as an incentive pool and may be based upon attainment of Performance Measures or such other measures or goals as the Committee may designate. The Committee may condition payment of such an Award upon the satisfaction of such objective or subjective standards as the Committee shall determine to be appropriate, in its sole discretion, and shall retain the discretion to prevent dilutionincrease or enlargementreduce the amount of rights. In either case, any Award that would otherwise be payable to a Participant, including a reduction in such adjustmentamount to zero.
5. Payment of Awards.
Notwithstanding any provision Participants may also be permitted to elect to defer payment of the Plan to the contrary, except in connection with a corporate transaction involving the Company (including, without limitation, a Change in Control as defined in the applicable Award Agreementall or the transactionspart of one or events described in this Section 4.2), the Committee shall not, without the approval of the Company's stockholders, (i) reduce the Option Exercise Price of an Option or reduce the Base Value of a SAR after it is granted, (ii) cancel outstanding Options or SARs in exchange for other Awards or Options or SARs with an Option Exercise Price or Base Value, as applicable, that is less than the Option Exercise Price or Base Value of the original Options or SARs, (iii) cancel an outstanding Option or SAR when the Option Exercise Price or Base Value, as applicable, exceeds the Fair Market Value of a share of the Stock in exchange for cash or other securities, or (iv) take any other action with respect to an Option or SAR that would be treated as a repricing under the rules and regulations of the New York Stock Exchange.
4.3 Award Limitations. Subject to Section 4.2 above, the following limitations shall apply to Awards intended to qualify as Performance-Based Compensation: (i) the total number of shares of Stock with respect to which Options or SARs may be granted in any calendar year to any Participant shall not exceed 4,000,000 shares; (ii) the total number of shares of Qualified Restricted Stock or Qualified Restricted Stock Units that may be granted in any calendar year to any Participant shall not exceed 3,000,000 shares or Units, as the case may be; (iii) the total number of shares of
The Allstate Corporation -- B-6
Performance Stock that may be granted in any calendar year to any Participant shall not exceed 4,000,000 shares and the maximum amount that may be paid pursuant to Performance Units granted in any one calendar year to any Participant shall not exceed $10,000,000; (iv) the total number of shares of Stock granted pursuant to Article 10 herein in any calendar year to any Participant shall not exceed 4,000,000 shares; (v) the total cash Award that may be paid pursuant to an Award granted under Article 10 herein in any calendar year to any Participant shall not exceed $10,000,000; and (vi) the aggregate value of cash dividends (other than large, nonrecurring cash dividends) or Dividend Equivalents that a Participant may receive in any calendar year shall not exceed $11,500,000.
Subject to Section 4.2 above, the maximum number of shares of Stock that may be issued pursuant to Incentive Stock Options shall be 5,500,000 shares.
Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in the Plan ("Eligible Persons") are all Employees of the Company and its Subsidiaries, as determined by the Committee.
5.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all Eligible Persons those to whommore Awards. Any such deferred Awards shall be granted.
Article 6. Stock Options
6.1 Grant of Options. Subject topaid in accordance with the terms and conditions of the applicable deferred compensation arrangement.
The Committee shall have complete discretion in determiningend of the Fiscal Year, will be prorated based on the number of shares of Stock subjecthalf months the Participant was employed and eligible to Options granted to each Eligible Person (subject to Article 4 herein) and, consistent withbe a Participant during the provisions of the Plan, in determining the terms and conditions pertaining to such Options.Fiscal Year. The Committee may grant ISOs, NQSOs, or a combination thereof.
6.2 Option Award Agreement. Each Option grant shall be evidenced by an Option Award Agreement that shall specify the Option Exercise Price, the term of the Option (which shall not be greater than ten (10) years), the number of shares of Stock to which the Option pertains, the Exercise Period, and such other provisions as the Committee shall determine, including but not limited to special provisions relating to a change of control. The Option Award Agreement shall also specify whether the Option is intended to be an ISO or NQSO. The Option Exercise Price shall not be less than 100% of the Fair Market Value of the Stock on the date of grant. No Dividend Equivalents shall be provided with respect to Options.
6.3 Exercise of and Payment for Options. Options granted under the Plan shall be exercisable at such times and shall be subject to such restrictions and conditions as the Committee shall in each instance approve.
A Participant may exercise an Option at any time during the Exercise Period. Options shall be exercised by the delivery of a written notice of exercise to the Company, or such method acceptable to the Company, setting forth the number of shares of Stock with respect to which the Option is to be exercised, accompanied by provision for full payment of the Stock.
The Option Exercise Price shall be payable: (i) in cash or its equivalent, (ii) by tendering (by actual delivery of shares or by attestation) previously acquired Stock (owned for at least six months) having an aggregate Fair Market Value at the time of exercise equal to the total Option Exercise Price, (iii) by broker-assisted cashless exercise, (iv) with respect to Options granted on and after May 16, 2006, by share withholding, or (v) by a combination of (i), (ii), (iii) and/or (iv).
Options may not be exercised for less than 25 shares of Stock unless the exercise represents the entire remaining balance of the Award.
Stock received upon exercise of an Option may be granted subject to restrictions deemed appropriate by the Committee.
B-7 -- The Allstate Corporation
6.4 Termination. Each Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option upon Termination of Employment. Such provisions shall be determined in the sole discretion of the Committee (subject to applicable law), shall be included in the Option Award Agreement entered into with Participants, need not be uniform among all Options granted pursuant to the Plan or among Participants and may reflect distinctions based on the reasons for termination.
To the extent the Option Award Agreement does not set forth termination provisions, the provisions of Article 13 shall control.
6.5 Transferability of Options. Except as otherwise determined by the Committee, all Options granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant or his or her legal representative, and no Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. ISOs are not transferable other than by will or by the laws of descent and distribution. The Committee shall have the authority, in its discretion, to grant (or to sanction by way of amendment to an existing Award) Nonqualified Stock Options, the vested portions of which may be transferred by the Participant during his lifetime to any Family Member. A transfer of an Option pursuant hereto may only be effected by the Company at the written request of a Participant and shall become effective only when recorded in the Company's record of outstanding Options. A transferred Option shall continue to be governed by and subject to the terms and limitations of the Plan and the relevant Award Agreement, and the transferee shall be entitled to the same rights as the Participant, as if no transfer had taken place. In no event shall an Option be transferred for consideration.
6.6 Designation of Beneficiary. (a) Each Participant may designate a Beneficiary who shall have the right to exercise the Option in the event of the Participant's death. Participants shall designate a Beneficiary by executing a Beneficiary Designation Form. A Beneficiary designation is not binding on the Company unless it receives a properly completed Beneficiary Designation Form prior to the Participant's death. If no designation is made or no designated Beneficiary is alive (or in the case of an entity designated as a Beneficiary, in existence) at the time of the Participant's death, the Participant's spouse or, if no spouse exists, the executor or personal representative of the Participant's estate shall have the right to exercise the Option. If there is any question as to the legal right of any Beneficiary to exercise the Option under the Plan, the Company may determine in its sole discretion whether a Participant's termination constitutes Retirement or is due to provide the right of exercise to the executor or personal representative of the Participant's estate. The Company's determination shall be binding and conclusive on all persons, and it will have no further liability to anyone with respect to such Option.
(b) Change of Beneficiary Designation. A Participant may change an earlier Beneficiary designation by executing a later Beneficiary Designation Form. The execution of a Beneficiary Designation Form revokes and rescinds any prior Beneficiary Designation Form.
6.7 Automatic Exercise. Any unexercised Option will be exercised automatically on behalf of the Participant using broker-assisted cashless exercise on the business day immediately preceding the expiration date if:
A Participant may elect not to have automatic exercise apply by written notice to the Committee at any time within the six-month period before the automatic exercise day above.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and conditions of the Plan, an SAR may be granted to an Eligible Person at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SARs.
The Allstate Corporation -- B-8
The Committee shall have complete discretion in determining the number of SARs granted to each Eligible Person (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.
7.2 SAR Award Agreement. Each SAR award shall be evidenced by an SAR Award Agreement that shall specify the number of SARs granted, the Base Value (which shall not be less than one hundred percent (100%) of the Fair Market Value of a share of Stock on the date of grant), the term of the SAR (which shall not be greater than ten (10) years), the Exercise Period, and such other provisions as the Committee shall determine, including but not limited to special provisions relating to a change of control. No Dividend Equivalents shall be provided with respect to SARs.
7.3 Exercise and Payment of SARs. Tandem SARs may be exercised for all or part of the Stock subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the shares of Stock for which its related Option is then exercisable.
Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR will expire no later than the expiration of the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Option Exercise Price of the underlying ISO and the Fair Market Value of the shares of Stock subject to the underlying ISO at the time the Tandem SAR is exercised; (iii) the Tandem SAR may be exercised only when the Fair Market Value of the shares of Stock subject to the ISO exceeds the Option Exercise Price of the ISO; and (iv) the Tandem SAR may be transferred only when the underlying ISO is transferable, and under the same conditions.
Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them.
A Participant may exercise an SAR at any time during the Exercise Period. SARs shall be exercised by the delivery of a written notice of exercise to the Company, or such method acceptable to the Company, setting forth the number of SARs being exercised. Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount equal to the product of:
At the sole discretion of the Committee, the payment to the Participant upon SAR exercise may be in cash, in shares of Stock of equivalent value, or in some combination thereof.
7.4 Termination. Each SAR Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR upon Termination of Employment. Such provisions shall be determined in the sole discretion of the Committee (subject to applicable law), shall be included in the SAR Award Agreement entered into with Participants, need not be uniform among all SARs granted pursuant to the Plan or among Participants, and may reflect distinctions based on the reasons for termination.
To the extent the SAR Award Agreement does not set forth termination provisions, the provisions of Article 13 shall control.
7.5 Transferability of SARs. Except as otherwise determined by the Committee, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant or his or her legal representative, and no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. To the extent the Committee permits the transfer of an SAR, in no event shall an SAR be transferred for consideration.
7.6 Designation of Beneficiary. (a) Each Participant may designate a Beneficiary who shall have the right to exercise the SARs in the event of the Participant's death. Participants shall designate a Beneficiary by executing a Beneficiary Designation Form. A Beneficiary designation is not binding on the Company unless it receives a properly completed Beneficiary Designation Form prior to the Participant's death. If no designation is made or no designated Beneficiary is alive (or in the case of an entity designated as a Beneficiary, in existence) at the time of the Participant's
B-9 -- The Allstate Corporation
death, the Participant's spouse, or if no spouse exists, the executor or personal representative of the Participant's estate shall have the right to exercise the SARs. If there is any question as to the legal right of any Beneficiary to exercise the SARs under the Plan, the Company may determine in its sole discretion whether to provide the right of exercise to the executor or personal representative of the Participant's estate. The Company's determination shall be binding and conclusive on all persons, and it will have no further liability to anyone with respect to such SARs.
(b) A Participant may change an earlier Beneficiary designation by executing a later Beneficiary Designation Form. The execution of a Beneficiary Designation Form revokes and rescinds any prior Beneficiary Designation Form.
7.7 Automatic Exercise. Any unexercised SAR will be exercised automatically behalf of the Participant on the business day immediately preceding the expiration date if:
A Participant may elect not to have automatic exercise apply by written notice to the Committee at any time within the six-month period before the automatic exercise day above.
Article 8. Unrestricted Stock, Restricted Stock, and Restricted Stock Units
8.1 Grant of Unrestricted Stock, Restricted Stock, and Restricted Stock Units. Subject to the terms and conditions of the Plan, Unrestricted Stock, Restricted Stock, and/or Restricted Stock Units may be granted to an Eligible Person at any time and from time to time, as shall be determined by the Committee.
The Committee shall have complete discretion in determining the number of shares of Unrestricted Stock, Restricted Stock, and/or Restricted Stock Units granted to each Eligible Person (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such Awards.
In addition, the Committee may, prior to or at the time of grant, designate an Award of Restricted Stock or Restricted Stock Units as Qualified Restricted Stock or Qualified Restricted Stock Units, as the case may be, in which event it will condition the granting or vesting, as applicable, of such Qualified Restricted Stock or Qualified Restricted Stock Units, as the case may be, upon the attainment of the Performance Goals selected by the Committee.
8.2 Unrestricted Stock, Restricted Stock/Restricted Stock Unit Award Agreement. Each grant of Unrestricted Stock, Restricted Stock, and/or Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the number of shares of Unrestricted Stock, Restricted Stock, and/or Restricted Stock Units granted, the initial value (if applicable), the Period or Periods of Restriction (if applicable), and such other provisions as the Committee shall determine, including but not limited to special provisions relating to a change of control.
8.3 Transferability. Restricted Stock and Restricted Stock Units granted hereunder may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Award Agreement. During the applicable Period of Restriction, all rights with respect to the Restricted Stock and Restricted Stock Units granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant or his or her legal representative.
8.4 Certificates. No certificates representing Stock shall be delivered to a Participant, and no book entry representing delivery of Stock to a Participant shall be made, until such time as all restrictions applicable to such shares have been satisfied.
8.5 Removal of Restrictions. Restricted Stock shall become freely transferable by the Participant after the last day of the Period of Restriction applicable thereto. Once Restricted Stock is released from the restrictions, the Participant shall be entitled to receive a certificate representing such Stock or shall be entitled to book entry delivery of such Stock.
Payment of Restricted Stock Units shall be made after the last day of the Period of Restriction applicable thereto. The Committee, in its sole discretion, may pay Restricted Stock Units in cash or in shares of Stock of equivalent value (or in some combination thereof).
The Allstate Corporation -- B-10
8.6 Voting Rights. During the Period of Restriction, Participants may exercise full voting rights with respect to the Restricted Stock.
8.7 Dividends and Other Distributions. Subject to the Committee's right to determine otherwise at the time of grant, during the Period of Restriction, Participants shall receive all cash dividends, other than large, nonrecurring cash dividends, paid with respect to the Restricted Stock while they are so held. All other distributions paid with respect to such Restricted Stock shall be credited to Participants subject to the same restrictions on transferability and forfeitability as the Restricted Stock with respect to which they were paid and shall be paid to the Participant promptly after the full vesting of the Restricted Stock with respect to which such distributions were made.
Rights, if any, to Dividend Equivalents on Restricted Stock Units shall be established by the Committee at the time of grant and set forth in the Award Agreement. In addition, with respect to both Restricted Stock or Restricted Stock Units with performance-based vesting, any dividends or Dividend Equivalents that are based on dividends paid prior to the vesting of such Restricted Stock or Restricted Stock Units, as applicable, shall only be paid out to the Participant to the extent that the performance-based vesting conditions are subsequently satisfied and the Restricted Stock or Restricted Stock Units vest.
8.8 Termination. Each Restricted Stock/Restricted Stock Unit Award Agreement shall set forth the extent to which the Participant shall have the right to receive Restricted Stock and/or a Restricted Stock Unit payment following termination of the Participant's employment with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all grants of Restricted Stock/Restricted Stock Units or among Participants and may reflect distinctions based on the reasons for termination.
8.9 Participant's Death. In the event of the Participant's death, any vested Restricted Stock or Restricted Stock Units, including Restricted Stock or Restricted Stock Units that vest because of the Participant's death, shall be paid or delivered on behalf of the Participant.
To the extent the Restricted Stock/Restricted Stock Unit Award Agreement does not set forth termination provisions, the provisions of Article 13 shall control.
Article 9. Performance Units and Performance Stock
9.1 Grant of Performance Units and Performance Stock. Subject to the terms and conditions of the Plan, Performance Units and/or Performance Stock may be granted to an Eligible Person at any time and from time to time, as shall be determined by the Committee.
The Committee shall have complete discretion in determining the number of Performance Units and/or shares of Performance Stock granted to each Eligible Person (subject to Article 4 herein) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such Awards.
9.2 Performance Unit/Performance Stock Award Agreement. Each grant of Performance Units and/or shares of Performance Stock shall be evidenced by a Performance Unit and/or Performance Stock Award Agreement that shall specify the number of Performance Units and/or shares of Performance Stock granted, the initial value (if applicable), the Performance Period, the Performance Goals, and such other provisions as the Committee shall determine, including but not limited to special provisions relating to a change of control and any rights to Dividend Equivalents.
9.3 Value of Performance Units/Performance Stock. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. The value of a share of Performance Stock shall be equal to the Fair Market Value of the Stock. The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Units/Performance Stock thatProrated Awards will be paid out toat the Participants.
9.4 Earning of Performance Units/Performance Stock. Aftersame time as other Awards for the applicable Performance Period has ended, the Participant shall be entitled to receive a payout with respect to the Performance Units/Performance Stock and any Dividend Equivalents earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved.
B-11 -- The Allstate Corporation
9.5 Form and Timing of Payment of Performance Units/Performance Stock. Payment of earned Performance Units/Performance Stock shall be made following the close of the applicable Performance Period. The Committee, in its sole discretion, may pay earned Performance Units/Performance Stock in cash or in Stock (or in a combination thereof), which has an aggregate Fair Market Value equal to the value of the earned Performance Units/Performance Stock at the close of the applicable Performance Period. Such Stock may be granted subject to any restrictions deemed appropriate by the Committee.
9.6 Termination. Each Performance Unit/Performance Stock Award Agreement shall set forth the extent to which the Participant shall have the right to receive a Performance Unit/Performance Stock payment upon Termination of Employment during a Performance Period. Such provisions shall be determined in the sole discretion of the Committee (subject to applicable law), shall be included in the Award Agreement entered into with Participants, need not be uniform among all grants of Performance Units/Performance Stock or among Participants, and may reflect distinctions based on reasons for termination.
To the extent the Performance Unit/Performance Stock Award Agreement does not set forth termination provisions, the provisions of Article 13 shall control.
9.7 Transferability. Except as otherwise determined by the Committee, a Participant's rights with respect to Performance Units/Performance Stock granted under the Plan shall be available during the Participant's lifetime only to such Participant or the Participant's legal representative and Performance Units/Performance Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. To the extent the Committee permits the transfer of Performance Units/Performance Stock, in no event shall Performance Units/Performance Stock be transferred for consideration.
9.8 Participant's Death. In the event of the Participant's death, any vested Performance Units/Performance Stock, including Performance Units/Performance Stock that vest because of the Participant's death, shall be paid or delivered on behalf of the Participant.
Article 10. Other Awards
The Committee shall have the right to grant other Awards which may include, without limitation, the payment of Stock in lieu of cash, the payment of cash based on attainment of Performance Goals established by the Committee, and the payment of Stock in lieu of cash under other Company incentive or bonus programs. Payment under or settlement of any such Awards shall be made in such manner and at such times as the Committee may determine.
Article 11. Deferrals
The Committee may, in its sole discretion, permit a Participant to defer the Participant's receipt of the payment of cash or the delivery of Stock that would otherwise be due to such Participant under the Plan. If any such deferral election is permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals.
Article 12. Rights of Participants
12.1 Termination. Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant's employment or other relationship with the Company or any Subsidiary at any time, for any reason or no reason in the Company's or the Subsidiary's sole discretion, nor confer upon any Participant any right to continue in the employ of, or otherwise in any relationship with, the Company or any Subsidiary.
12.2 Participation. No Eligible Person shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to be selected to receive a future Award.
12.3 Limitation of Implied Rights. Neither a Participant nor any other Person shall, by reason of the Plan, acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including, without limitation, any specific funds, assets or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the Stock or amounts, if any, payable under the Plan, unsecured by any assets of the Company or any Subsidiary. Nothing contained
The Allstate Corporation -- B-12
in the Plan shall constitute a guarantee that the assets of such companies shall be sufficient to pay any benefits to any Person.
Except as otherwise provided in the Plan, no Award under the Plan shall confer upon the holder thereof any right as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights.
12.4 Waiver. Each Participant, by acceptance of an Award, waives all rights to specific performance or injunctive or other equitable relief and acknowledges that he has an adequate remedy at law in the form of damages.
Article 13. Termination of Employment
If a Participant has a Termination of Employment, then, unless otherwise provided by the Committee or in the Award Agreement, all Awards shall terminate and be forfeited on the date of such Termination of Employment.
Article 14. Equity Incentive Plans of Foreign Subsidiaries
The Committee may authorize any foreign Subsidiary to adopt a plan for granting Awards ("Foreign Equity Incentive Plan"), and awards granted under such Foreign Equity Incentive Plans may be treated as awards under the Plan, if the Committee so determines. Such Foreign Equity Incentive Plans shall have such terms and provisions as the Committee permits not inconsistent with the provisions of the Plan and which may be more restrictive than those contained in the Plan. Awards granted under such Foreign Equity Incentive Plans shall be governed by the terms of the Plan except to the extent that the provisions of the Foreign Equity Incentive Plans are more restrictive than the terms of the Plan, in which case such terms of the Foreign Equity Incentive Plans shall control.
Article 15. Amendment, Modification, and Termination
The Board may, at any time and from time to time, alter, amend, suspend, or terminate the Plan in whole or in part, provided that no amendment shall be made which shall increase the total number of shares of Stock that may be issued under the Plan, materially modify the requirements for participation in the Plan, or materially increase the benefits accruing to Participants under the Plan, in each case unless such amendment is approved by the stockholders of the Company.
No termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award, unless such termination, modification, or amendment is required by applicable law and except as otherwise provided herein.
Article 16. Payment for Awards and Withholding
16.1 Payment for Awards. In the event a Participant elects to pay the Option Exercise Price or make payment for any other Award through tender of previously acquired Stock, (i) only a whole number of share(s) of Stock (and not fractional shares of Stock) may be tendered in payment, (ii) such Participant must present evidence acceptable to the Company that he has owned any such shares of Stock tendered in payment (and that such shares of Stock tendered have not been subject to any substantial risk of forfeiture) for at least six months prior to the date of exercise, and (iii) Stock must be tendered to the Company, either by actual delivery of the shares or by attestation. When payment is made by tender of Stock, the difference, if any, between the aggregate amount payable and the Fair Market Value of the share(s) of Stock tendered in payment (plus any applicable taxes) shall be paid by check. No Participant may tender shares of Stock having a Fair Market Value exceeding the aggregate Option Exercise Price or other payment due.
16.2 Notification under Section 83(b). If the Participant, in connection with the exercise of any Option, or the grant of any share of Restricted Stock, makes the election permitted under Section 83(b) of the Code (i.e., an election to include in such Participant's gross income in the year of transfer the amounts specified in Section 83(b) of the Code), such Participant shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under the authority of Section 83(b) of the Code.
16.3 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount (including any Stock withheld as provided below) sufficient to satisfy
B-13 -- The Allstate Corporation
Federal, state, and local taxes (including the Participant's FICA obligation) required by law to be withheld with respect to an Award made under the Plan.
16.4 Stock Withholding. With respect to tax withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock or Restricted Stock Units, or upon any other taxable event arising out of or as a result of Awards granted hereunder, Participants may elect to satisfy the withholding requirement, in whole or in part, by tendering Stock held by the Participant (by actual delivery of the shares or by attestation) or by having the Company withhold Stock having a Fair Market Value equal to the minimum statutory total tax which could be imposed on the transaction. All elections shall be irrevocable, made in writing (or other method acceptable to the Company) and signed by the Participant. In the event a Participant fails to make an election by the date required, the Participant will be deemed to have made an election to have the Company withhold Stock having a Fair Market Value equal to the minimum statutory total tax which could be imposed on the transaction.
Article 17. Repayment of Awards, Non-Solicitation, and Non-Competition
17.1 Restatements.Fiscal Year.
B-3 | The Allstate Corporation
Officer, as determined by the Board or a committee thereof, the Board or the Committee (i) will review or cause to be reviewed all Awards paid to the Section 16 Officer pursuant to the Plan on the basis of having met or exceeded Performance Measures(s) or other measures or goals for Fiscal Years beginning after December 31, 2008 to the extent the Awards relate, in whole or in part, to the periods with respect to which the financial statements are restated and, if a lesser Award or Awards would have been paid to the Section 16 Officer based upon the restated financial results, the Board or the Committee shall have the authority, to the extent permitted by applicable law, to
The term "Proceeds" means, with respect to any sale or other disposition (including to the Company) of shares of Stock acquired pursuant to an Award, an amount determined by the Committee, (a) in the case of an Award other than an Option or SAR, up to the amount equal to the Fair Market Value per share of Stock at the time of such sale or other disposition multiplied by the number of shares sold or disposed of, or (b) in the case of an Option or SAR, up to the amount equal to the number of shares of Stock sold or disposed of multiplied by the excess of the Fair Market Value per share of Stock at the time of such sale or disposition over the Option Exercise Price or Base Value, as applicable. The return of Proceeds is in addition to and separate from any other relief available to the Company or any other actions as may be taken by the Committee in its sole discretion. Any determination by the Committee with respect to the foregoing shall be final, conclusive, and binding on all interested parties.
17.2 Non-Solicitation.While employed and for the one-yearone year period starting on the date of Terminationtermination of Employment,employment, any Participant who has received an Award under the Plan shall not, directly or indirectly:
The Allstate Corporation -- B-14
17.3 Non-Competition. Any Participant who has received an Award under the Plan:
directly or indirectly engage in, own or control an interest in, or act as principal, director, officer, or employee of, or consultant to, any firm or company that is a Competitive Business. "Competitive Business" is defined as a business that designs, develops, markets, or sells a product, product line, or service that competes with any product, product line, or service of the division in which Participant works. This section is not meant to prevent Participant from earning a living, but rather to protect the Company's legitimate business interests. A Participant is not subject to this non-competition provision if:
If a Participant violates the non-competition provision set forth above, the Board or the Committee may, to the extent permitted by applicable law, cancel or cause to be cancelled any or all of the Participant's outstanding Awards granted on or after February 21, 2012, that remain subject to a Period of Restriction or other performance or vesting condition as of the date on which the Participant first violated the non-competition provision.
17.4 No Limitation on Other Rights; Blue Pencil.Nothing contained in this Article 17Sections 5.g. or 5.h. shall be deemed to (i) limit any additional legal or equitable rights or remedies the Company may have under applicable law with respect to any Participant who may have caused or contributed to the Company's need to restate its financial results or who may have violated theany such non-solicitation or non-competition provisions in the Plan or in any other plan, policy, agreement or
B-15 -- The Allstate Corporation
arrangement or (ii) affect any other non-solicitation non-competition, or other restrictive covenants to which a Participant is subject. If any of the covenants contained in Article 17.2Section 5.g. and 17.35.h. or any part thereof, are held to be unenforceable, the court making such determination shall have the power to revise or modify such provision to make it enforceable to the maximum extent permitted by applicable law and, in its revised or modified form, said provision shall then be enforceable.
Article 18. Successors6. Miscellaneous.
The Allstate Corporation | B-4
rights and interests of a Participant under the Plan may not be assigned, encumbered, or transferred, voluntarily or involuntarily, other than by will or the laws of descent and distribution.
Article 19. Legal Construction
19.1 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular and the singular shall include the plural.
19.2 Severability. In the event any provisionadministration of the Plan shall be held illegal or invalidborne by the Company.
19.3 Requirements of Law. The granting of Awards and the issuance of Stock under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
19.4 Governing Law. To the extent not preempted by Federal law, the Plan, and all agreements hereunder, shall be construed in accordance with, and governed by, the laws of the State of Delaware, except with regard to conflicts of law provisions.
19.5 Code Section 409A Compliance. To the extent applicable, it is intended that this Plan and any Awards granted hereunder comply with the requirements of Section 409A of the Code and any related regulations or other guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service ("Section 409A"), and the Plan and any Awards granted under the Plan shall be interpreted and construed in a manner consistent with such intent.accordingly. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Dateif the Committee determines that any Award may beconstitute deferred compensation subject to Code Section 409A, the Committee may adopt such amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures (including amendments, policies, and procedures with retroactive effect), or take any other actions that the Committee determines are necessary or appropriate to (i) exempt the Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award. To the extent a Participant is entitled to an Award or (ii) comply with the requirements ofthat constitutes deferred compensation subject to Code Section 409A upon the Participant's separation from service from the Company, and thereby avoid the application of any penalty taxes under such Section. In the event that itParticipant is reasonably determined by the Committee that, as a result of Section 409A, payments in respect of any Award under the Plan may not be madedeemed at the time contemplated by the terms of the Plan or the applicable Award Agreement, as the case may be, without causing the Participant holding such Awardseparation from service to be subject to taxation under Section 409A, the Company will make such payment on the first day that would not result in the Participant incurring any tax liability under Section 409A, which action may include, but is not limited to, delaying payment to a Participant who is a "specified employee" within the meaning ofunder Code Section 409A, then payment of such Award shall not be paid or commence until the first day followingearliest of (i) the six-monthexpiration of the six (6) month period beginning onmeasured from the date of Participant's separation from service with the Company; or (ii) the date of the Participant's death following such separation from service.
7. Amendment or Termination of Employment No actionthe Plan.
The Board may at any time and from time to time, suspend, terminate, modify or failure byamend the Committee orPlan;provided,however, that no amendment that requires stockholder approval in order to maintain the Company in good faith to act, pursuant to this Section 19.5 shall subject the Committee, the Company, or anyqualification of the Company's employees, directors, or representatives to any claim, liability, or expense, and the Company shall not have any obligation to indemnify or otherwise protect any Participant from the obligation to pay any taxesQualified Performance-Based Awards as performance-based compensation pursuant to Section 409A.162(m) of the Code and regulations promulgated thereunder shall be made without such stockholder approval.
B-5 | The Allstate Corporation
8. Effective Date.
On February 19, 2014, the Plan was amended and restated effective upon approval of the material terms of the Plan by the Company's stockholders at the Company's 2014 annual stockholders meeting and shall thereafter remain in effect as provided herein.
The Allstate Corporation --| B-16B-6
Appendix C | ||||||
PROXY STATEMENT | ||||||
APPENDIX C
POLICY REGARDING PRE-APPROVAL
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT'S SERVICES
The Audit Committee recognizes the importance of maintaining the independent and objective stance of our Independent Registered Public Accountant. We believe that maintaining independence, both in fact and in appearance, is a shared responsibility involving management, the Audit Committee, and the Independent Registered Public Accountant.
The Committee recognizes that the Independent Registered Public Accountant possesses a unique knowledge of the Corporation and its subsidiaries and can provide necessary and valuable services to the Corporation in addition to the annual audit. The provision of these services is subject to three basic principles of auditor independence: (i) auditors cannot function in the role of management, (ii) auditors cannot audit their own work; and (iii) auditors cannot serve in an advocacy role for their client. Consequently, this policy sets forth guidelines and procedures to be followed by this Committee when approving services to be provided by the Independent Registered Public Accountant.
Audit Services, Audit-Related Services, Tax Services, Other Services, and Prohibited Services are described in the attached appendix. All services to be provided by the Independent Registered Public Accountant must be approved by the Audit Committee or the Chair of the Audit Committee. Neither the Audit Committee nor the Chair will approve the provision of any Prohibited Services by the Independent Registered Public Accountant.
In connection with the approval by the Audit Committee of the engagement of the Independent Registered Public Accountant to provide Audit Services for the upcoming fiscal year, the Independent Registered Public Accountant will submit to the Committee for approval schedules detailing all of the specific proposed Audit, Audit-Related, Tax, and Other Services, together with estimated fees for such services that are known as of that date. Subsequent to the Audit Committee's approval of audit engagement, Corporation management may submit to the Committee or the Chair for approval schedules of additional specific proposed Audit, Audit-Related, Tax, and Other Services that management recommends be provided by the Independent Registered Public Accountant during the audit and professional engagement period. Regardless of when proposed to the Committee or the Chair, each specific service will require approval by the Committee or the Chair before commencement of the specified service. The Independent Registered Public Accountant will confirm to the Committee or the Chair that each specific proposed service is permissible under applicable regulatory requirements.
Prior to approval of any specific Tax Service, the Independent Registered Public Accountant shall also provide to the Committee or the Chair a written description of (i) the scope of the service and the related fee structure, (ii) any side letter or other agreement between the Independent Registered Public Accountant and the Corporation or any subsidiary regarding the service, and (iii) any compensation arrangement or other agreement between the Independent Accountant and any person with respect to promoting, marketing, or recommending a transaction covered by the service.
In addition to the Audit Committee, the Chair of the Audit Committee has the authority to grant approvals of services to be provided by the Independent Registered Public Accountant. The decisions of the Chair to approve services shall be reported to the Audit Committee at each of its regularly scheduled meetings.
At each regularly scheduled Audit Committee meeting, the Audit Committee shall review a report containing (i) a summary of any services approved by the Chair since the Committee's last regularly scheduled meeting and (ii) an updated projection for the current fiscal year, presented in a manner consistent with the proxy disclosure requirements, of the estimated annual fees to be paid to the Independent Registered Public Accountant.
C-1 --| The Allstate Corporation
Audit Services
Audit-Related Services
Tax Services
Other Services
Any service that is not a Prohibited Service, Audit Service, Audit-Related Service, or Tax Service
Prohibited Services
The following services, as more fully described in Regulation S-X, Rule 2-01, of the Securities and Exchange Commission, are Prohibited Services; provided however, that the services described in items 1 through 5 are not Prohibited Services if it is reasonable to conclude that the results of such services will not be subject to audit procedures during an audit of the Corporation's financial statements:
The Allstate Corporation --| C-2
Appendix D | ||||||
PROXY STATEMENT | ||||||
Executive Officers EXECUTIVE OFFICERS
The following table lists the names and titles of our executive officers. "AIC"AIC refers to Allstate Insurance Company.
Name | Principal Positions and Offices Held | |
---|---|---|
Thomas J. Wilson | Chairman of the Board, President, and Chief Executive Officer of The Allstate Corporation and of AIC. Mr. Wilson also is a director of The Allstate Corporation. | |
Don Civgin | President and Chief Executive Officer, Allstate Financial. | |
James D. DeVries | Executive Vice President and Chief Administrative Officer of AIC (Human Resources). | |
Judith P. Greffin | Executive Vice President and Chief Investment Officer of AIC. | |
Sanjay Gupta | Executive Vice President and Chief Marketing Officer of AIC. | |
Suren Gupta | Executive Vice President, Allstate Technology and Operations of | |
Susan L. Lees | Executive Vice President, | |
Katherine A. Mabe | President, Business to Business of AIC. | |
Samuel H. Pilch | Senior Group Vice President and Controller of The Allstate Corporation and of AIC. | |
Steven E. Shebik | Executive Vice President and Chief Financial Officer of The Allstate Corporation and of AIC. | |
Steven C. Verney | Executive Vice President and Chief Risk Officer of AIC. | |
Matthew E. Winter | President, Allstate | |
D-1 --| The Allstate Corporation
Appendix E | PROXY STATEMENT |
DEFINITIONS OF NON-GAAP MEASURES
Measures that are not based on accounting principles generally accepted in the United States of America ("non-GAAP") are defined and reconciled to the most directly comparable GAAP measure. We believe that investors' understanding of Allstate's performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.
Operating income ("operating profit") is net income available to common shareholders, excluding:
Net income available to common shareholders is the GAAP measure that is most directly comparable to operating income.
We use operating income as an important measure to evaluate our results of operations. We believe that the measure provides investors with a valuable measure of the company's ongoing performance because it reveals trends in our insurance and financial services business that may be obscured by the net effect of realized capital gains and losses, valuation changes on embedded derivatives that are not hedged, business combination expenses and the amortization of purchased intangible assets, gain (loss) on disposition of operations and adjustments for other significant non-recurring, infrequent or unusual items. Realized capital gains and losses, valuation changes on embedded derivatives that are not hedged and gain (loss) on disposition of operations may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions, the timing of which is unrelated to the insurance underwriting process. Consistent with our intent to protect results or earn additional income, operating income includes periodic settlements and accruals on certain derivative instruments that are reported in realized capital gains and losses because they do not qualify for hedge accounting or are not designated as hedges for accounting purposes. These instruments are used for economic hedges and to replicate fixed income securities, and by including them in operating income, we are appropriately reflecting their trends in our performance and in a manner consistent with the economically hedged investments, product attributes (e.g. net investment income and interest credited to contractholder funds) or replicated investments. Business combination expenses are excluded because they are non-recurring in nature and the amortization of purchased intangible assets is excluded because it relates to the acquisition purchase price and is not indicative of our underlying insurance business results or trends. Non-recurring items are excluded because, by their nature, they are not indicative of our business or economic trends. Accordingly, operating income excludes the effect of items that tend to be highly variable from period to period and highlights the results from ongoing operations and the underlying profitability of our business. A byproduct of excluding these items to determine operating income is the transparency and understanding of their significance to net income variability and profitability while recognizing these or similar items may recur in subsequent periods. Operating income is used by management along with the other components of net income available to common shareholders to assess our performance. We use adjusted measures of operating income and operating income per diluted common share in incentive compensation. Therefore, we believe it is useful for investors to evaluate net income available to common shareholders, operating income and their components separately and in the aggregate when reviewing and evaluating our performance. We note that investors, financial analysts, financial and business media organizations and rating agencies utilize operating income results in their evaluation of our and our industry's financial performance and in their investment decisions, recommendations and communications as it represents a
E-1 | The Allstate Corporation
reliable, representative and consistent measurement of the industry and the company and management's performance. We note that the price to earnings multiple commonly used by insurance investors as a forward-looking valuation technique uses operating income as the denominator. Operating income should not be considered a substitute for net income available to common shareholders and does not reflect the overall profitability of our business.
The following table reconciles operating income and net income available to common shareholders for the years ended December 31.
| | | Per diluted common share | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
($ in millions, except per share data) | 2013 | 2012 | 2013 | 2012 | |||||||||
Operating income | $ | 2,670 | $ | 2,148 | 5.68 | 4.36 | |||||||
Realized capital gains and losses, after-tax | 385 | 216 | 0.82 | 0.44 | |||||||||
Valuation changes on embedded derivatives that are not hedged, after-tax | (16 | ) | 82 | (0.03 | ) | 0.17 | |||||||
DAC and DSI amortization relating to realized capital gains and losses and valuation changes on embedded derivatives that are not hedged, after-tax | (5 | ) | (42 | ) | (0.01 | ) | (0.09 | ) | |||||
DAC and DSI unlocking relating to realized capital gains and losses, after-tax | 7 | 4 | 0.01 | 0.01 | |||||||||
Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax | (7 | ) | (33 | ) | (0.01 | ) | (0.07 | ) | |||||
Business combination expenses and the amortization of purchased intangible assets, after-tax | (55 | ) | (81 | ) | (0.12 | ) | (0.16 | ) | |||||
(Loss) gain on disposition of operations, after-tax | (515 | ) | 12 | (1.10 | ) | 0.02 | |||||||
Loss on extinguishment of debt, after-tax | (319 | ) | — | (0.68 | ) | — | |||||||
Postretirement benefits curtailment gain, after-tax | 118 | — | 0.25 | — | |||||||||
Net income available to common shareholders | $ | 2,263 | $ | 2,306 | 4.81 | 4.68 | |||||||
The Allstate Corporation | E-2
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: Signature [PLEASE SIGN WITHIN BOX] Date w SCAN TO VIEW MATERIALS & VOTE THE ALLSTATE CORPORATION ANNUAL MEETING FOR HOLDERS AS OF 3/ |