Allstate 2011 Annual Report Download - page 19

a competitive assessment of total direct compensation (base salary and annual and long-term incentives) for
senior management positions. Towers Watson also assessed changes proposed by management for the executive
compensation program designed to address the relationship between pay and performance and risk and reward,
to reflect a desired level of alignment with competitive market levels and practices. The aggregate amount of fees
for executive compensation consulting services paid to Towers Watson in 2010 was $133,130. Towers Watson
representatives participated in portions of three committee meetings in 2010.
In addition to executive compensation consulting services, Towers Watson provided the corporation with
non-executive compensation consulting and software maintenance services in 2010, with aggregate fees of
$2,248,000. Specifically, actuarial services and software maintenance services represent fees paid of $612,000,
while the balance of the fees, $1,636,000, was paid for services related to Allstate’s human resources work,
including benefits and compensation consulting, and administrative work regarding retirement and health and
welfare plans. The committee receives and reviews a report regarding the other services provided to the
corporation by Towers Watson or its affiliates, to the extent that the fees for such services exceed $120,000 in a
fiscal year.
In designing the various elements and amounts of compensation, the Compensation and Succession
Committee draws upon the expertise of our chief executive officer and senior human resources officer and
confers with our general counsel, secretary, and chief financial officer on matters that fall within their respective
responsibilities.
Our chief executive officer attends committee meetings and advises the committee regarding the alignment of
our incentive plan performance measures with our overall strategy, the alignment of the weightings of the
performance measures with the responsibilities of each executive, and the impact of the design of our equity
incentive awards on our ability to attract, motivate, and retain highly talented executives. In providing this advice,
the chief executive officer provides context regarding our products, business risks, financial results, and
stockholder return. The chief executive officer also makes recommendations to the committee regarding executive
merit increases and compensation packages selected for executives being hired or promoted. In addition, the
committee looks to our chief executive officer for his evaluation of the performance of the executives who report
to him.
Our senior human resources officer attends committee meetings and provides the committee with internal
and external analyses regarding the basic structure and competitiveness of our compensation program and the
details of the operations of our various compensation and incentive plans, including the design of performance
measures for our annual cash incentive plan and the design of our equity awards. Annually, the senior human
resources officer also provides the committee with a detailed review of the estimated and actual results for each
of the corporate and business unit performance measures compared to threshold, target, and maximum goals and
the resulting estimated and actual payments to the executive officers.
Our chief financial officer attends meetings to explain details of financial results relevant to incentive
compensation or other financial measures or accounting rules. The general counsel is available at meetings to
provide input on the legal and regulatory environment. The secretary attends meetings to respond to questions
about corporate governance and to assist in the preparation of minutes.
For both the chief executive officer 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 can provide the certification required by the Sarbanes-Oxley Act of 2002.
The committee regularly meets in executive session without management present. The committee reviews its
performance at the end of each non-telephonic meeting and reviews its charter each year. The Compensation
Committee Report is included herein on page 28.
Compensation Committee Interlocks and Insider Participation
During 2010, the Compensation and Succession Committee consisted of Mr. Riley, Chairman, Mrs. Taylor,
Ms. Redmond, and Messrs. Ackerman, Beyer, Farrell, Greenberg, LeMay, and Smith, several of whom were
members for a portion of the year. None is a current or former officer or employee of Allstate or any of its
subsidiaries. There were no committee interlocks with other companies in 2010 within the meaning of the
Securities and Exchange Commission’s proxy rules.
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Proxy Statement