Allstate 2011 Annual Report Download - page 33

Proposal 3
Approval of Proposed Amendment
to the Certificate of Incorporation
Granting to Holders of not Less than 20% of the
Corporation’s Outstanding Shares the Right to Call
a Special Meeting of Stockholders
The Board is proposing an amendment (the ‘‘Amendment’’) to Article Seventh of the corporation’s certificate
of incorporation to grant holders of not less than 20% of the outstanding common stock the right to require that
a special meeting be called, subject to the bylaw procedures described below. The Board undertook a review of
this governance issue in 2010 and, upon the recommendation of the Nominating and Governance Committee, has
unanimously adopted a resolution declaring the advisability of the Amendment and recommending its approval by
the stockholders.
The proposed Amendment demonstrates the Board’s responsiveness to stockholders’ support for the right to
call special meetings and promotes good governance in a cost-effective and efficient manner. At the 2010 Annual
Meeting, a stockholder proposal for the right of 10% of stockholders to call a special meeting received a 55%
affirmative vote, which represented 40% of total outstanding shares. The Board supports the concept of greater
stockholder access, but believes that a 20% threshold strikes a better balance than a 10% threshold in terms of
enhancing stockholder rights and protecting against the risk that a small percentage of stockholders could trigger
a meeting to pursue special interests at significant expense and distraction to the corporation. In arriving at the
ownership threshold, the Board engaged the services of legal and investment banking experts to ensure a holistic
analysis was used to set a threshold that would be most appropriate for Allstate and its stockholders. The Board’s
analysis took into account the composition of its stockholder base and the size of their holdings, as well as the
ability of opportunistic investors with short-term goals to accumulate large positions in Allstate’s stock easily. The
Board also received direct input from some of Allstate’s largest investors about the ownership threshold that they
recommended would be most suitable for Allstate. The proposed threshold is also consistent with the proposition
that special meetings should be limited to extraordinary matters or significant strategic concerns that require
stockholder attention between annual meetings of stockholders. The Board believes it has chosen the appropriate
threshold for Allstate and its stockholders.
If the Amendment is approved, holders of not less than 20% of the outstanding common stock will have the
right to require that a special meeting be called, subject to certain bylaw procedures. These bylaw procedures will
be amendments to the current bylaws and include, among other things, the procedural requirements for one or
more stockholders to require that a special meeting be called, including information identifying such stockholders;
the purpose of the meeting and the matters proposed to be acted upon at the meeting; the text of any resolutions
proposed for consideration; any material interest of each such stockholder in such business; and a description of
any agreement, arrangement, or understanding between each such stockholder and any other person or persons
in connection with such proposal or business or the shares of any such stockholder. The corporation believes its
bylaw requirements will help protect stockholders’ interests generally and are not unduly burdensome. The Board
will adopt these bylaw amendments to become effective upon stockholder approval of the Amendment.
To be approved, the Amendment must receive the affirmative vote of a majority of the shares of our common
stock outstanding and entitled to vote on the Amendment. If the Amendment is approved by the stockholders, it
will become effective upon its being filed with the Secretary of State of the State of Delaware, which the
corporation intends to do promptly following action by stockholders at the 2011 Annual Meeting. If the
Amendment is not approved by the requisite vote, then the Amendment will not be filed with the Secretary of
State of the State of Delaware and the bylaw amendments will not become effective. Absent the approval of the
Amendment, our stockholders will not have the ability to require that a special meeting of stockholders be called.
A copy of the Amendment is attached as Appendix B to this proxy statement.
The Board of Directors recommends that stockholders vote for the approval of the amendment to
the certificate of incorporation.
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Proxy Statement