Allstate 2011 Annual Report Download - page 41

Our philosophy and practices have provided us with the tools to create an effective executive compensation
program as detailed below.
Named Executives
This CD&A describes the executive compensation program at Allstate and specifically describes total 2010
compensation for the following named executives:
●Thomas J. Wilson—Chairman, President and Chief Executive Officer
●Don Civgin—Executive Vice President and Chief Financial Officer
●Joseph P. Lacher, Jr.—President, Allstate Protection
●Michele C. Mayes—Executive Vice President and General Counsel
●Matthew E. Winter—President and Chief Executive Officer, Allstate Financial
CEO Compensation
As stated in its charter, one of the Committee’s most important responsibilities is making recommendations to
the Board regarding the CEO’s compensation. The Committee establishes the goals against which the CEO’s
performance for the year will be evaluated and, in conjunction with the Nominating and Governance Committee,
evaluates the CEO’s performance relative to these goals. 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 for its consideration
by analyzing competitive compensation data provided by its independent executive compensation consultant and
company performance data provided by senior management. The Committee reviews the various elements of the
CEO’s compensation in the context of a total compensation package, including salary, annual cash incentive
awards, long-term incentive awards, and accrued pension benefits, as well as the value of Allstate stock holdings
and prior long-term incentive awards, and then presents its recommendations to the Board within this total
compensation framework.
Mr. Wilson’s total compensation and the amount of each compensation element are driven by the design of
our compensation plans, his years of experience, the scope of his duties, including his responsibilities for
Allstate’s overall strategic direction, performance, and operations, and the Committee’s analysis of competitive
compensation for CEOs of peer insurance companies and general industry CEO compensation practices. Because
of his leadership responsibilities, his leadership experience, and his ultimate accountability for performance of the
company, the Committee set a higher level of target total compensation as compared to the executive officers
who report to him.
Compensation Practices
The Committee reviews the design of our executive compensation program and executive pay levels on an
annual basis and performance and goal attainment within this design throughout the year. As part of that review,
the Committee engages Towers Watson, an independent compensation consultant, to conduct a marketplace
review of our executive compensation program. Towers Watson provided the Committee with relevant market data
and alternatives to consider when making compensation decisions for the named executives. In benchmarking our
executive compensation program the Committee utilizes a group of peer insurance companies as the primary data
source. The Committee selected these insurance companies based on the fact that they are publicly-traded and
their comparability to Allstate in product offerings, market segment, annual revenues, assets, and market value.
The Committee believes that these are companies against which Allstate competes for executive talent and
stockholder investment. Towers Watson recommended modifications to the peer insurance companies that the
Committee uses in benchmarking executive compensation for 2010, including program design, executive pay, and
performance comparisons. The Committee approved removing from the peer insurance companies Cincinnati
Financial Corporation due to its relative size and CNA Financial Corporation because it is closely held. ACE Ltd,
AFLAC Inc., and Manulife Financial Corporation were added to augment the peer insurance companies with
similarly sized insurers.
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Proxy Statement