Allstate 2013 Annual Report Download - page 42

Salary companies and our benchmark target for total direct
compensation at the 50th percentile.
Executive salaries are set by the Board based on the
Committee’s recommendations. In recommending Long-term Equity Incentive Awards
executive base salary levels, the Committee uses the
50th percentile of our peer insurance companies as a We grant equity awards to executives based on scope of
guideline, which supports Allstate’s ability to compete responsibility, consistent with our philosophy that a
effectively for executive talent. Annual merit increases for significant amount of executive compensation should be in
the named executives other than the CEO are based on the form of equity and that a greater percentage of
evaluations of their performance by the CEO, Committee, compensation should be tied to performance for
and Board, using the enterprise-wide merit increase executives who bear higher levels of responsibility for
budget as a guideline. An annual merit increase for the Allstate’s performance. Additionally, from time to time,
CEO is based on an evaluation of his performance and equity awards are also granted to attract new executives.
market conditions by the Committee and the Board. The Committee annually reviews the mix of equity
incentives provided to the named executives. Beginning
Annual Cash Incentive Awards with awards made to our senior executives in 2012, the
mix of equity incentives changed to 50% performance
In 2012 executives could earn an annual cash incentive stock awards and 50% stock options. We believe stock
award based on Allstate’s achievement of performance options are a form of performance-based incentive
measures during the year and assessments of individual compensation because they require stock price growth to
performance. deliver any value to an executive, while performance stock
In order to qualify annual incentive awards as deductible awards provide direct alignment with stockholder
performance-based compensation under Internal Revenue interests.
Code section 162(m), a pool equal to 1.0% of Adjusted
Operating Income (defined on page 56) was established. Timing of Equity Awards and Grant Practices
The maximum amount payable to any named executive Typically, the Committee approves grants of equity awards
who served as CFO during the year is an amount equal to during a meeting in the first fiscal quarter. The timing
15% of the award pool. The maximum amount payable to allows the Committee to align awards with our
the CEO and the three most highly compensated performance and business goals. Throughout the year, the
executives, excluding any named executive who served as Committee may grant equity incentive awards to newly
CFO during the year, is the lesser of a stockholder hired or promoted executive officers.
approved maximum of $8.5 million under the Annual
Executive Incentive Plan or a percentage, which varies by The Committee approves grants of equity awards to
executive, of the award pool. The CEO can earn up to executive officers. Under authority delegated by the Board
40% of the pool, while the maximum percentage for each and Committee, an equity award committee may grant, to
other named executive is 15% of the pool. These limits employees other than executive officers, restricted stock
established the maximum annual cash incentive awards units and stock options to newly hired and promoted
that could be paid while preserving deductibility under executives and in recognition of outstanding
section 162(m). The Committee retained complete achievements. At each regularly scheduled meeting the
discretion to pay less than these maximum amounts, with Committee reviews equity awards granted by the equity
actual awards based on the named executive’s target award committee. The grant date for awards to newly
annual incentive award opportunity and the achievement hired or promoted executives is fixed as the first business
of performance measures and assessments of individual day of a month following the later of committee action or
performance. The target annual incentive award the date of hire or promotion. For additional information
opportunity for each named executive was determined on the Committee’s practices, see the Corporate
based on market data pay levels at peer insurance Governance Practices section of this proxy statement.
30
Executive Compensation
The Allstate Corporation |
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