Allstate 2013 Annual Report Download - page 88

through equity awards granted by Allstate, assuming
that the performance stock awards payout at target
levels.
•Allstate already has stringent equity retention
requirements. Allstate has had stock ownership • Existing vesting schedules promote executives’ focus
guidelines in place since 1996 in order to further align on long-term performance. In addition to Allstate’s
executives’ interests with those of stockholders, existing stock ownership guidelines, Allstate’s vesting
encourage a focus on long-term performance, and schedules for equity awards further align the interests
discourage imprudent risk-taking. In 2012, Allstate of executives and stockholders, and they motivate
conducted an extensive examination of the guidelines, executives to focus on long-term performance. Option
compared Allstate’s requirements to the policies of peer awards vest over four years: 50% on the second
companies, and adopted the following: anniversary date and 25% on each of the third and
fourth anniversary dates. Performance stock awards
• Allstate’s stock ownership guidelines require vest in one installment on the third anniversary of the
executives to hold 75% of net after-tax shares grant date. Retirement does not accelerate executives’
earned as compensation until a salary multiple ability to exercise option awards or sell performance
guideline is met. For Allstate’s CEO, the multiple is stock awards, so Allstate’s performance continues to
six times salary, and for each other named executive, financially impact executives after retirement.
the multiple is three times salary.
•Proposal concept and structure is flawed and has
• Allstate applies a rigorous method to calculate undesirable consequences.
whether an executive meets his or her stock
ownership guideline. Only personally-owned shares, • The proposal would require executives to retain
shares held in the Allstate 401(k) Savings Plan, and Allstate stock until retirement age, even after leaving
restricted stock units count towards the guideline. the company. The youngest Allstate senior executive
Unexercised stock options are excluded from is 35 years old. Under the proposal, if this executive
Allstate’s calculations, and performance stock awards were to leave Allstate this year, he would be required
do not count toward the guideline until the to hold a portion of his equity awards until he
performance stock awards vest. reaches age 65 in 2042, almost three decades after
he had any influence over Allstate’s performance.
•Under the proposal, an executive would reach his or
her salary multiple guideline more slowly than under • The proposal recommends a ban on hedging
Allstate’s existing stock ownership guidelines. Under transactions, but Allstate already has a policy that
Allstate’s existing stock ownership guidelines, it is prohibits all officers, directors, and employees from
estimated that a new executive would reach the salary engaging in transactions in Allstate stock that might
multiple guideline in six years while in contrast, under be considered speculative or hedging, such as selling
the proposal, it would take approximately 11 years for short or buying or selling options.
an executive to reach the same level of stock holdings
76
Stockholder Proposals
The Allstate Corporation |
PROXY STATEMENT
The Board recommends that stockholders vote against
this proposal for the following reasons: