Allstate 2014 Annual Report Download - page 7

4NOV201122400855
The Allstate Corporation
2775 Sanders Road
Northbrook, IL 60062
April 6, 2015
To Our Stockholders,
The actions we took in 2014 relating to strategy, capital utilization, executive
compensation and governance built on a strong foundation of results and
oversight. The complete story is provided in the annual report and this proxy
statement but this letter highlights the significant actions taken based on
conversations with stockholders throughout the year. Overall, it has been a
productive and busy year with total stockholder return of 30.9% for 2014. This
brings total stockholder return for three- and five- years to 171.0% and 161.2%,
respectively, outperforming our property and casualty and life insurance peers. At
the same time, progress has been made in becoming a purpose-driven
organization that provides customers superior products and services.
Allstate maintained the same strategy of providing unique value propositions to
different segments of the personal lines insurance market. This strategy is working
as the company has grown policies in force and improved customer satisfaction
while maintaining excellent profitability.
In 2014, Allstate returned $2.78 billion to stockholders through a combination of
common stock dividends and the repurchase of 8.7% of the outstanding shares.
Net income return on equity was 13.3% and the ratio of debt to capital resources
was lowered to 18.9% by issuing preferred stock and repaying maturing debt.
To ensure that our compensation programs and payouts are aligned with
stockholder value, we made changes to performance stock awards and equity
retention requirements.
• The goals for performance stock awards were changed to a three-year average
operating income return on equity instead of three one-year operating income
return on equity goals. The change was made due to reduced homeowners
insurance volatility given management’s progress in reducing catastrophe
exposure.
• Equity retention requirements were lengthened for the 2014 awards in response
to a stockholder proposal in 2013 that received support from approximately
one-third of the voted shares. Despite this change, a similar proposal received
support from about a quarter of the shares voted in 2014. As a result, we
consulted with stockholders representing over one-third of our outstanding
shares and the compensation committee’s independent advisor to see if
additional changes were warranted. We decided to stay with the current equity
retention requirements since management’s ownership is in excess of the
LETTER TO STOCKHOLDERS FROM
YOUR BOARD OF DIRECTORS
STRATEGIC OVERSIGHT
CAPITAL UTILIZATION
EXECUTIVE COMPENSATION