Allstate 2015 Annual Report Download - page 7

The Allstate Corporation 2016 Proxy Statement 1
LETTER TO STOCKHOLDERS
FROM YOUR BOARD OF DIRECTORS
The Allstate Corporation
2775 Sanders Road
Northbrook, IL 60062
April 11, 2016
Fellow Stockholders,
Your Board’s focus, oversight and actions in 2015
reflected a changing external environment and
insights obtained from proactive engagement with
stockholders. This letter highlights the significant
strategic, governance, compensation and capital
actions taken over the last year. The entire story for
Allstate is told in greater detail in the annual report
and proxy statement.
Strategic Position
Allstate’s strategy of serving unique customer
segments with a broad range of products under
the Allstate, Esurance and Encompass brands
continues to strengthen its competitive position.
The breadth of product offerings enabled the
decline in auto insurance profitability to be offset
by continued strong performance in homeowners
and other insurance offerings. The strategic exit
from a number of life and annuity markets and the
subsequent repositioning of the investment portfolio
over the last several years also served us well. A
number of important initiatives are also underway
to adapt the business to provide trusted advice
though Allstate agencies, adapt to technologically
sophisticated cars and increase the use of data and
analytics.
Corporate Governance
Dialogue, transparency and responsiveness are
the cornerstones of our corporate governance
practices. Throughout the year, each Board
committee considers feedback from conversations
with stockholders representing about one-third of
outstanding shares and takes appropriate action
based on Allstate’s circumstances.
• Proxy Access - Allstate’s bylaws were amended to
give significant long-term stockholders the right
to nominate prospective Board members in the
company’s proxy statement beginning with next
year’s annual meeting.
• Board Capabilities - Jacques Perold, former
president of Fidelity Management & Research
Company, joined the Board bringing strategic,
operational and leadership capabilities, as well as
the perspective of a highly successful investor.
• Service on Other Boards - We evaluated the
standards for board service outside of Allstate and
concluded our standards were not impacting the
Board’s focus, commitment or attendance and were
aligned with market practice. Nevertheless, Judy
Sprieser reduced her other board commitments
given the additional responsibilities arising from
becoming our lead director in May 2015.
• Succession Planning - The development of our
senior executives and succession planning remains
an important area of focus. The compensation and
succession committee approaches succession
planning and development from both an enterprise
and individual leader perspective in three
meetings annually.
Executive Compensation
Annual incentive compensation for 2015 was funded
at 80.8% of target as the reduction in auto insurance
profitability was only partially offset by lower
catastrophe losses since we cap the amount of this
benefit that can flow through to compensation.
The Compensation Discussion and Analysis
section of the proxy statement provides additional
transparency on executive compensation.
We further evaluated management’s equity
retention requirements since there was a
stockholder proposal on this topic at last year’s
stockholder meeting that received support from
29% of stockholders. In our stockholder engagement
conversations, we discussed equity awards,
retention and stock ownership guidelines and
concluded the best approach was not to change
equity holding requirements but to make several
changes to the equity programs beginning in 2016.