Allstate 2008 Annual Report Download - page 50

For each performance measure, the Committee approved a threshold, target, and maximum goal. The target
goal for the corporate level adjusted operating income per diluted share measure, which is a component of the
annual cash incentive award for all named executives, was set at a level representing better than projected
average industry performance. Likewise, the target goal for the Allstate Protection growth and profit matrix was
set at a level representing better than projected average industry performance. The target goals for Allstate
Investments total return and excess spread performance measures were set at levels representing better than
market performance. The target goals for the other performance measures were based on evaluations of our
historical performance and plans to drive projected performance.
Target award opportunities approved by the Committee are stated as a percentage of annual base salary.
Award opportunities for the named executives are capped at 300% of the target awards. Annual cash incentive
awards are calculated using base salary, as adjusted by any merit and promotional increases granted during the
year on a prorated basis. One of the central beliefs on which our compensation philosophy is based is that a
greater percentage of compensation should be at risk for executives who bear higher levels of responsibility for
our performance. Because annual cash incentive awards are compensation that is at risk, the Compensation and
Succession Committee sets annual target award opportunities as a percentage of base salary for each named
executive based on that executive’s individual level of responsibility for contributing to our performance and
overall market competiveness. Among the named executives, Mr. Wilson as chairman, president and CEO bore the
most responsibility for our performance, followed by Mr. Ruebenson, who led our Allstate Protection unit, followed
by Mr. Simonson, who led our Investment unit, followed by Messrs. Civgin and Hale, our chief financial officers,
followed by Ms. Mayes, our general counsel, and by Mr. Pilch, who was our acting chief financial officer and is
our controller. Accordingly, for 2008, the Committee set annual target award opportunities for the named
executives, stated as a percentage of salary, as follows: Mr. Wilson—120%, Mr. Ruebenson—90%, Messrs. Civgin,
Hale and Simonson—80%, Ms. Mayes—70%, and Mr. Pilch—50%.
In calculating the annual cash incentive awards, our achievement with respect to each performance measure
is expressed as a percentage of the target goal, with interpolation applied between the threshold and target goals
and between the target and maximum goals. Unless otherwise adjusted by the Committee, the amount of each
named executive’s annual cash incentive award is the sum of the amounts calculated using Calculation A for the
corporate-level adjusted operating income per diluted share performance measure, the Allstate Financial adjusted
net income and adjusted operating income performance measures, and all of Allstate Investments performance
measures plus the sum of the amounts calculated using Calculation B for all of the other performance measures.
Calculation A
Actual performance interpolated X Weighting X Target award opportunity as a X Salary*
relative to threshold and percentage of salary*
target on a range of 50%
to 100% and relative to
target and maximum on
a range of 100% to 300%
* Base salary, as adjusted by any merit and promotional increases granted during the year on a prorated basis.
Calculation B
Actual performance interpolated X Weighting X Target award opportunity as a X Salary*
relative to threshold and target on a percentage of salary*
range of 0% to 100% and relative to
target and maximum on a range of
100% to 300%
* Base salary, as adjusted by any merit and promotional increases granted during the year on a prorated basis.
The weighting for each named executive is provided on page 41. Annual cash incentive awards based on the
achievement of the performance measures for 2008 are included in the amounts reported in the Non-Equity
Incentive Plan Compensation column of the Summary Compensation Table on page 51 and broken out separately
from long-term cash incentive awards in a footnote to that table. In addition, the threshold, target, and maximum
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