Allstate 2011 Annual Report Download - page 15

4. An Allstate director’s relationship with another company that has made payments to, or received
payments from, the Allstate Group for property or services in an amount which, in the last fiscal year,
does not exceed the greater of $1 million or 2% of such other company’s consolidated gross revenues for
such year.
5. An Allstate director’s position as an executive officer of a tax exempt organization to which the aggregate
amount of discretionary contributions (other than employee matching contributions) made by the Allstate
Group and The Allstate Foundation in any of the last three fiscal years of the tax exempt organization
were equal to or less than the greater of $1 million or 2% of such organization’s consolidated gross
revenues for such year.
6. An Allstate director’s relationship with another company (i) in which the Allstate Group makes
investments or (ii) which invests in securities issued by the Allstate Group or securities backed by any
product issued by the Allstate Group, all in the ordinary course of such entity’s investment business and
on terms and under circumstances similar to those available to or from entities unaffiliated with such
director.
Board Leadership Structure
Thomas J. Wilson is the chairman of the Board as well as the chief executive officer of Allstate. Allstate’s
Corporate Governance Guidelines allow the Board to determine the roles of chairman and chief executive officer
including whether they are held by separate individuals or by the same person. The Board believes that flexibility
in the allocation of the responsibilities of these two roles enables the Board to adapt the leadership function to
Allstate’s needs. Currently, Allstate is well-served by having these roles performed by Mr. Wilson, who provides
strategic and operating leadership for both the corporation and the Board. At other times, Allstate has split the
roles of chairman and chief executive officer between two individuals, such as it did when Mr. Wilson initially took
the position of chief executive officer.
The Board has a strong set of principles and practices to ensure independence and proper Board focus and
oversight. The only director who is an insider is Mr. Wilson. In addition, the Board meets in executive session
without management after each non-telephonic meeting to provide a formal venue to discuss issues among only
the independent directors. The leadership of these sessions rotates amongst the independent directors. The Board
selected this governance structure, after considering the approach supported by some proxy advisory firms of
utilizing one permanent lead director, based on the directors’ experiences on other public company boards and
Allstate’s current position. Allstate’s structure requires each board member to assume the responsibility of Board
leadership and enables the independent committee chairs to execute fully their responsibilities. This practice
provides all independent directors the opportunity to assume a leadership role in the executive sessions.
Furthermore, the Board believes that this practice is appropriate in light of the fact that currently only one of the
directors is an Allstate employee, all of the other directors are independent, and that the Audit, Compensation and
Succession, and Nominating and Governance Committees are comprised solely of independent directors. The
chairman and chief executive officer is advised of the issues discussed during these sessions immediately upon
conclusion of the meeting.
Board Role in Risk Oversight
The Board is responsible for the oversight of Allstate’s business and management, including risk management.
In exercising its management oversight responsibility, the Board regularly reviews management’s strategy and the
business plans for Allstate’s property and casualty business, life insurance and annuity business, and investment
portfolio, as well as the corporation’s liquidity and use of capital, and the general counsel’s assessment of legal,
regulatory, and legislative issues. Twice a year, the Board reviews the corporation’s risk management objectives
and processes. This includes how management measures, evaluates, and manages the corporation’s exposure to
risks posed by a wide variety of events and conditions, including turmoil in the capital markets and natural
catastrophes such as hurricanes. The Board also reviews third-party assessments of these risk management
processes, including a comparison with peer organizations, leading industry practices, and emerging trends. The
Audit Committee plays an integral role in risk management oversight by reviewing quarterly reports on risk
management and, as provided in its charter, discussing risk assessment and management processes with
Allstate’s executives, including the chief risk officer. In the performance of their oversight responsibilities, the
directors monitor whether Allstate’s strategies reflect a balance of risk and return, whether such strategies are
formulated within a clear set of risk tolerances, and whether risk management processes are executed as
designed.
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Proxy Statement