Allstate 2011 Annual Report Download - page 40

below targets. Mr. Winter’s annual cash incentive, as president of Allstate Financial, was the highest
amongst the named executives as Allstate Financial’s results were above target on all measures.
●Long-Term Equity Incentives. As of December 31, 2010, the value of stock options granted in 2010 is
essentially at-the-money as total stockholder return was 8.8% for the entire year.
●Long-Term Cash Incentive. There was no payout on the long-term cash incentive plan for the 2008-2010
cycle due to performance levels below threshold. This plan paid out at 45% and 50% of target respectively
in 2008 and 2009 reflecting strong financial results in 2006 and 2007. This plan is no longer in place based
on a compensation program design change made in 2009.
Allstate has made changes to its executive compensation program for 2011. We have eliminated any excise
tax gross-ups in new change-in-control agreements. Allstate has also made changes to the annual incentive
program for 2011 to continue to better align executive compensation with enterprise performance. The key
program change, which will apply to all bonus eligible employees across the enterprise, will be to reduce the
number of measures and provide for greater use of enterprise-wide corporate goals. We believe this action will
focus employees on those goals which will more effectively drive sustainable long-term growth for stockholders.
Compensation Philosophy
Our compensation philosophy is based on these central beliefs:
●Executive compensation should be aligned with performance and stockholder value. Accordingly, a
significant amount of executive compensation should be in the form of equity.
●The compensation of our executives should vary both with appreciation in the price of Allstate stock and
with Allstate’s performance in achieving strategic short and long-term business goals designed to drive
stock price appreciation.
●Our compensation program should inspire our executives to strive for performance that is better than the
industry average.
●A greater percentage of compensation should be at risk for executives who bear higher levels of
responsibility for Allstate’s performance.
●We should provide competitive levels of compensation for competitive levels of performance and superior
levels of compensation for superior levels of performance.
Our executive compensation program has been designed around these beliefs and includes programs and
practices that ensure alignment between the interests of our stockholders and executives and delivery of
compensation consistent with the corresponding level of performance. These objectives are balanced with the
goal of attracting, motivating, and retaining highly talented executives to compete in our complex and highly
regulated industry.
Some key practices we believe support this approach include:
●Providing a significant portion of executive pay through stock options, creating direct alignment with
stockholder interests.
●Establishment of stock ownership guidelines for senior executives that drive further alignment with
stockholder interests. The chief executive officer is required to hold Allstate stock worth seven times salary,
and each other named executive is required to hold four times salary.
●Stock option repricing is not permitted.
●A robust governance process for the design, approval, administration, and review of our overall
compensation program.
●Utilization of annual incentive plan caps to limit maximum award opportunities and support enterprise risk
management strategies.
●Inclusion of a clawback feature in the Annual Executive Incentive Plan and the 2009 Equity Incentive Plan
that provides the ability to recover compensation from the senior management team in the event of certain
financial restatements.
●Incorporation of discretion in the Annual Executive Incentive Plan to allow for the adjustment of awards to
reflect individual performance.
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Proxy Statement