Allstate 2012 Annual Report Download - page 17

management development for senior executives. Every The compensation and succession committee has sole
year, the compensation and succession committee authority to retain, terminate, and approve the fees of its
reviews succession plans for senior officers, confers with compensation consultant. In 2011, the committee retained
the chief executive officer about executives’ qualifications Towers Watson as its independent compensation
for potential senior leadership vacancies, and consultant. In this role, Towers Watson assessed
recommends to the Board officer elections. Allstate’s executive compensation design, peer group
selection, and relative pay for performance. In addition,
In addition, the chief executive officer advises the Towers Watson provided a competitive assessment of
nominating and governance committee and the Board total direct compensation (base salary and annual and
about chairman and chief executive officer succession long-term incentives) for senior management positions.
plans under various scenarios, such as chief executive Towers Watson also evaluated changes to the executive
officer retirement or incapacity. In case of a leadership compensation program that were proposed by
transition, the nominating and governance committee management to better align pay and performance and
would recommend candidates to the Board for the roles risk and reward with competitive market levels and
of chairman and chief executive officer. practices. In 2011, Towers Watson received $169,000 in
aggregate fees for executive compensation consulting
Board Role in Setting Compensation services. Towers Watson representatives participated in
Our executive compensation program is designed around five committee meetings in 2011.
the central beliefs that compensation should inspire In addition to executive compensation consulting services,
performance that is better than industry average; a Towers Watson provided Allstate with benefits consulting
greater percentage of compensation should be at risk for and software license and maintenance services for fees
senior executives; and compensation should be aligned totaling $2,345,000 in 2011. These fees were primarily
with performance and stockholder value. These objectives incurred under a three year agreement entered into with
are balanced with the goal of attracting and retaining Watson Wyatt in 2008, prior to its merger with Towers
highly talented executives and balancing risk and return. Perrin. The committee reviews a report on services
The compensation and succession committee reviews our provided to Allstate by Towers Watson or its affiliates in
executive compensation program annually and confers any given fiscal year for fees that exceed $120,000.
with its independent compensation consultant on market
practices and changes to the design of our executive Management Participation in Committee Meetings
compensation program. The compensation and succession
committee makes recommendations to the Board Audit Committee. Our chief executive officer, chief
regarding the compensation package of our chief financial officer, chief risk officer, general counsel,
executive officer and modifications to existing plans for secretary, controller, and senior internal audit officer
executive officers. participate in audit committee meetings. Executive
sessions of the committee are scheduled and held
The compensation and succession committee has throughout the year, including sessions in which the
authority to grant equity awards to eligible employees in committee meets exclusively with the independent
accordance with the terms of our 2009 Equity Incentive registered public accountant and the senior internal audit
Plan. In between meetings, the Board has delegated officer.
authority to an equity award committee, consisting of the
chief executive officer, to make awards of stock options Nominating and Governance Committee. Our chief
or restricted stock units, subject to limits, in connection executive officer, general counsel, and secretary
with an employee’s hiring or promotion or recognition of participate in nominating and governance committee
an employee’s particular achievement. All awards granted meetings. The committee regularly meets in executive
by the equity award committee are reported to the session without management present.
compensation and succession committee at its next Compensation and Succession Committee. In designing the
meeting. The equity award committee is not permitted to various elements and amounts of compensation, the
grant awards to individuals designated as executive compensation and succession committee draws on the
officers for purposes of Section 16 of the Securities expertise of our chief executive officer and senior human
Exchange Act of 1934 or covered employees as defined in resources officer and confers with our general counsel,
Section 162(m)(3) of the Internal Revenue Code. secretary, and chief financial officer on matters that fall
within their respective responsibilities. The committee
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Corporate Governance Practices
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