Allstate 2012 Annual Report Download - page 7

4NOV201122400855
The Allstate Corporation
2775 Sanders Road, Northbrook, IL 60062
April 11, 2012
To Our Stockholders,
The Allstate Board is fully committed to fulfilling its fiduciary obligations to all
stockholders and has a history of strong corporate governance. Your objectives and
insights are integral to Allstate’s success and therefore of primary importance to
the company’s leadership. Over the last year Tom Wilson, our chairman, met in
person with investors representing about 30% of our outstanding shares, as well as
the leading proxy advisory firms, to discuss corporate governance and executive
compensation. The entire board then thoughtfully considered this feedback,
evaluated alternatives, and developed a proposed set of changes to our corporate
governance and our executive compensation program. These proposed changes
were then further discussed with stockholders and we implemented important
modifications in three areas: stockholder ability to act between annual meetings,
executive compensation, and board effectiveness.
STOCKHOLDER ABILITY TO ACT BETWEEN ANNUAL MEETINGS
Recommending Instituting A Written Consent Right — We are recommending the
addition of a stockholder right to act by written consent. This right is structured so
that all stockholders will have the benefit of participating in a fully transparent
process that can be initiated by one or a group of investors holding at least 10% of
the outstanding shares. This action is responsive to the stockholders’ votes at the
last two annual meetings where a stockholder proposal to act by written consent
received 67% and 52% of the shares voted in 2010 and 2011, respectively.
Recommending Lowering The Ownership Threshold For Special Meetings — Last
year, we recommended stockholders approve the addition of a right to call special
meetings for stockholders owning 20% or more of the shares outstanding. This
proposal received affirmative support from 83% of our outstanding shares. This
year, we are recommending that the ownership threshold be lowered from 20% to
10%. This will make this right consistent with the proposed threshold for
stockholder action by written consent.
EXECUTIVE COMPENSATION
We made changes to our executive compensation program based on stockholder
input and discussions with our independent compensation consultant on recent
market trends. The changes are designed to further align pay with performance.
The primary changes are listed below, with greater detail in the Executive
Compensation section of the proxy statement.
Reduced Change-in-Control Benefits — We revised our change-in-control
arrangements. For senior executives, the new plan eliminates tax gross ups and
pension enhancements. Severance benefits were lowered for senior executives,
except the CEO. In addition, beginning in 2012, equity awards will have a ‘‘double
trigger,’’ which means that they will not vest in the event of a change-in-control,
unless also accompanied by a qualifying termination of employment.
Raised Performance Standards on Long-Term Equity Awards — We changed the
mix of long-term equity awards granted to our senior leadership team. For 2012,
long-term equity awards consisted of 50% performance stock awards and 50%
stock options. Previously this mix was 35% restricted stock units that vested over
time and 65% stock options.