Allstate 2015 Annual Report Download - page 56

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EXECUTIVE COMPENSATION
Performance Stock Awards
PSAs represent our promise to transfer shares of
common stock in the future if certain performance
measures are met. For the awards granted in 2015,
performance is measured in a single three-year
measurement period, and the actual number of PSAs
that vest will vary from 0% to 200% of that period’s
target PSAs based on Average Adjusted Operating
Income ROE for the measurement period. For a
definition of how that measure is calculated, see
pages 61-63. Each PSA represents Allstate’s promise
to transfer one fully vested share in the future for
each PSA that vests. Vested PSAs will be converted
into shares of Allstate common stock and dividend
equivalents accrued on these shares will be paid in
cash. No dividend equivalents will be paid prior to
vesting. PSAs will vest following the end of the three-
year performance cycle if the performance conditions
are met, subject to continued employment (other
than in the event of death, disability, retirement, or a
qualifying termination following a change in control).
Stock Options
Stock options represent an opportunity to buy
shares of our stock at a fixed exercise price at a
future date. We use them to align the interests of
our executives with long-term stockholder value, as
the stock price must appreciate from the grant date
for the executives to profit.
Under our stockholder-approved equity incentive
plan, the exercise price cannot be less than the
closing price of a share on the grant date. Stock
option repricing is not permitted. In other words,
without an event such as a stock split, if the
committee cancels an award and substitutes a
new award, the exercise price of the new award
cannot be less than the exercise price of the
cancelled award.
All stock option awards have been made in the form
of non-qualified stock options. The options granted
to the named executives in 2014 and 2015 become
exercisable over three years. One-third of the stock
options will become exercisable on the anniversary
of the grant date for each of the three years. The
change to the vesting schedule beginning in 2014
was made to reflect current market practice. For
the vesting schedule for other option grants, see
footnote 1 to the Outstanding Equity Awards at
Fiscal Year-end 2015 table. All of the options expire
ten years from the grant date, unless an earlier date
has been approved by the committee in connection
with certain change-in-control situations or other
special circumstances such as termination, death, or
disability.