DEF 14A 1 allstate3149221-def14a.htm DEFINITIVE PROXY STATEMENT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant Filed by a Party other than the Registrant      

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
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Definitive Proxy Statement
  Definitive Additional Materials
Soliciting Material Under Rule 14a-12

The Allstate Corporation

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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Notice of 2017 Annual Meeting
and Proxy Statement














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REPORT FROM INDEPENDENT
DIRECTORS TO STOCKHOLDERS
     

The Allstate Corporation
2775 Sanders Road
Northbrook, IL 60062

April 12, 2017

As independent directors we proactively oversee corporate governance, strategy, business performance, executive compensation and succession and capital management. Our objectives are to support Allstate in meeting its obligations to customers, stockholders, employees, business partners and society. This report summarizes our major accomplishments in 2016, which are also discussed in more detail in the proxy statement.

CORPORATE GOVERNANCE

Our governance responsibilities are built on a foundation of interactive dialogue with stockholders and external governance firms, written principles and continuous improvement. Allstate has a long history of proactively reaching out multiple times a year to its largest stockholders to discuss governance trends and issues. In 2016, these discussions included our independent lead director, chair of the nominating and governance committee and our Chairman. Feedback was evaluated by the full Board and several important changes were implemented in 2016.

Strengthened the Lead Director Role – Last year a proposal to prospectively split the role of Chair and CEO received support from less than a majority of shares outstanding, but at a significant enough level to warrant a closer review. Our stockholder discussions made it apparent that we should formalize existing practices and institute additional changes to strengthen the lead director role. As a result, we formalized the lead director’s role in approving Board meeting agendas, schedules and meeting materials, and the lead director’s ability to call meetings of the independent directors. We also revised our governance guidelines to require that only independent directors elect the lead director and established the expectation that the lead director serve for more than one year. Lead director duties are fully described on page 21 of the proxy statement.
 

Expanded Committee Chair Responsibilities We formally extended to the committee chairs the power to approve committee agendas and meeting materials.
 

Strengthened Cybersecurity Oversight In 2013, we created a risk and return committee to better oversee enterprise risk and return activities and free up audit committee time for cybersecurity oversight. In 2016, the audit committee engaged its own independent cybersecurity advisor to provide additional independent oversight. While this advisor does not attest to results, as Deloitte & Touche LLP does for our annual audited financial statements, it is another step in adding cybersecurity monitoring capabilities and ensuring independent evaluation and oversight.
 

Enhanced Board Capabilities Allstate’s 11 member Board includes 10 independent directors who are highly qualified to oversee the business and provide expertise to support management, and have an average tenure of seven years. Half of the nominees bring gender or ethnic diversity, and currently hold four of the five Board leadership roles. We continuously look for opportunities to refresh our Board to augment its skills and expertise and this year added Perry Traquina, the former chair and chief executive officer of Wellington Management Company, one of the nation’s largest investors. Our independent directors, as a whole, bring expertise in financial services, technology, data and analytics, customer service, leadership, talent management, investment management and strategic expansions. Directors participated in external training and director forums in 2016.

STRATEGY AND BUSINESS PERFORMANCE

Since the pace of economic change continues to accelerate, a diligent board must simultaneously focus on current performance and long-term strategy. As part of strategic planning, the Board reviews Allstate’s relative competitive positioning and alternatives to maximize profitable growth. In 2016, we focused on overseeing management’s operating performance, execution of the customer segmented go-to-market strategy and investment activities. In addition, we spent considerable time discussing the strategic options to take advantage of a changing personal transportation system, and a new entity, Arity LLC, was launched to fully leverage and expand automotive telematics offerings. We also approved the acquisition of SquareTrade, a protection plan provider for consumer electronics and connected devices.

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EXECUTIVE COMPENSATION AND SUCCESSION

The Board and compensation and succession committee spend a considerable amount of time on executive compensation and succession planning. Executive compensation programs are designed, with assistance from an independent consultant, to be aligned with our strategy, key performance metrics and total shareholder returns. These programs are working effectively, as reflected by the stockholder advisory vote with 95% support for each of the last three years. Several enhancements to these programs were made in 2016.

Annual Incentive Plan – Total return on the investment portfolio was added as a funding measure for the annual incentive compensation pool. This change holds management accountable for both short-term income and the market value of the portfolio on an annual basis.
 
Management Stock Ownership Requirements – The CEO is required to hold a minimum of 6 times salary but currently holds a multiple of 34 times, reflecting a culture of strong equity ownership. This year, the holding requirement for the President and all executive vice presidents was aligned to a consistent multiple of 3 times salary. Beginning with awards granted in 2014, there is also a one year holding period for a portion of the net shares received from equity grants.
 
Succession Planning – We expanded our succession planning discussions to four times a year. The processes are designed to ensure sufficient in-house talent is available for all senior management positions by incorporating individual reviews, scenario planning, specific development plans and one-on-one meetings with more than 20 senior leaders and Board members.

SHAREHOLDER RETURNS

Total shareholder return was 21.5%, 43.2% and 196.6% over the last one, three and five years, respectively, which compares favorably to the Company’s peers and the S&P 500 Index. The annual dividend was raised by 10% and a $1.5 billion share repurchase plan was approved in May 2016.

SOCIETAL RESPONSIBILITIES

The Board also ensures that Allstate fulfills its role as a key member of the communities in which it operates. This includes operating with integrity, participating in an appropriate manner in public policy development and being a force for good by supporting youth empowerment and helping victims of domestic violence. Allstate and The Allstate Foundation helped over 4,800 nonprofit social service organizations in 2016. These activities are discussed in detail in Allstate’s corporate social responsibility report (http://corporateresponsibility.allstate.com/).

Stockholder interaction and dialogue are a key input to effectively executing our fiduciary Board duties, and consequently we value the insights and suggestions of all stockholders. You can reach us at directors@allstate.com.

We want to thank Herb Henkel who will be retiring from the Board in May. We are thankful for his wise counsel and strategic expertise over the last four years.

Thank you for your continued support of Allstate.

           
Kermit R. Crawford   Michael L. Eskew   Herbert L. Henkel

           
Siddharth N. (Bobby) Mehta   Jacques P. Perold   Andrea Redmond

           
John W. Rowe   Judith A. Sprieser   Mary Alice Taylor

Perry M. Traquina

The Allstate Corporation  

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NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS

When: Thursday, May 25, 2017, at 11:00 a.m. Central time. Registration begins at 10:00 a.m.
       

Where:

Allstate, North Plaza Auditorium 2775 Sanders Road Northbrook, Illinois 60062

 

Items of
Business:

Proposal 1 – Election of 10 directors.

Proposal 2 – Say-on-pay: advisory vote on the compensation of the named executives.

Proposal 3 – Advisory vote on the frequency of future advisory votes on the compensation of the named executives.

Proposal 4 – Approval of The Allstate Corporation 2017 Equity Compensation Plan for Non-Employee Directors.

Proposal 5 – Ratification of appointment of Deloitte & Touche LLP as Allstate’s independent registered public accountant for 2017.

Proposals 6 through 8 – Three stockholder proposals, if properly presented at the meeting.

In addition, any other business properly presented may be acted upon at the meeting.

 

Who Can
Vote:

Holders of Allstate common stock at the close of business on March 27, 2017. Each share of common stock is entitled to one vote for each director position and one vote for each of the other proposals.

 

Who Can
Attend:

Stockholders who wish to attend the meeting in person should review page 87.

 

Date of
Mailing:

On or about April 12, 2017, these proxy materials and annual report are being mailed or made available to stockholders and to participants in the Allstate 401(k) Savings Plan.


By Order of the Board,

Susan L. Lees
Secretary
April 12, 2017

How To Vote In Advance

Your vote is important. Please vote as soon as possible by one of the methods shown below. Make sure to have your proxy card, voting instruction form, or notice of Internet availability in hand and follow the instructions.

   

By Telephone: In the U.S. or Canada, you can vote your shares toll-free by calling 1-800-690-6903.

 
By Internet: You can vote your shares online at www.proxyvote.com.
 

By Mail: You can vote by mail by marking, dating, and signing your proxy card or voting instruction form and returning it in the postage-paid envelope.

 

By Tablet or Smartphone: You can vote your shares online with your tablet or smartphone by scanning the QR code.


Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 25, 2017

The Notice of 2017 Annual Meeting, Proxy Statement, and 2016 Annual Report and the means to vote by Internet are available at www.proxyvote.com.














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PROXY SUMMARY

This summary highlights selected information about the items to be voted on at the annual meeting. This summary does not contain all of the information that you should consider in deciding how to vote. You should read the entire proxy statement carefully before voting.

Meeting Agenda and Voting Recommendations

Proposal
1

Election of 10 Directors

The Board recommends a vote FOR each of the director nominees.
Diverse slate of directors with broad leadership experience; four of five leadership roles bring gender or ethnic diversity.
All candidates are highly successful executives with relevant skills and expertise.
Average director tenure of 7 years with 9 of 10 independent of management.
Proactive stockholder engagement.
Exceptional corporate governance ratings.
   
     See pages 11-16 for further information
      

Name    Principal Professional Experience(1)    Years of
Tenure
   # of
Other
Public
Company
Boards
    
Committee Memberships
(2)
AC    CSC    NGC    RRC    EC
Kermit R. Crawford President, Pharmacy, Health and Wellness for Walgreen Co. 4 1
Michael L. Eskew Chairman and CEO of United Parcel Service, Inc. 3 3
Siddharth N. Mehta President and CEO of TransUnion 3 2

Jacques P. Perold President of Fidelity Management & Research Company 1 1
Andrea Redmond Managing Director of Russell Reynolds Associates Inc. 7 0

John W. Rowe Chairman and CEO of Exelon Corporation 5 3

Judith A. Sprieser
Lead Independent
Director
CEO of Transora, Inc. and senior executive at Sara Lee Corporation 18 2
Mary Alice Taylor Senior executive at Citicorp and FedEx Corporation 19 0

Perry M. Traquina(3) Chairman, CEO and Managing Partner of Wellington Management Company, LLP <1 2
Thomas J. Wilson Chair and CEO of The Allstate Corporation 11 1


AC = Audit Committee RRC = Risk and Return Committee
CSC = Compensation and Succession Committee EC = Executive Committee

NGC = Nominating and Governance Committee

 = Chair of Committee

(1)         Except for Mr. Wilson, the professional experiences listed are the nominees’ former principal occupations.
(2)   Committee assignments for 2017 will be made after the annual election of directors.
(3)   Consistent with Allstate’s onboarding practices, committee assignments for Mr. Traquina will be established during his first year of service.


The Allstate Corporation  

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2017 Proxy Statement       Proxy Summary

BOARD NOMINEE HIGHLIGHTS

Relevant Skills and Experience Tenure Diversity

Broad governance experience by serving on other public company boards

Significant corporate leadership experience in relevant industries

Mix of seasoned directors who have been with Allstate through different external operating environments and fresh perspectives

Diversity of skill set, experience, thought, gender, ethnicity and background


9

Nine of our nominees have other public board experience

   

8

Eight of our nominees have served as a CEO or President

   

6

Six highly qualified nominees have joined the Board in the last five years

   

5

Three of our nominees bring gender diversity, and two of our nominees bring ethnic diversity to the Allstate boardroom

10

10

10

 

10

 
GOVERNANCE HIGHLIGHTS

Allstate has a history of strong corporate governance guided by three primary principles - dialogue, transparency and responsiveness. The Board has adjusted our governance approach over time to align with evolving best practices, drive sustained stockholder value and best serve the interests of stockholders.

Stockholder
Rights
     

Annual election of all directors

Majority vote standard in uncontested director elections

Proxy access rights

No stockholder rights plan (“poison pill”)

No supermajority voting provisions

Confidential voting

Right to call a special meeting for stockholders with 10% or more of outstanding shares

Right to request action by written consent for stockholders with 10% or more of outstanding shares

Stockholder engagement with holders of approximately 1/3 of outstanding shares each year

Independent
Oversight

     

Strong independent lead director role with clearly articulated responsibilities   

See pages 20-21 for changes made during 2016

Independent Board committees

All directors are independent except the Chair

Executive sessions at every in-person Board and committee meeting without management present

Good
Governance

     

Extensive Board dialogue with formal processes for stockholder engagement and frequent cross-committee and Board communications

Annual report to stockholders from the independent directors on Board accomplishments

Ongoing Board and committee self-evaluation process, including at the end of each in-person meeting

See page 18 for information about our evaluation processes

Strong annual individual director evaluation process

See page 18 for further information about the individual director evaluations

Comprehensive annual report on corporate involvement with public policy

Robust global code of business conduct and ethics training for all directors

Effective director education program

Strong equity ownership and retention requirements for executives



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Proxy Summary       2017 Proxy Statement

Proposal
2

Say-on-Pay: Advisory Vote on the Compensation of the Named Executives

The Board recommends a vote FOR this proposal.
Independent oversight by compensation and succession committee with the assistance of an independent consultant.
Executive compensation targeted at 50th percentile of peers and is structured to be aligned with total return to shareholders and our strategy.
Compensation programs are working effectively. Annual incentive compensation funding for our named executives in 2016 was 55.1% of target, from 80.8% of target in the prior year, primarily due to the impact of auto insurance profit improvement actions on the total premium measure.
Total shareholder return compares favorably to compensation.
   
     See pages 32-66 for further information
      

EXECUTIVE COMPENSATION HIGHLIGHTS

We compensated our named executives using the following elements for total target direct compensation in 2016:

  Element Description   Further Information
(pages)

Targeted
at 50th
percentile
of peers

     

Salary

     

Provides a base level of competitive cash to attract and retain executive talent

     

37, 42

Annual Cash Incentive

A funding pool for 2016 of 55.1% of target was based on four performance measures

Amounts awarded to each executive were based on pool funding, established target amounts, and individual performance

37, 42-43

Long-term Equity Incentive

The mix of equity incentives granted in 2016 was 60% performance stock awards (PSAs) and 40% stock options

Actual PSAs awarded are determined by Average Adjusted Operating Income Return on Equity (ROE) (70%) and Earned Book Value (30%) (both measured over a three-year period)

37, 43-45

Our executive compensation programs have delivered pay which is supported by performance as illustrated by the following chart showing CEO total compensation in comparison to Operating Income per Diluted Common Share and Total Shareholder Return over the last three years.

(1) As reported in the “Total” column of the Summary Compensation Table.
(2)         The Operating Income per Diluted Common Share measure is not based on accounting principles generally accepted in the United States of America (“non-GAAP”) and is defined and reconciled to the most directly comparable GAAP measure (net income applicable to common shareholders per diluted common share) in Appendix A.

The Allstate Corporation  

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2017 Proxy Statement       Proxy Summary

Proposal
3

Advisory Vote on the Frequency of Future Advisory Votes on the Compensation of the Named Executives

The Board recommends that you vote to conduct future advisory votes on executive compensation EVERY YEAR.
Our stockholders have expressed interest in annual say-on-pay proposals.
The Board values the opportunity to receive annual feedback to respond to changing market conditions.

   
     See page 67 for further information
      

Proposal
4

Approval of The Allstate Corporation 2017 Equity Compensation Plan for Non-Employee Directors

The Board recommends a vote FOR the approval of the Plan.
Director pay is reviewed and benchmarked against our peers annually.
The Plan includes a number of provisions that reflect best practice, including an annual limit on equity awards to directors.
The director pay program is aligned with stockholder interests as a meaningful portion of director compensation is in the form of equity.
Allstate cannot make equity awards to non-employee directors beyond the remaining allotment under the 2006 plan. The new Plan authorizes 400,000 shares for equity grants to Allstate’s independent directors.
   
     See pages 68-72 for further information
      

Proposal
5

Ratification of Deloitte & Touche LLP as the Independent Registered Public Accountant for 2017

The Board recommends a vote FOR ratification of Deloitte & Touche LLP for 2017.
Independent firm with few ancillary services and reasonable fees.
Significant industry and financial reporting expertise.
The audit committee has solicited requests for information from other auditing firms in the last four years and determined that the retention of Deloitte & Touche LLP continues to be in the best interests of Allstate and its stockholders.
   
     See pages 73-75 for further information
      


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Proxy Summary       2017 Proxy Statement

Proposal
6

Stockholder Proposal on Independent Board Chairman

The Board recommends a vote AGAINST this proposal.
Allstate’s independent lead director provides meaningful independent leadership of the Board.
The Board should continue to have flexibility to determine whether to split or combine the Chair and CEO roles and not be required to utilize one approach.
The Board has split the roles of Chair and CEO in the past.
The lead director is just one of many structural safeguards that provide effective independent oversight of Allstate.
 
   
     See pages 76-78 for further information
      

Proposal
7

Stockholder Proposal on Lead Director Qualifications

The Board recommends a vote AGAINST this proposal.
This proposal seeks to establish a new independence standard that is inconsistent with public stock exchange listing standards.
The nominating and governance committee specifically evaluated the impact of Ms. Sprieser’s tenure and concluded it had no impact on her independence.
Allstate’s independent lead director is selected through a robust process, and her performance is evaluated annually.
The Board believes it is important to maintain a mix of director tenures.
   
     See pages 79-80 for further information
      

Proposal
8

Stockholder Proposal on Reporting Political Contributions

The Board recommends a vote AGAINST this proposal.
Allstate already provides stockholders with comprehensive disclosures on Allstate’s involvement in the public policy arena (found at www.allstate.com/publicpolicyreport).
Allstate’s Board has strong governance and oversight practices over the company’s public policy involvement.
Allstate surpasses all disclosure requirements pertaining to political contributions under federal, state, and local laws.
   
     See pages 81-82 for further information
      


The Allstate Corporation  

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TABLE OF CONTENTS

2 REPORT FROM INDEPENDENT DIRECTORS TO STOCKHOLDERS
4 NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS
4 How To Vote In Advance
5 PROXY SUMMARY
11 CORPORATE GOVERNANCE
11 Proposal 1 – Election of 10 Directors
12 Director Nominees
17 Board Composition and Nominee Considerations
19 Board Leadership Structure and Practices
28 Board Meetings and Committees
30 Director Compensation
32 EXECUTIVE COMPENSATION
32 Proposal 2 – Say-on-Pay: Advisory Vote on the Compensation of the Named Executives
33 Compensation Discussion and Analysis
49 Compensation Committee Report
50 Summary Compensation Table
52 Grants of Plan-Based Awards at Fiscal Year-end 2016
54 Outstanding Equity Awards at Fiscal Year-end 2016
55 Option Exercises and Stock Vested During 2016
56 Retirement Benefits
59 Non-Qualified Deferred Compensation at Fiscal Year-end 2016
60 Potential Payments as a Result of Termination or Change in Control (CIC)
63 Estimate of Potential Payments upon Termination
64 Performance Measures for 2016
67 OTHER COMPENSATION PROPOSALS
67 Proposal 3 – Advisory Vote on the Frequency of Future Advisory Votes on the Compensation of the Named Executives
68 Proposal 4 – Approval of The Allstate Corporation 2017 Equity Compensation Plan for Non-Employee Directors
73 AUDIT COMMITTEE MATTERS
73 Proposal 5 – Ratification of Deloitte & Touche LLP as the Independent Registered Public Accountant for 2017
75 Audit Committee Report
76 STOCKHOLDER PROPOSALS
76 Proposal 6 – Stockholder Proposal on Independent Board Chairman
79 Proposal 7 – Stockholder Proposal on Lead Director Qualifications
81 Proposal 8 – Stockholder Proposal on Reporting Political Contributions
83 Stockholder Proposals or Director Nominations for the 2018 Annual Meeting
84 STOCK OWNERSHIP INFORMATION
84 Security Ownership of Directors and Executive Officers
85 Security Ownership of Certain Beneficial Owners
85 Section 16(a) Beneficial Ownership Reporting Compliance
86 OTHER INFORMATION
86 Proxy and Voting Information
89 Appendix A – Definitions of Non-GAAP Measures
93 Appendix B – Categorical Standards of Independence
93 Appendix C – Executive Officers
94 Appendix D – The Allstate Corporation 2017 Equity Compensation Plan for Non-Employee Directors



About Allstate

We Are
The Good Hands.


The Allstate Corporation is the largest publicly held personal lines property and casualty insurer in America, serving more than 16 million households nationwide. Founded in 1931, Allstate has been dedicated to protecting our customers from life’s uncertainties and preparing them for the future for more than 85 years.

Allstate became a publicly-traded company in 1993, and is listed on the New York Stock Exchange under the trading symbol ALL. In 2016, Allstate had over $36 billion in revenues.


See information about our stockholder engagement regarding our Board leadership structure in 2016 on page 25

See information about our compensation decisions for our named executive officers in 2016 on pages 38-40

See information about our proposed director pay limits on pages 68-69




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CORPORATE GOVERNANCE

Proposal
1

Election of 10 Directors

The Board recommends a vote FOR each of the director nominees.
Diverse slate of directors with broad leadership experience; four of five leadership roles bring gender or ethnic diversity.
All candidates are highly successful executives with relevant skills and expertise.
Average director tenure of 7 years with 9 of 10 independent of management.
Proactive stockholder engagement.
Exceptional corporate governance ratings.

   
      

The Board recommends 10 nominees for election to the Allstate Board for one-year terms beginning in May 2017 and until a successor is duly elected and qualified or his or her earlier resignation or removal. These nominees are talented, both as individuals and as a team. They bring a full array of business and leadership skills to their oversight responsibilities. Most nominees serve on other public company boards, enabling our Board to more quickly adopt best practices from other companies. Their diversity of experience and expertise facilitates robust and thoughtful decision-making on Allstate’s Board.

Each nominee, other than Mr. Traquina, was previously elected at Allstate’s annual meeting of stockholders on May 24, 2016 for one-year terms. Mr. Traquina was elected by the Board on June 30, 2016. The Board expects all nominees named in this proxy statement to be available for election. If any nominee is not available, then the proxies may vote for a substitute. On the following pages, we list the reasons for nominating each individual. Mr. Henkel is not standing for re-election at the annual meeting.



DIRECTOR NOMINEES SKILLS AND EXPERIENCE

Our Board selected the nominees based on their diverse skills and experiences, which the Board believes will contribute to the effective oversight of Allstate.

Core Competencies

Strategic Oversight

100% of Directors

       

Stockholder Advocacy

100% of Directors

 

Corporate Governance

100% of Directors

 

Leadership

100% of Directors

  
 

Additional Capabilities

Financial Services

80% of Directors

Complex, Highly-Regulated Businesses

   

80% of Directors

   

Risk Management

80% of Directors

 

Operational Risk Management

70% of Directors

 

Accounting and Finance

80% of Directors

 
 

Succession Planning

70% of Directors

   
 

Technology

80% of Directors

Innovation and Consumer Focus

 

70% of Directors

 
 

Global Perspective

70% of Directors

 

Government, Public Policy and Regulatory Affairs

   

60% of Directors

 
   

The Allstate Corporation  

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2017 Proxy Statement       Corporate Governance

Director Nominees

 
   
KERMIT R. CRAWFORD
Age: 57
Allstate Board Service
Tenure: 4 years (2013)
Audit committee
Nominating and governance committee
 
  Independent
 
   
      Professional Experience      
Former President and Executive Vice President, Pharmacy, Health and Wellness for Walgreen Co., which operates one of the largest drugstore chains in the United States.
Relevant Skills
Expertise assessing the strategies and performance of a geographically distributed and consumer-focused service business in a highly competitive industry.
Effectively led operational change, including through the use of technology, and established strong platforms for long-term stockholder value creation.
Extensive knowledge about analyzing consumer experience and insights.
Effectively transformed the pharmacy experience from a model focused primarily on drug delivery to a pharmacist-patient centric model.
Committee Expertise Highlights
Audit Committee Member

As a senior leader at Walgreen Co., he was responsible for all aspects of strategic, operational, and profit and loss management of the largest division of the then-largest drugstore chain in the United States.

Significant experience overseeing the strategy and transformation of a highly competitive consumer-focused business.

Current member of the audit and compliance committee at LifePoint Health.

Nominating and Governance Committee Member

Member of the governing bodies of Northwestern Lake Forest Hospital and the University of Southern California School of Pharmacy.

Current member of the corporate governance and nominating committee at LifePoint Health.

Other Public Board Service:
LifePoint Health 2016–present
   
 
   
MICHAEL L. ESKEW
Age: 67
Allstate Board Service
Tenure: 3 years (2014)
Audit committee
Compensation and succession committee
 
  Independent
 
   
      Professional Experience      
Former Chairman and CEO of United Parcel Service, Inc., a provider of specialty transportation and logistics services.
Presiding director at International Business Machines Corporation since May 2014 and lead director at 3M Company since 2012.
Relevant Skills
Effectively re-designed UPS’s operational platforms by using digital technologies to more effectively and efficiently deliver a customer-focused worldwide service.
Expertise in strategy and leadership development.
Oversight of a highly regulated company as a director of Eli Lilly and Company.
Committee Expertise Highlights
Audit Committee Member
Chair of the IBM and Eli Lilly audit committees and a past member of the 3M audit committee.
Successful execution of financial oversight responsibilities as CEO of UPS.
Compensation and Succession Committee Member
Significant management experience as former Chairman and CEO of UPS from 2002 to 2007 and director of other publicly-traded companies.
Current chair of the 3M compensation committee.
Other Public Board Service:
Eli Lilly and Company 2008–present
IBM 2005–present
3M Company 2003–present
   


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Corporate Governance       2017 Proxy Statement

 
   
SIDDHARTH N.
(BOBBY) MEHTA
Age: 58
Allstate Board Service
Tenure: 3 years (2014)
Audit committee
Risk and return committee chair
Executive committee
 
  Independent
 
   
      Professional Experience      
Former President, CEO, and current director of TransUnion, a global provider of credit information and risk management solutions.
Former Chairman and CEO, HSBC North America Holdings, Inc.
Former Chief Executive Officer, HSBC Finance Corporation.
Relevant Skills
Successful CEO leadership that increased revenues and global reach through the use of technology and advanced analytics.
Extensive operational and strategic experience in the financial services industry, including in banking and the credit markets, which provides valuable insights into the highly regulated insurance industry and investment activities.
Committee Expertise Highlights
Audit Committee Member
Multiple leadership positions with financial oversight responsibility, including President and CEO of TransUnion, CEO of HSBC Finance Corporation, and Chairman and CEO of HSBC North America Holdings, Inc.
Chair of Allstate risk and return committee.
Risk and Return Committee Chair
Significant experience in financial markets through multiple executive leadership positions at HSBC Group.
Other Public Board Service:
TransUnion 2012–present
Piramal Enterprises Ltd. 2013–present
   
 
   
JACQUES P. PEROLD
Age: 58
Allstate Board Service
Tenure: 1 year (2015)
Nominating and governance committee
Risk and return committee
 
  Independent
 
   
      Professional Experience      

Former President of Fidelity Management & Research Company, a privately-held investment and asset management company serving clients worldwide with $1.8 trillion in assets under management.

Former Chief Operating Officer for Fidelity Asset Management.

Former Founder, President and Chief Investment Officer of Geode Capital Management, LLC, a global asset manager and independent institutional investment firm and sub-advisor to Fidelity.

Current trustee of New York Life Insurance Company’s MainStay Mutual Funds.

Relevant Skills

30 years of successful leadership of strategy and operations and investment expertise in the financial services industry.

Leader of one of the world’s largest asset management firms.

Oversaw investments and operations for Fidelity’s family of mutual funds with over $1.8 trillion in assets under management.

Committee Expertise Highlights
Nominating and Governance Committee Member

Investor perspective on corporate governance as a result of asset management expertise.

Significant governance experience as President of Geode Capital which involved interlocking financial and operating relationships.

Risk and Return Committee Member

Significant experience in management and oversight of risk for three large asset management firms.

Current trustee of several mutual funds.

Other Public Board Service:
MSCI Inc. 2017–present
   


The Allstate Corporation  

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2017 Proxy Statement       Corporate Governance

 
   
ANDREA REDMOND
Age: 61
Allstate Board Service
Tenure: 7 years (2010)
Compensation and succession committee
Nominating and governance committee chair
Executive committee
 
  Independent
 
   
      Professional Experience      

Former Managing Director, co-head of the CEO/board services practice, founder and leader of global insurance practice, and member of financial services practice at Russell Reynolds Associates Inc., a global executive search firm, with 20 years of experience at the firm.

Independent consultant providing executive recruiting, succession planning, and talent management services.

Relevant Skills

Expert in public company succession planning, talent management, and compensation across a wide range of industries.

Substantial experience in financial services leadership selection and executive development.

Effectively helped companies identify and recruit leaders capable of building high-performance organizations.

Extensive experience in assessing required board capabilities and evaluating director candidates.

Committee Expertise Highlights
Compensation and Succession Committee Member

Experience in executive recruiting, succession planning, and talent management.

Extensive experience working with numerous publicly-traded companies to recruit and place senior executives.

Nominating and Governance Committee Chair

Significant expertise recruiting and evaluating directors for a variety of public companies.

A senior partner at a highly regarded global executive search firm, Russell Reynolds Associates, from 1986 to 2007, including significant tenure as co-head of the CEO/board services practice.

   
 
   
JOHN W. ROWE
Age: 71
Allstate Board Service
Tenure: 5 years (2012)
Compensation and succession committee chair
Nominating and governance committee
Executive committee
 
  Independent
 
   
      Professional Experience      

Chairman Emeritus and former Chairman and CEO of Exelon Corporation, one of the country’s largest electric utilities.

Relevant Skills

Extensive leadership and management experience as a CEO.

Successfully led a company in a highly regulated industry comparable to the complex insurance regulatory system in which Allstate operates.

Created and implemented a differentiated strategy in a highly regulated industry.

Financial services and insurance expertise as lead director on the board of Northern Trust Corporation and a former director of Unum Provident.

Committee Expertise Highlights
Compensation and Succession Committee Chair

Leadership responsibilities as former Chairman and CEO of Exelon Corporation.

Former member of SunCoke Energy compensation committee.

Member of Northern Trust Corporation compensation and benefits committee.

Former director of Sunoco and member of its compensation committee.

Nominating and Governance Committee Member

Chair of corporate governance committee and lead director of Northern Trust Corporation.

Lead director and chair of SunCoke Energy governance committee.

Former director of Sunoco and member of its executive committee.

Other Public Board Service:
Northern Trust Corporation 2002–present
SunCoke Energy, Inc. 2012–present
American DG Energy, Inc. 2013–present
   


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Corporate Governance       2017 Proxy Statement

 
   
JUDITH A. SPRIESER
Lead Director
Age: 63
Allstate Board Service
Tenure: 18 years (1999)
Nominating and governance committee
Risk and return committee
Executive committee
 
  Independent
 
   
      Professional Experience      

Former CEO of Transora, Inc., a technology software and services company.

Former CFO and other senior executive positions at Sara Lee Corporation, a global manufacturer and marketer of brand-name consumer goods.

Former director at Jimmy Choo plc, Royal Ahold NV and Experian.

Relevant Skills

Extensive service on boards of publicly-traded and international companies, including highly regulated companies.

More than 20 years operational experience in executive positions at Sara Lee Corporation.

Extensive evaluation of financial statements and supervision of financial executives.

Committee Expertise Highlights
Lead Director

Prior chair of audit committee (7 years).

Board service at Allstate during many different external operating environments and two CEOs.

Nominating and Governance Committee Member

Significant experience on boards of publicly-traded and international companies, and current member of nominating and governance committee at Intercontinental Exchange, Inc.

Numerous key leadership positions, including CEO of Transora, Inc., and CFO of Sara Lee Corporation.

Risk and Return Committee Member

Insight from service as prior chair of Allstate’s audit committee and current audit committee chair at Intercontinental Exchange, Inc.

Significant risk oversight and management experience.

Tenure as an Allstate director has provided experience through multiple operating environments.

Other Public Board Service:
Intercontinental Exchange, Inc. 2004–present
Reckitt Benckiser Group plc 2003–present
   
 
   
MARY ALICE TAYLOR
Age: 67
Allstate Board Service
Tenure: 19 years
(1996-1998; 2000-present)
Audit committee chair
Risk and return committee
Executive committee
 
  Independent
 
   
      Professional Experience      

Former senior executive with several Fortune 500 companies, including Citicorp and FedEx Corporation.

Former director at Blue Nile, Inc.

Relevant Skills

Held senior executive roles in technology, finance, operations, and distribution logistics at large corporations, including Citicorp and FedEx Corporation.

Developed significant financial experience by serving in financial oversight roles at Cook Industries, Northern Telecom, Homegrocer.com, Citicorp, and FedEx Corporation.

Prior experience as a lead director at Blue Nile, Inc.

Certified public accountant (inactive).

Committee Expertise Highlights
Audit Committee Chair

Significant financial oversight expertise developed as Chairman and CEO of HomeGrocer.com and in senior executive roles at Citicorp and FedEx Corporation.

Former member of the audit committee of Blue Nile, Inc.

Risk and Return Committee Member

Significant senior management experience.

Expertise in strategy formation, including technology-based business strategies, at both large established companies and start-ups.

Tenure as an Allstate director has provided experience through multiple operating environments.

Chair of Allstate audit committee.

   


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PERRY M. TRAQUINA
Age: 60
Allstate Board Service
Tenure: <1 year
Elected to the Board on June 30, 2016
 
  Independent
 
               
      Professional Experience      

Former Chairman, CEO and Managing Partner of Wellington Management Company, LLP, one of the world’s largest global investment management firms.

Relevant Skills

Extensive leadership and management experience as CEO of one of the largest institutional investors.

Strong financial services and global investment management expertise through 34 years at Wellington Management Company, LLP.

Oversaw the globalization of Wellington’s investment platform.

Successfully led company in a highly regulated climate with volatile capital markets.

Brings valuable market-oriented investor perspective.

Committee Expertise Highlights

Consistent with past practice, committee assignments will be established during first year of service.

Current audit committee member at Morgan Stanley and member of the audit and corporate governance and nominating committees at eBay.

Current chair of the risk committee at Morgan Stanley.

Other Public Board Service:
Morgan Stanley 2015–present
eBay 2015–present
   
 
   
THOMAS J. WILSON
Board Chair and Chief Executive Officer
Age: 59
Allstate Board Service
Tenure: 11 years (2006)
Executive committee chair
 
  
 
   
      Professional Experience      

CEO since January 2007 and Chair of Board since May 2008.

President from January 2005 to January 2015.

Held senior executive roles other than CEO, leading all major operating units over a 22-year period.

Relevant Skills

Key leadership roles throughout Allstate over a 22-year period.

Thorough and in-depth understanding of Allstate’s business, including its employees, agencies, products, investments, customers, and investors.

Developed Allstate’s strategy to provide differentiated customer value propositions to four consumer segments.

Created and implemented Allstate’s risk and return optimization program, allowing Allstate to withstand the 2008 financial market crisis and adapt to increases in severe weather and hurricanes.

In-depth understanding of the insurance industry.

Industry and community leadership, including former chair of the Property and Casualty CEO Roundtable and the Financial Services Roundtable, co-chair of a public-private partnership to reduce violence in Chicago, and national and Illinois co-chair for WE Day.

Committee Expertise Highlights
Executive Committee Chair

Comprehensive knowledge of Allstate’s business and industry with 22 years of leadership experience at the company.

Other Public Board Service:
State Street Corporation 2012–present
   


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Corporate Governance       2017 Proxy Statement

Board Composition and Nominee Considerations

The Board and nominating and governance committee believe that each director should be well-versed in strategic oversight, corporate governance, stockholder advocacy, and leadership in order to be an effective member of the Allstate Board. In addition to this fundamental expertise, the Board and committee seek directors with corporate operating experience, financial services expertise, and compensation and succession experience. The Board and committee also consider experience in the areas listed under the section “Evaluation Process for Current Directors” on page 18.

The Board and committee expect each non-employee director to be free of interests or affiliations that could give rise to a biased approach to directorship responsibilities or a conflict of interest and be free of any significant relationship with Allstate that would interfere with the director’s exercise of independent judgment. The Board and committee also expect each director to devote the time and effort necessary to serve as an effective director and act in a manner consistent with a director’s fiduciary duties of loyalty and care. Allstate executive officers may not serve on boards of other corporations whose executive officers serve on Allstate’s Board.

Board nominees are identified through a retained search firm, suggestions from current directors and stockholders, and through other methods including self-nominations. Our newest director, Mr. Traquina, was identified by our other directors.

The nominating and governance committee will consider director candidates recommended by a stockholder in the same manner as all other candidates recommended by other sources. A stockholder may recommend a candidate at any time of the year by writing to the Office of the Secretary, The Allstate Corporation, 2775 Sanders Road, Suite F7, Northbrook, Illinois 60062-6127.

All candidates are evaluated and considered for their diversity, including gender, ethnic and diversity of background, expertise, and perspective, as well as the criteria described in our Corporate Governance Guidelines at www.allstateinvestors.com.

Beginning with the 2017 annual meeting, a stockholder or group of up to 20 stockholders owning 3% or more of Allstate’s outstanding common stock continuously for at least three years can nominate director candidates constituting up to 20% of the Board in the company’s annual meeting proxy materials.

NOMINATION PROCESS FOR BOARD ELECTION

  

The Board continuously identifies potential director candidates in anticipation of retirements, resignations, or the need for additional capabilities. The graphic below describes the ongoing nominating and governance committee process to identify highly qualified candidates for Board service.

  
 
Consider current Board skill sets and needs


Ensure Board is strong in core competencies of strategic oversight, corporate governance, stockholder advocacy and leadership and has diversity of expertise and perspective to meet existing and future business needs
Check conflicts of interest and references
All candidates are screened for conflicts of interest, and all directors are independent, except the CEO
Nominating and governance committee dialogue
Considered 112 candidates since 2011
Meet with qualified candidates
To ensure appropriate personal qualities, such as independence of mind, being a team player, tenacity, and skill set to meet existing or future business needs
Nominating and governance committee dialogue
To consider shortlisted candidates and after deliberations, recommend candidates for election to the Board
Board dialogue and decision
Added seven highly qualified directors in the past five years


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EVALUATION PROCESS FOR CURRENT DIRECTORS

Before recommending the annual slate of director nominees, the nominating and governance committee has a rigorous process to evaluate current directors. In addition to considering the current directors’ tenure, the committee’s process includes:

On an annual basis, the contributions and performance of each individual director are evaluated, including in the following areas:


Core capabilities of strategic oversight, corporate governance, stockholder advocacy, and leadership.

   

Additional capabilities that provide the appropriate mix of skills and experience that fit Allstate’s business and strategies and contribute to the effectiveness of the Board, including capabilities in the following areas: financial services, complex/highly-regulated businesses, risk management, operational risk management, accounting and finance, succession planning,

technology, innovation and consumer focus, global perspective, and government, public policy and regulatory affairs.
   

Interests and affiliations that could give rise to a biased approach to directorship responsibilities.

   

Significant relationships with Allstate that would interfere with the director’s exercise of independent judgment.

   

Willingness and ability to devote the time necessary to serve as an effective director.


In addition, on a biennial basis, each director’s future plans for continued Board membership are discussed so that individual circumstances can be appropriately addressed.

Individual directors receive feedback each year from the Chair, the lead director, or chair of the nominating and governance committee.

The outcomes of such evaluations are shared with the nominating and governance committee in connection with the annual nomination process and inform the Board and nominating and governance committee’s ongoing process to identify highly qualified candidates for Board service.



STEPS TO ACHIEVE BOARD EFFECTIVENESS – EVALUATION PROCESSES

       
              

 

Evaluation at every in-person meeting – review Board, committee, and management performance after every meeting to measure the effectiveness of Board and committee oversight (performed by independent directors)

     
     
        
     

 

Annual evaluation – review contributions and performance of each director in light of Allstate’s business and strategies and confirm the continued independence of each non-employee director (evaluations performed by lead director, chair of nominating and governance committee and Chair with feedback provided to each director every year by the lead director, the chair of nominating and governance committee or Chair)

     
     
     
       
     
 

Biennial evaluation – discuss each director’s future plans for continued Board membership and whether overall Board skills align with business strategy (performed by lead director, chair of nominating and governance committee and Chair)

     
     
       
     
 

Evaluation after change in circumstances – review continued service of a director if there is a change in principal employment or other significant change in responsibilities (performed by Board)

     
     
        
     
     

Results

Board refreshment and average director tenure of seven years
Added seven highly qualified directors in past five years
Added Mr. Traquina in 2016 – as former CEO of one of the largest institutional investors, he complements the strategic, operational and investment expertise of Allstate’s Board
 
 

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NOMINEE INDEPENDENCE DETERMINATIONS

The Board has determined that all non-employee directors who served during 2016 and all nominees, other than Mr. Wilson, are independent according to applicable law, the NYSE listing standards, and the Board’s Director Independence Standards (which are included on www.allstateinvestors.com). In accordance with the Director Independence Standards, the Board has determined that the nature of the relationships with the corporation that are set forth in Appendix B do not create a conflict of interest that would impair a director’s independence. The Board also determined that the members of the audit, compensation and succession, nominating and governance, and risk and return committees are independent within the meaning of applicable laws, the NYSE listing standards and the Director Independence Standards.

When evaluating the independence of director nominees, the Board weighs numerous factors, including tenure. In particular, the Board weighed the potential impact of tenure on the independence of our two longest serving directors, Ms. Sprieser and Ms. Taylor. Both directors have significant experience serving at Allstate under different operating environments and management teams, and both served on the Board under two CEOs and prior to Mr. Wilson’s appointment. The Board concluded that both Ms. Sprieser and Ms. Taylor continue to be effective directors who fulfill their responsibilities with integrity and independence of thought. They appropriately challenge management and the status quo, and are reasoned, balanced, and thoughtful in Board deliberations and in communications with management. Therefore, the Board determined that their independence from management has not been diminished by their years of service.



Board Leadership Structure and Practices

BOARD CHAIR

Allstate’s Corporate Governance Guidelines allow the independent directors the flexibility to split or combine the Chair and CEO responsibilities. The independent directors periodically review Allstate’s leadership structure and whether separating the roles of Chair and CEO is in the best interests of Allstate and its stockholders. When making this determination, the independent directors consider the recommendation of the nominating and governance committee, the current circumstances at Allstate, the skills and experiences of the individuals involved and the leadership composition of the Board. The roles of Chair and CEO were split during a transition of leadership in 2007 and 2008. The independent directors also appoint an independent lead director with robust powers and responsibilities. A strong lead director role provides an effective independent counterbalance if the independent directors choose to combine the Chair and CEO roles.

At present, the independent directors have determined Allstate is well-served by having these roles performed by Mr. Wilson, who provides excellent leadership and direction for both management and the Board. This promotes a strong connection between the Board and management and is still subject to strong independent oversight by Allstate’s independent lead director and the other independent directors. The Board believes it benefits from the considerable knowledge and perspective that Mr. Wilson has acquired from more than 22 years of insurance industry experience. Given his extensive company knowledge and his ability to effectively fulfill both roles simultaneously, he is uniquely qualified to lead discussions of the Board and is in the best position to facilitate the flow of business information and communications between the Board and management.



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INDEPENDENT LEAD DIRECTOR

Allstate’s Board places great importance on strong independent Board leadership and has had a strong lead director role in place for over six years. Allstate’s Corporate Governance Guidelines describe

the responsibilities of the lead director and the selection process, including the characteristics that the Board considers important in a lead director.



   
   
In November 2016, in response to stockholder feedback and to formalize its practices, the Board amended Allstate’s Corporate Governance Guidelines to expand the responsibilities of the lead director to include:
Approval of meeting agendas, schedules and other materials sent to the Board
Authority to call meetings of the independent directors
Formal oversight over the Board committee self-evaluation process and committee reports to the Board
Responsibility for facilitating the Chair and CEO succession process
   
Other changes to the guidelines included:
Formalized change in lead director election process to provide that only the independent directors elect the lead director annually, with the expectation that the lead director serve more than one year
Clarified lead director selection process, including selection considerations for nominees, which are reviewed annually in connection with evaluation of the lead director
Reduced the number of public company boards that a non-executive director can serve on, in addition to Allstate, from five to four
 

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Judy Sprieser is Allstate’s lead director, and has held that role since 2015. The lead director is elected annually by the independent directors, and it is generally expected that the lead director serve more than one year. The lead director’s duties include:

         
Board Meetings and
Executive Sessions

Has the authority to call meetings of the independent directors
  Approves meeting agendas and schedules and information sent to the Board to ensure there is sufficient time for discussion of all items and that directors have the information necessary to perform their duties
Chairs executive sessions of independent directors at every Board meeting
Presides at all Board meetings when the Chair is not present
Duties to the Board Has regular communications with the CEO about the strategy and performance of Allstate
Performs additional duties that the independent directors may designate from time to time  
Communication
Between Chair and
Independent Directors
Serves as liaison between the Chair and independent directors
Is available to consult with the Chair about the concerns of the Board and reports on decisions made/suggestions in executive sessions
Communication with
Stockholders
Communicates with significant stockholders and other stakeholders on matters involving broad corporate policies and practices
Committee
Involvement
Works with the Chair and committee chairs to ensure coordinated coverage of Board responsibilities and ensures effective functioning of all committees
Ensures the implementation of a committee self-evaluation process and regular reports to the Board
Board and
Individual Director
Evaluations
  Facilitates the evaluation of individual director, Board and committee performance in conjunction with the chair of the nominating and governance committee and the Chair
CEO Performance
Evaluation
  Facilitates and communicates the Board’s performance evaluation of the Chair and CEO in conjunction with the chair of the compensation and succession committee
Succession Plans Ensures that a succession plan is in place for the Chair and CEO
 

       
   


JUDITH A. SPRIESER

       

governance expertise, operational and leadership experience, board service and tenure, integrity, prior Board leadership roles, and ability to meet the required time commitment. It is preferable that the lead director hold a previous position as chair of a Board committee, either at Allstate or another company. Ms. Sprieser was chosen by the independent directors as she exemplified these characteristics. She has devoted significant time fulfilling her duties as lead director since May of 2015. During her tenure on Allstate’s Board, she has cultivated an expansive knowledge of Allstate and the trust of the independent directors. She became a director prior to the election of the current Chair and CEO and has been a director through a number of different external operating environments. Her long-term perspective complements the perspectives of newer Board members, seven of whom have joined in the last five years. The independent directors believe that Ms. Sprieser is exceptionally well-qualified to serve as Allstate’s independent lead director.

 
    
Lead director since 2015
Member of the nominating and governance, risk and return and executive committees
Prior chair of audit committee for seven years
Allstate Board experience in multiple operating environments and under two CEOs
 

 

 

 

 

 

Considerations in Selecting Current Lead Director

When determining the appropriate candidate for lead director, the independent directors consider several factors, including the director’s corporate

 
     

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ACTIVE AND ENGAGED BOARD – SELECT ACTIONS OVER LAST FIVE YEARS

Allstate’s Board is committed to operating with transparency. The following summary lists select strategic, governance and compensation developments overseen by the Board during the last five years.

   
 
                 
   
Governance Enhanced the independent lead director’s powers, responsibilities and election process
Governance Strengthened role of committee chairs in approval of meeting agendas and committee materials
Governance The audit committee engaged an independent advisor to report on cybersecurity risk
Strategy Approved acquisition of SquareTrade, a protection plan provider for consumer electronics and connected devices, which expands Allstate’s customer protection offerings
 
Strategy Launched Arity LLC, a new entity, to fully leverage Allstate’s telematics offerings and expand Allstate’s current analytical capabilities
Compensation Added a fourth performance measure, total return, to the annual incentive compensation program to capture all investment results on an annual basis
     
   
Governance Adopted proxy access (3%, 3 years, 20% of Board, up to 20 stockholders can aggregate)
Strategy Oversight of auto insurance profit improvement plan in response to the historic rise in auto loss costs across the industry
Compensation Made decision to replace time-based restricted stock awards with performance stock awards for all senior vice presidents, starting in 2016
Compensation Added a second performance measure to the performance stock award program, earned book value, to create greater alignment with the increase in performance-based assets in Allstate’s investment portfolio, beginning with 2016 awards
Compensation Changed allocation of long-term equity award grants to 60% performance stock awards and 40% stock options, effective for 2016 grants
     
   
Governance Increased focus on cybersecurity oversight with audit committee conducting quarterly cybersecurity reviews
Compensation Changed performance goal for performance stock awards to three-year average (instead of three separate one-year periods)
Compensation Adopted a policy prohibiting the pledging of Allstate securities for senior executives and directors
     
   
Governance Created a risk and return committee to enhance the Board’s oversight of Allstate’s risk and return activities
Governance Expanded and formalized the Board’s director evaluation practices, and included a biennial review in addition to the annual reviews to discuss each director’s future plans for Board service
Strategy Approved the sale of Lincoln Benefit Life to strategically focus Allstate Financial and redeploy capital to earn higher risk-adjusted returns
Strategy Strengthened Allstate’s capital position and improved its strategic flexibility by utilizing preferred stock and subordinated debt to refinance higher-cost senior debt
Compensation Added an equity retention requirement for certain senior executives to require that 75% of the net proceeds be held for an additional year past the three-year vesting period in the case of performance stock awards, or for an additional year after exercise in the case of options
     
   
Governance Implemented stockholder right to call special meeting - 10% or more of outstanding shares
Governance Implemented stockholder action by written consent - 10% or more of outstanding shares
Strategy Implementation of customer segmented approach to property-liability insurance and aggressive initiation of auto telematics programs
Compensation Replaced time-based restricted stock awards with performance stock awards for senior leaders
 

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BOARD ROLE IN RISK OVERSIGHT

The Board is responsible for the oversight of Allstate’s strategy, business results, and management, including risk management. The Board formally reviews Allstate’s overall risk position and risk management twice a year and uses external resources when appropriate to assess enterprise risk and return management processes. Material risks, including those affected by climate, are regularly identified, measured, managed, and reported to senior management and the Board.

In 2013, the Board added a risk and return committee as a standing committee of the Board to ensure sufficient expertise and continuity between the Board’s biannual reviews. This committee oversees the effectiveness of Allstate’s enterprise risk and return management framework, governance structure and decision-making. The key responsibilities of the risk and return committee are further detailed on page 29.

The audit committee provides oversight and guidance on Allstate’s controls related to key risks and reviews the major financial risk exposures

and the steps taken to monitor and control those risks. As such, cybersecurity risk oversight was expanded in 2014 to supplement the oversight already provided by the Board and risk and return committee. The audit committee conducts quarterly reviews to:

Oversee the efficacy of cybersecurity risk initiatives and related policies and procedures.
Assess regular reports received from the chief risk officer and chief information security officer, who are tasked with monitoring cybersecurity risks, and from outside experts to supplement management reports.

In 2016, the audit committee engaged an independent advisor to assess Allstate’s cybersecurity risk. The advisor delivered a detailed report to the audit committee and Board. The chairs of the risk and return and audit committees are members of both committees to enhance cross-committee communication at the Board level.   


RISK MANAGEMENT AND COMPENSATION

The compensation and succession committee reviews executive compensation programs to ensure they appropriately reflect the risk and return principles approved by the Board. Each year, Allstate’s chief risk officer conducts a review and assessment of potential compensation-related risks arising from Allstate’s executive compensation plans and presents the analysis to the compensation and succession committee for further consideration and dialogue. The chief risk officer reviews the design, performance measures, and ranges in the incentive plans to ensure they are consistent with Allstate’s risk and return principles. The committee plays an important role in overseeing the executive compensation risk assessment and understanding any steps taken by management to manage and control executive compensation risks. In addition, the committee employs an independent compensation consultant each year to review and assess Allstate’s executive pay levels, practices, and overall program design.

Based on this annual review, we believe our compensation policies and practices are appropriately structured and do not provide incentives for employees to take unnecessary or excessive risks. Compensation plans provide a balanced and appropriate mix of cash and equity

through annual and long-term incentives to align with short and long-term business goals. No one, regardless of eligibility, is guaranteed an award under the annual cash incentive program. We utilize multiple performance measures that correlate with long-term stockholder value creation and that diversify the risk associated with any single performance indicator. In addition, the annual incentive program contains a funding adjustment for senior executives in the event of a net loss, which reduces the corporate pool funding for those officers by 50% of actual performance. Likewise, for the performance stock award program, the committee requires positive net income for our executives to earn awards above target. Equity awards to executive officers after 2009 and annual cash incentive awards beginning in 2010 are subject to clawback in the event of certain financial restatements. Executives are also subject to rigorous stock ownership and retention requirements. Beginning with awards granted in 2014, for senior executives, there is also a one year holding period for a portion of the net after-tax shares received from equity grants.

Based on this analysis, we believe Allstate’s compensation policies ensure appropriate levels of risk-taking, while avoiding unnecessary risks that could have a material adverse effect on Allstate.



BOARD ROLE IN MANAGEMENT SUCCESSION

     The Board oversees the recruitment, development, and retention of executive talent. Management succession is now discussed four times annually. Management succession is discussed in the compensation and succession committee, nominating and governance committee, and Board meetings with the CEO, as well as in executive sessions.

Discussions cover the CEO and other senior executive roles and include a broader discussion on organizational health. The Board also has regular and direct exposure to senior leadership and high-potential officers through one-on-one breakfasts and other informal meetings held throughout the year.



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BOARD REVIEW OF SUCCESSION PLANNING AND TALENT DEVELOPMENT PRACTICES
       
April
July
Topic:
CEO succession planning
 
Primary Focus:
Internal succession alternatives in three different time periods – immediate, 3-5 years, and long-term
   
Topic:
Organizational health – how the organization recruits, develops and retains people, including its inclusive diversity commitments
 
Primary Focus:
Systematic approach to talent development
 
 
November
September
Topic:
CEO and senior leadership succession – “what if” scenario planning
 
Primary Focus:
Board dialogue in advance of unexpected succession issues
 
Topic:
Senior leadership succession, including CEO
 
Primary Focus:
Key leader development and retention
 

BOARD ROLE IN SETTING COMPENSATION

The compensation and succession committee reviews the executive compensation program throughout the year with the assistance of an independent compensation consultant, Compensation Advisory Partners (“CAP”). CAP benchmarks Allstate’s plans and compensation payments to the market and evaluates changes to our executive compensation program. The compensation consultant also assesses Allstate’s executive compensation design, peer group selection, relative pay for performance, and total direct compensation for individual senior executive positions. Representatives of the compensation consultant participated in all six compensation and succession committee meetings in 2016.

The compensation and succession committee annually evaluates the compensation consultant’s performance and independence.

The compensation and succession committee makes recommendations to the Board on compensation for the CEO and executive officers and the structure of plans used for executive officers.

The compensation and succession committee grants all equity awards to individuals designated as executive officers for purposes of Section 16 of the Securities Exchange Act of 1934 or covered employees as defined in Internal Revenue Code section 162(m). The compensation and succession committee has authority to grant equity awards to eligible employees in accordance with the terms of our 2013 Equity Incentive Plan. The Board has delegated limited authority to the CEO to grant equity awards to non-executive officers. All awards granted between compensation and succession committee meetings are reported at the next meeting.

The compensation consultant also provides to the nominating and governance committee competitive information on director compensation, including updates on practices and emerging trends.



STOCKHOLDER ENGAGEMENT

Allstate has a proactive practice of discussing corporate governance issues with significant stockholders throughout the year. Dialogue, transparency, and responsiveness are the cornerstones of our practice. Such discussions are held before the annual meeting, during stockholder voting, and after the annual meeting and include our lead director, chair of nominating and governance committee, Chair of the Board, and

other committee chairs or directors as necessary. Direct engagement typically involves our largest stockholders representing approximately one-third of our total outstanding shares. We also engage with proxy and other investor advisory firms that represent the interests of various stockholders. In addition to input on current governance and executive compensation topics specific to Allstate, we invite discussion on any other topics or trends



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stockholders may wish to share with us. Their input is reported to the nominating and governance committee, which in turn allocates specific issues to relevant Board committees for further consideration. Each Board committee reviews relevant feedback and determines if additional discussion or actions are necessary by the respective committee or full Board. In addition, broader investor surveys provide perspective on investor concerns.

 

During 2016, Allstate reached out to stockholders representing approximately 40% of outstanding shares and spent a significant amount of time

discussing Allstate’s Board leadership structure, including the appropriate duties, responsibilities and important characteristics for our lead director role. After many investor meetings and focused discussions, the Board amended Allstate’s Corporate Governance Guidelines to, among other things, expand and formalize existing practices and responsibilities of the lead director. These amended guidelines can be found at www.allstateinvestors.com.



STOCKHOLDER ENGAGEMENT CYCLE
 
       
Before Annual Meeting
During Stockholder Voting
-Preview with investors plans for governance and compensation issues/ actions.
-Request feedback from investors.
   
-Follow up on previous conversations and discuss final Board decisions and reasoning.
-Review vote proposals and solicit support for Board recommendations.
 


 
After Annual Meeting
Annual Meeting of Stockholders
-Discuss with investors potential actions in response to results and new governance and compensation topics of interest for the upcoming year.
 
-Stockholders vote on issues such as directors, say-on-pay, auditor ratification and stockholder proposals.
 

BOARD ATTENDANCE POLICY

Each incumbent director attended at least 75% of the combined Board meetings and meetings of committees of which he or she was a member.

Attendance at Board and committee meetings during 2016 averaged 99% for the incumbent directors as a group. Directors are expected to

attend Board and committee meetings and the annual meeting of stockholders. All directors who stood for election at the 2016 annual meeting of stockholders attended the annual meeting.



RELATED PERSON TRANSACTIONS

The nominating and governance committee has adopted a written policy on the review, approval, or ratification of transactions with related persons, which is posted on the Corporate Governance section of allstateinvestors.com.

There were no related person transactions identified for 2016.

The committee or committee chair reviews transactions with Allstate in which the amount involved exceeds $120,000 and in which any related person had, has, or will have a direct or indirect material interest. In general, related persons are

directors, executive officers, their immediate family members, and stockholders beneficially owning 5% or more of our outstanding stock. The committee or committee chair approves or ratifies only those transactions that are in, or not inconsistent with, the best interest of Allstate and its stockholders. Transactions are reviewed and approved or ratified by the committee chair when it is not practicable or desirable to delay review of a transaction until a committee meeting. The committee chair reports any approved transactions to the committee. Any ongoing, previously approved, or ratified related person transactions are reviewed annually.



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2017 Proxy Statement       Corporate Governance

MANAGEMENT PARTICIPATION IN COMMITTEE MEETINGS

Audit Committee. The CFO, chief audit executive, chief compliance executive, chief risk officer, CEO, general counsel and controller all actively participate in audit committee meetings. Senior business unit and technology executives, including the chief technology officer, are present when appropriate. Executive sessions of the committee are scheduled and held throughout the year, including sessions in which the committee meets exclusively with the independent registered public accountant, chief audit executive, and chief ethics, compliance and privacy officer.

Compensation and Succession Committee. The executive vice president, human resources, general counsel, CFO and CEO regularly participate in compensation and succession committee meetings. The committee regularly meets in executive sessions that include just the independent compensation consultant or executive vice president, human resources, when necessary.

Our senior human resources executive provides the committee with internal and external analyses of the structure of compensation programs. Throughout the year, the estimated and actual results under our incentive compensation plans are reviewed.
 

Our CFO discusses financial results relevant to incentive compensation, other financial measures, and accounting rules.

Our CEO advises on the alignment of our incentive plan performance measures with our overall strategy and the design of our equity incentive awards. He also provides the committee with performance evaluations of senior executives and recommends merit increases and compensation awards.
 

The general counsel is available at meetings to provide input on the legal and regulatory environment and corporate governance best practices and to ensure the proxy materials accurately reflect the committee’s actions.
 

The chief risk officer reports annually on compensation plan alignment with Board-approved risk and return principles.

Nominating and Governance Committee. The CEO and general counsel participate in nominating and governance committee meetings. The committee regularly meets in executive session without management present.

Risk and Return Committee. The chief risk officer, CFO, general counsel, CEO and operating unit risk officers participate in risk and return committee meetings. The committee regularly meets in executive session, including sessions with the chief risk officer.



COMMUNICATION WITH THE BOARD

The Board has established a process to facilitate communication by stockholders and other interested parties with directors as a group. The general counsel reports regularly to the nominating and governance committee on all correspondence received that, in her opinion, involves functions of the Board or its committees or that she otherwise determines merits Board attention.

In addition, the audit committee has established procedures for the receipt, retention, and treatment of any complaints about accounting, internal accounting controls, or auditing matters. The communication process and the methods to communicate with directors are posted on the “Corporate Governance” and “Management & Directors” sections of www.allstateinvestors.com.

The Allstate Board welcomes your input on compensation, governance, and other matters.

@

directors@allstate.com


The Allstate Corporation
Nominating & Governance Committee
2775 Sanders Road, Suite F7
Northbrook, IL 60062-6127
c/o General Counsel



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Corporate Governance       2017 Proxy Statement

CORPORATE RESPONSIBILITY

The Board oversees Allstate’s reputation and corporate responsibility initiatives and believes that investing in our communities and operating sustainably benefit Allstate’s investors. Allstate and The Allstate Foundation create positive social change through the following priorities and initiatives.

     

Youth Empowerment: Good Starts Young is The Allstate Foundation’s program supporting America’s youth and their role in society as problem solvers. Last year, the organizations we supported helped over 1.7 million youth participate in service-based learning.

       

Helping End Domestic Violence: Over the past decade, The Allstate Foundation Purple Purse program became the nation’s longest-running program focused on providing financial empowerment services for domestic violence survivors. To date, our programs have helped over 1 million domestic violence survivors.

   

Volunteerism: Allstate employees contribute time and talent to a variety of organizations through Allstate and The Allstate Foundation Helping Hands in the Community programs. In 2016, employees and agents reported they volunteered over 230,000 hours of service to local nonprofit organizations. Additionally, many of Allstate officers provide leadership by serving on nonprofit boards.

   

Sustainability Efforts: In 2010, Allstate pledged to reduce its energy use by 20% over a ten-year period and surpassed that goal six years early. Allstate continues to work toward further reductions. Allstate has reduced its greenhouse gas emissions by nearly 30% since establishing a baseline in 2007.

     

To learn more about our corporate responsibility efforts, please view Allstate’s Corporate Responsibility Report at http://corporateresponsibility.allstate.com/.


MORE INFORMATION

You can learn more about our corporate governance by visiting www.allstateinvestors.com, where you will find our Corporate Governance Guidelines, each standing committee charter, and Director Independence Standards. Allstate has adopted a comprehensive Global Code of Business Conduct that applies to the chief executive officer, chief financial officer, controller, and other senior financial

and executive officers, as well as the Board of Directors and other employees. It is also available at www.allstateinvestors.com. Each of the above documents is available in print upon request to the Office of the Secretary, The Allstate Corporation, 2775 Sanders Road, Suite F7, Northbrook, Illinois 60062-6127.



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2017 Proxy Statement       Corporate Governance

Board Meetings and Committees

THE ALLSTATE CORPORATION BOARD OF DIRECTORS

Meetings in 2016: 7

Independent Lead Director: Judith A. Sprieser

Chair: Thomas J. Wilson

Key Responsibilities:

“The primary role and responsibility of the Board of Directors is to oversee the affairs of the Corporation for the benefit of the stockholders. . . . [including] oversight of the Corporation’s strategy, business performance, capital structure, management selection, compensation programs, shareholder advocacy, corporate reputation,

social responsibility initiatives, ethical business practices, and Board and Committee structure and operations.”

-Allstate’s Corporate Governance Guidelines

10 of 11 Allstate directors are independent

Executive sessions without management present at every in-person meeting

Strategy discussion at every meeting, including a meeting devoted solely to that topic

Succession planning discussed at four meetings annually




         
          

AUDIT
COMMITTEE
(1)
 

 
Meetings in 2016: 10
Chair: Mary Alice Taylor
Other Members:
Kermit R. Crawford
Michael L. Eskew
Siddharth N. Mehta
Key Responsibilities:
Oversees integrity of financial statements and other financial information and disclosures
Oversees the system of internal control over accounting and financial reporting and disclosure controls and procedures
Reviews the enterprise risk control assessment and guidelines, including cybersecurity risk and the major financial risk exposures and management steps to monitor and control those risks
Oversees the ethics and compliance program and compliance with legal and regulatory requirements
Appoints, retains, and oversees the independent registered public accountant, and evaluates its qualifications, performance and independence

“We discussed risk at five of our meetings, and engaged an independent advisor to review Allstate’s cybersecurity risks and controls. We anticipate that this will continue to be an area of focus throughout 2017.”

Mary Alice Taylor,
Chair
 
Report, pg. 75
 
 
Retains independent cybersecurity advisor
Oversees Allstate’s internal audit function
Has authority to engage independent counsel and other advisors to carry out its duties
         
     

COMPENSATION AND
SUCCESSION COMMITTEE 

        
 
 
Meetings in 2016: 6
Chair: John W. Rowe
Other Members:
Michael L. Eskew
Herbert L. Henkel
Andrea Redmond

Key Responsibilities:
Oversees Allstate’s executive compensation plans
Has authority to retain the committee’s independent compensation consultant
Assists the Board in determining all compensation elements of the executive officers, including the CEO
Reviews the Compensation Discussion and Analysis and prepares the Compensation Committee Report in this proxy statement
Reviews management succession plans, evaluation processes and organizational strength

“In 2016, we spent a considerable amount of time on the performance metrics in our short- and long-term incentive programs to ensure the programs, as a whole, continued to align with the long-term interests of our stockholders. We also added a fourth discussion on management succession.”

John W. Rowe,
Chair
 
Report, pg. 49
 
Reviews CEO’s performance in light of approved goals and objectives





 
 


(1)         The Board determined that all members of the audit committee are independent under the New York Stock Exchange and SEC requirements, and that Mrs. Taylor and Messrs. Eskew and Mehta are each an audit committee financial expert as defined under SEC rules. Ms. Sprieser and Messrs. Rowe and Traquina also have the background and experience to qualify as audit committee financial experts.

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Judith A. Sprieser,
Independent Lead Director

“Oversight of Allstate’s strategy was an important area of focus for our Board and this was a key part of our meetings in 2016. We also formalized and expanded the responsibilities of the lead director and committee chairs in response to stockholder feedback. We continue to evaluate our directors to ensure the optimal mix of skills, experience and diversity to effectively execute the Board’s responsibilities. This Board is well informed, actively engaged and highly collaborative.”

           
  

NOMINATING AND
GOVERNANCE COMMITTEE

        

RISK AND RETURN
COMMITTEE

 
 
Meetings in 2016: 6
Chair: Andrea Redmond
Other Members:
Kermit R. Crawford
Jacques P. Perold
John W. Rowe
Judith A. Sprieser
Key Responsibilities:
Recommends candidates for Board election and nominees for Board committees
Recommends candidates for lead director and Chair
Recommends criteria for selecting directors and the lead director, and determines director independence
Reviews the Corporate Governance Guidelines and advises the Board on corporate governance issues
Determines performance criteria and oversees the performance assessment of the Board, Board committees, and lead director
Reviews Allstate’s non-employee director compensation program
Has authority to retain a director search firm and director compensation consultant

“We spent a considerable amount of time discussing the role of the independent lead director, reflecting on last year’s stockholder vote and subsequent dialogue with stockholders and governance firms. As a result, we made additional changes to the responsibilities of this role. Board composition and refreshment were also important areas of focus. We were also thrilled to add Perry Traquina to our Board.”

Andrea Redmond,
Chair
 
Meetings in 2016: 5
Chair: Siddharth N. Mehta
Other Members:
Herbert L. Henkel
Jacques P. Perold
Judith A. Sprieser
Mary Alice Taylor
Key Responsibilities:
Assists the Board in risk and return governance and oversight
Reviews risk and return processes, policies, and guidelines used by management to evaluate, monitor, and manage enterprise risk and return (particularly related to Allstate’s business strategy, capital structure and operating plans)
Reviews Allstate’s enterprise risk and return management function, including its performance, organization, practices, budgeting, and staffing
Supports the audit committee in its oversight of risk assessment and management policies
Has authority to retain outside advisors to assist in its duties

“The committee is focused on building Allstate’s exceptional risk management practices and capital and risk allocation processes. Expanding governance of model risk, operational risk management and talent development were key priorities in 2016.”

Siddharth N. Mehta, 
Chair
 

EXECUTIVE
COMMITTEE

Meetings in 2016: No meetings were necessary
Chair: Thomas J. Wilson
Other Members:
Siddharth N. Mehta
Andrea Redmond
John W. Rowe
Judith A. Sprieser
Mary Alice Taylor

Key Responsibilities:
Has the powers of the Board in the management of Allstate’s business affairs to the extent permitted under the bylaws, excluding any powers granted by the Board to any other committee of the Board
Provides Board oversight if outside the scope of established committees or if an accelerated process is necessary
Comprised of lead director, committee chairs and Chair

Each committee operates under a written charter and has the ability to hire third-party advisors. Outside experts such as independent auditors, compensation consultants, governance specialists, cybersecurity experts, board search firm representatives, and financial advisors attend meetings to provide directors with additional information on issues. All committees, other than the executive committee, used independent external consultants in 2016.


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Director Compensation

DIRECTOR COMPENSATION PROGRAM

Allstate’s non-employee director compensation is reviewed annually. The nominating and governance committee proposes changes to director compensation based on this annual review and benchmark information from peer companies and

relevant compensation surveys. The following table describes each component of our non-employee director compensation program for 2016. No meeting fees or other professional fees were paid to the directors.



Role     Quarterly
Cash Retainer
(1)
     

Equity

Non-Employee Director $26,250

To create a linkage with corporate performance and stockholder interests, the Board believes that a meaningful portion of a director’s compensation should be in the form of equity securities. For that reason, directors are granted restricted stock units on June 1 equal in value to $150,000 divided by the closing price of a share of Allstate common stock on such grant date, rounded to the nearest whole share. For the 2017 award, the amount was increased to $155,000.

Lead Director $12,500
Audit Committee Chair $6,250
Other Committee Chair
(except Executive Committee)
$5,000
 
(1)        Paid in advance on the first day of January, April, July, and October. The retainer is prorated for a director who joins the Board during a quarter.

 

Based on peer benchmarking and an evaluation of the increased demands associated with Board service, effective January 1, 2017, the standard retainer was increased to $31,250, the quarterly chair


fee for the compensation and succession and risk and return committees was increased to $6,250 and the audit committee chair fee was increased to $8,750. Director compensation was last increased in 2015.


DIRECTOR STOCK OWNERSHIP GUIDELINES

Each director is expected, within five years of joining the Board or within five years of an increase in annual retainer, if applicable, to accumulate an ownership position in Allstate common stock equal to five times the annual value of the standard retainer.

Each director has met the ownership guideline, except for Messrs. Mehta, Perold, and Traquina, who joined the Board in the last five years.



2016 DIRECTOR COMPENSATION

The following table summarizes the compensation for each of our non-employee directors who served as a member of the Board and its committees in 2016.

Name     Leadership Roles
Held During 2016
    Fees Earned or
Paid in Cash
($)(1)(2)
    Stock
Awards
($)(3)(4)
    All Other
Compensation
($)(5)
    Total
($)
Mr. Beyer Retired May 2016
Risk and Return Committee Chair (January - May)
62,500 0 10,000 72,500
Mr. Crawford 105,000 150,054 0 255,054
Mr. Eskew 105,000 150,054 0 255,054
Mr. Henkel 105,000 150,054 0 255,054
Mr. Mehta Risk and Return Committee Chair (May –
December)
117,088 150,054 0 267,142
Mr. Perold 105,000 150,054 0 255,054
Ms. Redmond Nominating and Governance Committee Chair 125,000 150,054 0 275,054
Mr. Rowe Compensation and Succession Committee Chair 125,000 150,054 0 275,054
Ms. Sprieser Lead Director 155,000 150,054 0 305,054
Mrs. Taylor Audit Committee Chair 130,000 150,054 0 280,054
Mr. Traquina 52,788 137,522 0 190,310
(1)        Mr. Traquina received a prorated retainer as he joined the Board in June 2016.

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(2)         Under the 2006 Equity Compensation Plan for Non-Employee Directors, directors may elect to receive Allstate common stock in lieu of cash compensation. Mr. Traquina elected to receive stock in lieu of cash. Also, under Allstate’s Deferred Compensation Plan for Non-Employee Directors, directors may elect to defer their retainers to an account that is credited or debited, as applicable, based on (a) the fair market value of, and dividends paid on, Allstate common shares (common share units); (b) an average interest rate calculated on 90-day dealer commercial paper; (c) Standard & Poor’s 500 Index, with dividends reinvested; or (d) a money market fund. No director has voting or investment powers in common share units, which are payable solely in cash. Subject to certain restrictions, amounts deferred under the plan, together with earnings thereon, may be transferred between accounts and are distributed after the director leaves the Board in a lump sum or over a period not in excess of ten years in accordance with the director’s instructions. For 2016, Messrs. Eskew and Henkel each elected to defer his cash retainer into common share units.
(3) Grant date fair value for restricted stock units granted in 2016 is based on the final closing price of Allstate common stock on the grant dates, which in part also reflects the payment of expected future dividend equivalent rights. (See note 18 to our audited financial statements for 2016.) Mr. Traquina received a prorated award when he joined the Board in 2016. The final grant date closing price was $67.44, except with respect to the prorated award granted to Mr. Traquina, which was $69.95. The values were computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. Each restricted stock unit entitles the director to receive one share of Allstate common stock on the conversion date (see footnote 4).
(4) The following table provides outstanding restricted stock units and stock options as of December 31, 2016 for each director.

OUTSTANDING AWARDS AT FISCAL YEAR-END 2016
          
        Restricted
Stock Units
      Stock
Options
Name (#) (#)
Mr. Beyer 4,000 0
  Mr. Crawford 11,283 0
Mr. Eskew 6,622 0
Mr. Henkel 10,962 0
Mr. Mehta 7,761 0
Mr. Perold 3,407 0
Ms. Redmond 26,755 0
Mr. Rowe 15,904 0
Ms. Sprieser 40,413 0
Mrs. Taylor 40,413 8,000
Mr. Traquina 1,966 0
        Restricted stock unit awards granted before September 15, 2008, convert into common stock one year after termination of Board service. Restricted stock unit awards granted on or after September 15, 2008 and before June 1, 2016, convert into common stock upon termination of Board service. Restricted stock units granted on or after June 1, 2016, convert into common stock on the earlier of the third anniversary of the date of grant or upon termination of Board service. Directors had the option to defer the conversion of the restricted stock units granted on June 1, 2016, for ten years from the date of grant or the later of termination of Board service or June 1, 2024. The conversion of restricted stock units granted after June 1, 2016, may be deferred for ten years or until termination of Board service. In addition to the conversion periods described above, restricted stock units will convert upon death or disability. Each restricted stock unit includes a dividend equivalent right that entitles the director to receive a payment equal to regular cash dividends paid on Allstate common stock. Under the terms of the restricted stock unit awards, directors have only the rights of general unsecured creditors of Allstate and no rights as stockholders until delivery of the underlying shares.
Non-employee directors do not receive stock options as part of their compensation as a result of a policy change effective on June 1, 2009. All outstanding stock options were exercisable as of December 31, 2016.
All outstanding options were awarded under the terms of the 2006 Equity Compensation Plan for Non-Employee Directors, which specifies that the exercise price for the option awards is equal to the fair market value of Allstate common stock on the grant date. For options granted in 2007 and 2008, the fair market value is equal to the closing sale price on the date of the grant. If there was no such sale on the grant date, then on the last previous day on which there was a sale. The options became exercisable in three substantially equal annual installments and expire ten years after grant. Stock option repricing is not permitted. An outstanding stock option will not be amended to reduce the option exercise price. However, the plan permits repricing in the event of an equity restructuring (such as a split) or a change in corporate capitalization (such as a merger).
(5) This amount represents a charitable contribution made by Allstate to an entity selected by Mr. Beyer upon his retirement from the Board.

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EXECUTIVE COMPENSATION

Proposal
2

Say-on-Pay: Advisory Vote on the Compensation of the Named Executives

The Board recommends a vote FOR this proposal.
Independent oversight by compensation and succession committee with the assistance of an independent consultant.
Executive compensation targeted at 50th percentile of peers and is structured to be aligned with total return to shareholders and our strategy.
Compensation programs are working effectively. Annual incentive compensation funding for our named executives in 2016 was 55.1% of target, from 80.8% of target in the prior year, primarily due to the impact of auto insurance profit improvement actions on the total premium measure.
Total shareholder return compares favorably to compensation.
   
      

We conduct a say-on-pay vote every year at the annual meeting. While the vote is non-binding, the Board and the compensation and succession committee (the “committee” as referenced throughout the Compensation Discussion and Analysis and Executive Compensation sections) consider the results as part of their annual evaluation of our executive compensation program.

You may vote to approve or not approve the following advisory resolution on the executive compensation of the named executives:

RESOLVED, on an advisory basis, the stockholders of The Allstate Corporation approve the compensation of the named executives, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis and accompanying tables and narrative on pages 33-66 of the Notice of 2017 Annual Meeting and Proxy Statement.



Allstate continued to execute operational improvements in a challenging external environment. These operational improvements, however, led to a modest decline in insurance policies in force and, in part, led to results below threshold on the total premiums performance measure in the annual incentive program. Operating income was below target due to catastrophe losses in excess of plan. Net investment income was close to target levels and total return on our investment portfolio was well above target.
Total shareholder return was 21.5% for 2016 in comparison to 16.5% for the compensation peer group.
Total 2016 compensation for the CEO decreased from 2015 by $1.1 million to $12.2 million excluding the change in pension value, as shown in the Summary Compensation Table.
The annual incentive compensation plan was funded for the named executives at 55.1% of target in 2016. Based on company and individual performance, the named executives received the following annual incentive payments, which were significantly lower than the prior two years’ awards:

        Named Executive       2014 Annual
Incentive
($)
      2015 Annual
Incentive
($)
      2016 Annual
Incentive
($)
Mr. Wilson 4,073,075 2,888,136 1,982,880
Mr. Shebik 883,619 850,000 600,000
  Mr. Civgin 1,000,000 768,629 535,066
Ms. Fortin(1) 291,774
Mr. Winter 1,500,000 1,600,000 1,017,513
        (1)         For Ms. Fortin, only the last fiscal year is shown since this is the first year she is a named executive officer.


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Executive Compensation       2017 Proxy Statement

Compensation Discussion and Analysis

EXECUTIVE OVERVIEW

Our Compensation Discussion and Analysis describes Allstate’s executive compensation program, including total 2016 compensation for our named executives listed below:

Thomas J. Wilson — Chair and Chief Executive Officer (CEO)
Steven E. Shebik — Executive Vice President and Chief Financial Officer (CFO)
Don Civgin — President, Emerging Businesses
Mary Jane Fortin — President, Allstate Financial
Matthew E. Winter — President

See Appendix C for a list of Allstate’s other executive officers.

Business Highlights

In 2016, Allstate successfully executed its strategy to serve the four customer segments with unique value propositions, met near-term financial commitments and invested in long-term growth platforms. Stockholders received $1.8 billion in cash in 2016 through a combination of stock repurchases and common stock dividends. Our management team continued to advance all five of our 2016 operating priorities:

Operating Priorities             Results   
Better serve our customers through innovation, effectiveness, and efficiency  
Advanced the Allstate brand trusted advisor transformation by introducing new customer relationship initiation practices, including providing personalized insurance proposals to prospective customers.
Effectively utilized a “net promoter score” to focus efforts to better serve customers.
 
   
 
Achieve target economic returns on capital  
Operating income* of $1.8 billion despite a 49.6% increase in catastrophe losses in 2016, generating an operating income return on capital* of 10.4%.
Delivered a property-liability underlying combined ratio* of 87.9 for 2016, at the favorable end of the annual outlook range provided to investors.
 
   
 
Grow insurance policies in force  
Overall insurance policies in force declined modestly as increases in auto insurance pricing reduced both new business and customer retention.
Strong growth at Allstate Benefits.
   
 
Proactively manage investments  
Net investment income of $3 billion was essentially on plan.
Achieved 4.4% total return on the $82 billion investment portfolio in 2016.
Performance-based investments, including private equity and real estate, grew 17.2% in 2016 to $6 billion.
   
 
Build and acquire long-term growth platforms  
Launched Arity, our telematics company, to provide software, data and analytics services.
Agreed to acquire SquareTrade to expand Allstate’s protection offerings (closed in January 2017).
Allstate Benefits achieved $1 billion in premiums and contract charges in 2016.
   
   

*         The operating income and underlying combined ratio measures are not based on accounting principles generally accepted in the United States of America (“non-GAAP”) and are defined and reconciled to the most directly comparable GAAP measures in Appendix A.

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2017 Proxy Statement       Executive Compensation

Allstate’s one-year total shareholder return was 21.5%. The following chart shows Allstate’s total shareholder return over one, three and five years relative to the market cap weighted average of the peer group used for 2016 compensation benchmarking (identified on page 46).

COMPARISON OF TOTAL SHAREHOLDER RETURN

Alignment of Pay with Performance

The committee designs the executive compensation program to deliver pay in accordance with corporate, business unit and individual performance. A large percentage of total target compensation is at risk through long-term equity awards and annual cash incentive awards. These awards are linked to

performance measures that correlate with long-term stockholder value creation. The mix of target total direct compensation for 2016 for our CEO and the average of our other named executives is shown in the chart below.



CHIEF EXECUTIVE OFFICER       AVERAGE OF OTHER NAMED
EXECUTIVE OFFICERS

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Executive Compensation       2017 Proxy Statement

In addition to the compensation structure at target, the 2016 compensation paid to our named executives reflects strong pay for performance alignment.

Annual cash incentive. For our annual cash incentive award, we set performance ranges to align with our operating plan and strategy. The annual incentive plan was funded for the named executives at 55.1% of target. Allstate continued to execute operational improvements

in a challenging external environment. These operational improvements, however, led to a modest decline in insurance policies in force and, in part, led to results below threshold on the total premiums performance measure in the annual incentive program. Operating income was below target due to catastrophe losses in excess of plan. Net investment income was close to target levels, and total return on our investment portfolio was well above target.

The following table shows the annual cash incentive award paid to each named executive as a percentage of target in the last three years.

AIP % OF TARGET
     
Name       2014       2015       2016
Mr. Wilson 118.9% 80.8% 55.1%
Mr. Shebik 118.9% 90.7% 62.3%
Mr. Civgin 114.3% 80.8% 55.1%
Ms. Fortin 51.2%
Mr. Winter 130.4% 89.3% 55.1%

Long-term incentive awards. Senior executives received equity grants in 2016 composed of 60% performance stock awards (“PSAs”) and 40% stock options. The committee selected Average Adjusted Operating Income ROE and Earned
Book Value as the performance measures for PSAs since those measures were deemed to be best correlated to long-term stockholder value. See pages 43-45. The 2014-2016 PSAs paid out at 87.1% of target.


CONSIDERATION OF 2016 STOCKHOLDER VOTE

Stockholders approved the 2016 say-on-pay resolution with approximately 95% of the votes cast in favor. The committee, with input from the independent compensation consultant, considered the vote results, investor input, and current market practices as it evaluated whether changes to the compensation program were warranted.

As we strive to continuously improve our practices, we made the following modifications to our program in 2016:
Annual Incentive Plan. Our annual incentive plan for 2016 included total return as a fourth performance measure, further aligning our short-term incentive program with our long-term investments strategy.

Stock Ownership Guidelines. The President and all executive vice presidents are now required to own Allstate common stock worth a multiple of three times their base salary.



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2017 Proxy Statement       Executive Compensation

ALLSTATE’S EXECUTIVE COMPENSATION PRINCIPLES

Allstate’s executive compensation program includes industry best practices.

    
   What We Do   
Pay for Performance. A significant percentage of total target direct compensation is pay at-risk and is based on measurable performance goals.
Strong Link between Performance Measures and Strategic Objectives. Performance measures for incentive compensation are linked to operating priorities designed to create long-term stockholder value.
Independent Compensation Consultant. The committee retains an independent compensation consultant to review the executive compensation programs and practices.  
Targeted Pay at 50th Percentile of Peers. The committee targets total direct compensation at the 50th percentile of peers.
Benchmark Peers of Similar Revenues and Business Complexity. The committee benchmarks our executive compensation program and reviews the composition of the peer group annually with the assistance of the independent compensation consultant.
Moderate Change-in-Control Benefits. Change-in-control severance benefits are three times target cash compensation for the CEO and two times target cash compensation for other executive officers.
Double Trigger in the Event of a Change in Control. Beginning with grants made in 2012, equity incentive awards have a double trigger; that is, they will not vest in the event of a change in control unless also accompanied by a qualifying termination of employment.
Maximum Payout Caps for Annual Cash Incentive Compensation and Performance Stock Awards (“PSAs”). The committee establishes a maximum limit on the number of PSAs and the amount of annual cash incentive that can be earned. The respective compensation plans also limit awards for certain executives.
Robust Equity Ownership and Retention Requirements. In addition to executive stock ownership guidelines, we extended holding requirements beginning with awards granted in 2014. Senior executives must hold a portion of their equity for one additional year after vesting of the PSAs or restricted stock units or exercise of options.
Clawback of Certain Compensation if Restatement or Covenant Breach. Certain awards made to executive officers are subject to clawback in specified circumstances.
 

     
   What We Don’t Do  
No Employment Agreements for Executive Officers. Our executive officers are at-will employees with no employment contracts.   
No Guaranteed Annual Salary Increases or Bonuses. For the named executives, annual salary increases are based on evaluations of individual performance, while their annual cash incentives are tied to corporate and individual performance.
No Special Tax Gross Ups. No tax gross ups are provided beyond limited items which are generally available to all full-time employees.
No Repricing or Exchange of Underwater Stock Options. Our equity incentive plan does not permit repricing or exchange of underwater stock options or stock appreciation rights without stockholder approval, except in connection with certain transactions involving Allstate or a change in control.
No Plans that Encourage Excessive Risk-Taking. Based on the annual review, it was determined that the company’s compensation practices are appropriately structured and avoid incenting employees to engage in unnecessary and excessive risk-taking.
No Hedging or Pledging of Allstate Securities. Officers, directors, and employees are prohibited from hedging Allstate securities. Directors, executive officers and other senior executives are prohibited from pledging Allstate securities as collateral or holding securities in a margin account, unless an exception is granted by the Chair or lead director.
No Inclusion of Equity Awards in Pension Calculations. Compensation realized from the exercise of stock options or the settlement of PSAs is not used in the calculation of an employee’s pension benefit.
No Dividends Paid on Unvested PSAs. Dividend equivalents are accrued but not paid on PSAs until the performance conditions are satisfied and the PSAs vest after the performance measurement period.
No Excessive Perks. We offer only limited benefits as required to remain competitive and to attract and retain highly talented executives.
 

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Executive Compensation       2017 Proxy Statement

ELEMENTS OF 2016 EXECUTIVE COMPENSATION PROGRAM DESIGN

The following table lists the elements of target direct compensation for our 2016 executive compensation program. The committee uses the 50th percentile of our peer companies as a guideline when setting total target direct compensation. The program uses a mix of fixed and variable compensation elements and provides alignment with both short- and long-term business goals through annual and long-term incentives. Our incentives are designed to drive overall corporate performance, specific business unit strategies, and individual performance using measures that correlate to stockholder value and align with our long-term strategic vision and operating priorities.

    Fixed     Variable
        Base Salary       Annual Cash Incentive
Awards
      Performance Stock Awards
(“PSAs”)
      Stock Options

Key
Characteristics

Fixed compensation component payable in cash.
Reviewed annually and adjusted when appropriate.
Variable compensation component payable annually in cash.
Actual performance against annually established goals determines overall corporate pool, which is allocated based on individual performance.
Equity award based on achieving performance goals.
PSAs vest on the day before the third anniversary of the grant date based on actual performance against goals established at the beginning of the performance period.
See page 45 for the retention requirements for PSAs.
Non-qualified stock options to purchase shares at the market price when awarded. Vest ratably over three years.(1)
Expire in ten years or in the event of retirement, the earlier of five years or normal expiration.
See page 45 for the retention requirements for stock options.

Why We Pay
This Element

Provide a base level of competitive cash compensation for executive talent.
Motivate and reward executives for performance on key strategic, operational, and financial measures during the year.
Motivate and reward executives for performance on key long-term measures.
Align the interests of executives with long-term stockholder value and retain executive talent.
Align the interests of executives with long-term stockholder value and retain executive talent.

How We
Determine
Amount

Experience, job scope, market data, and individual performance.
Senior executive payments are approved by the compensation and succession committee.
A corporate-wide funding pool is based on performance on four measures:
Adjusted Operating Income(2)
Total Premiums(2)
Net Investment Income(2)
Total Return(2)
Individual awards are based on job scope, market data, and individual performance.
Target awards based on job scope, market data, and individual performance.
Vested awards based on performance on Adjusted Operating Income Return on Equity(2) and Earned Book Value(2) with a requirement of positive Net Income for any payout above target.
Target awards based on job scope, market data, and individual performance.
(1)         Stock options granted prior to February 18, 2014 vested over four years with 50% exercisable on the second anniversary of the grant date, and 25% exercisable on each of the third and fourth anniversary dates. The change to a three-year vesting schedule with one-third exercisable on each anniversary was made in 2014 to reflect current market practice.
(2)   For a description of how these measures are determined, see pages 64-66.

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COMPENSATION DECISIONS FOR 2016

Chief Executive Officer

Mr. Wilson, Chair and Chief Executive Officer
Mr. Wilson’s total compensation and the amount of each compensation element are driven by the design of our compensation program, his experience, his responsibility for Allstate’s overall strategic direction, performance and operations, and the committee’s analysis of peer company CEO compensation. In conjunction with the committee’s independent compensation consultant, the committee conducts an annual review of Mr. Wilson’s total target direct compensation and determines if any changes are warranted.
Mr. Wilson’s performance as Chair and CEO is evaluated under the following categories which are determined by the committee: operating results, total shareholder return, developing and implementing long-term strategy, maintaining and motivating a high performance team, corporate stewardship and Board effectiveness. Performance is assessed over one- and three-year time periods.
Operating Results. Allstate made substantial progress in executing the profit improvement plan for auto insurance. However, the auto insurance profit improvement plan negatively impacted the total premiums measure in the annual incentive plan. Operating profit was below plan due to a substantial increase in catastrophe losses in 2016.
Total Shareholder Returns. Total shareholder returns of 21.5% and 43.2% over one and three years are substantially higher than the compensation peer group (see page 34).
Long-term Strategy. Successful execution of the customer segmentation strategy and building long-term growth platforms such as Arity and Allstate Benefits, and the acquisition of SquareTrade.
High Performance Team. Allstate has a strong performance based culture, exceptional employee engagement and an excellent leadership team.
Board Effectiveness. The Board is highly collaborative, transparent and fully engaged. Mr. Traquina joined the Board in 2016.
During the 2016 annual review, the committee determined that Mr. Wilson’s target direct compensation was appropriately aligned with the median of the compensation peer group. Furthermore, Mr. Wilson’s annual cash incentive target of 300% of salary and long-term equity incentive target of 750% of salary remained unchanged.
Salary. In 2016, the Board did not adjust Mr. Wilson’s salary of $1,200,000. Mr. Wilson’s last salary increase was in March 2015.
Annual Cash Incentive Award. Mr. Wilson’s target annual incentive payment of 300% of base salary with a maximum funding opportunity for the award pool of 200% of target was unchanged in 2016. The committee approved an annual cash incentive award of $1,982,880, which was 55.1% of target and equal to the funding level as determined by the actual results for the four performance measures. This was 19.8% of the maximum payment established by the Board.
Equity Incentive Awards. In February 2016, based on its assessment of Mr. Wilson’s performance in delivering strong business results in 2015, the committee granted him equity awards of stock options with a grant date fair value of $3,600,000 and performance stock awards with a grant date fair value of $5,400,028, which was Mr. Wilson’s target equity incentive award opportunity of 750% of salary.
Other. The change in pension value for Mr. Wilson in 2016 of $1,574,760 was $3,907,387 lower than the change would have been had management not recommended a change in pension benefits beginning in 2014, as discussed on page 47. The total value of Mr. Wilson’s pension benefit as of December 31, 2016 is $13.4 million less than it would have been without the 2014 pension change.

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Other Named Executives

Mr. Wilson and the Board evaluate the performance and contributions of each member of the senior leadership team, including each other named executive. Based on his review, Mr. Wilson recommended specific adjustments to salary as well as actual incentive awards. The recommendations were considered and approved by the committee.

Mr. Shebik, Executive Vice President and Chief Financial Officer
Salary. The committee approved an increase from $750,000 to $775,000 during 2016, based on an evaluation of his performance, level of responsibility, and target compensation as compared to the peer group.
Incentive Targets. No changes were made to Mr. Shebik’s incentive targets during 2016. Mr. Shebik’s annual incentive target was 125% of salary and his target equity incentive opportunity was 300% of salary.
Annual Cash Incentive Award. The committee approved an annual cash incentive award of $600,000 for Mr. Shebik. This award was slightly above pool funding based on excellent performance in 2016. This was 11.1% of the maximum payment established by the Board.
Equity Incentive Awards. In February 2016, based on a review of Mr. Shebik’s performance during 2015, the committee granted him equity awards with a grant date fair value of $2,749,985, which is approximately $500,000 above his target equity incentive award opportunity.
2016 Performance. Mr. Shebik had exceptional performance in 2016. As Chief Financial Officer he was integral to all of the operational and strategic accomplishments across Allstate. He also served as Interim Chief Investment Officer beginning in April 2016 and delivered strong investment results.

Mr. Civgin, President, Emerging Businesses
Salary. The committee approved an increase from $762,000 to $780,000 during 2016, based on an evaluation of his performance, level of responsibility, and target compensation as compared to the peer group.
Incentive Targets. No changes were made to Mr. Civgin’s incentive targets during 2016. Mr. Civgin’s annual incentive target was 125% of salary and his target equity incentive opportunity was 300% of salary.
Annual Cash Incentive Award. The committee approved an annual cash incentive award of $535,066 for Mr. Civgin, which was at the calculated pool funding and 9.9% of the maximum payment established by the Board.
Equity Incentive Awards. In February 2016, based on a review of Mr. Civgin’s performance during 2015, the committee granted him equity awards with a grant date fair value of $2,400,027, which is approximately $114,000 above his target equity incentive award opportunity.
2016 Performance. Mr. Civgin’s business results were slightly below plan as profit improvement initiatives were more complicated than expected. Excellent progress was made in building two long-term growth opportunities, Arity and Allstate Benefits.

Ms. Fortin, President, Allstate Financial
Salary. The committee approved an increase from $625,000 to $634,375 during 2016, based on an evaluation of her performance, level of responsibility, and target compensation as compared to the peer group.
Incentive Targets. No changes were made to Ms. Fortin’s incentive targets during 2016. Ms. Fortin’s annual incentive target was 90% of salary and her target equity incentive opportunity was 250% of salary.
Annual Cash Incentive Award. The committee approved an annual cash incentive award of $291,774 for Ms. Fortin, which was slightly below calculated pool funding and 5.4% of the maximum payment established by the Board.
Equity Incentive Awards. In February 2016, based on a review of Ms. Fortin’s performance during 2015, the committee granted her equity awards with a grant date fair value of $1,562,486, which was Ms. Fortin’s target equity incentive award opportunity of 250% of salary.
2016 Performance. Allstate Life and Retirement operating income was above plan, but sales were below the prior year. Substantial long-term economic value should be created by the repositioning of the investment portfolio for the payout annuity liabilities.

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2017 Proxy Statement       Executive Compensation

Mr. Winter, President
Salary. The committee approved an increase from $800,000 to $825,000 during 2016, based on an evaluation of his performance, level of responsibility, and target compensation as compared to the peer group.
Incentive Targets. No changes were made to Mr. Winter’s incentive targets during 2016. Mr. Winter’s annual incentive target was 225% of salary and his target equity incentive opportunity was 375% of salary.
Annual Cash Incentive Award. The committee approved an annual cash incentive award of $1,017,513 for Mr. Winter, which was at calculated pool funding and 14.1% of the maximum payment established by the Board.
Equity Incentive Awards. In February 2016, based on a review of Mr. Winter’s performance during 2015, the committee granted him equity awards with a grant date fair value of $3,200,016, which is approximately $200,000 above his target equity incentive award opportunity.
2016 Performance.
Operating income was below plan despite a 49.6% increase in catastrophe losses from the prior year. Excellent execution of the auto insurance profit improvement plan while maintaining attractive margins from homeowners insurance. Successfully utilized continuous improvement processes and operational oversight to reduce expenses.
Enhanced long-term competitive position of Allstate agencies by implementing the trusted advisor strategy.
Developed and recruited a strong senior leadership team.

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Executive Compensation       2017 Proxy Statement

INCENTIVE DESIGN AND GOAL SETTING

For the annual and long-term incentive programs, the committee oversees a rigorous and comprehensive goal-setting process. The committee works to identify performance measures and ranges of performance in the annual and long-term programs that (1) align with the company’s strategy,

operating principles and priorities, and stockholder interests, (2) support the achievement of corporate goals, and (3) reflect the company’s overall performance. The following timeline of key events reflects the committee’s process:



INCENTIVE DESIGN, PAYOUT, AND GOAL-SETTING PROCESS

March-April
Evaluate peer group to determine if any changes are required for the next performance cycle
Compare actual compensation paid, operating results and stockholder returns from previous year to peer group as provided by the independent compensation consultant
Review feedback from stockholders and governance firms
July-October
Independent compensation consultant provides advice on incentive design and overall executive compensation program
The consultant provides compensation data from the peer group and information on current market practices and industry trends
November-January
Establish plan design, performance measures and ranges (target, threshold, and maximum) for upcoming year for annual incentive plan and long-term incentive awards
Review plans and measures for alignment with enterprise risk and return principles
January-February
Calculate the corporate pool for the annual incentive award based on actual performance
Allocate the calculated corporate pool amongst Market Facing Businesses and Areas of Responsibility based on their operating performance in relationship to target amounts. Allocate these pools based on individual performance
Determine the number of performance stock awards that vested for the applicable measurement period based on actual performance
Approve specific measurable goals for current year for annual incentive plan and 3-year performance stock awards
Review and approve salary adjustments and annual incentive and equity targets for executive officers
Ongoing
Review compensation philosophy and objectives in light of company performance, company goals and strategy, stockholder feedback, and external benchmarking
Monitor compensation estimates in comparison to actual and relative performance

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2017 Proxy Statement       Executive Compensation

Salary

Executive salaries are set by the Board based on the committee’s recommendations. In recommending executive salary levels, the committee uses the 50th percentile of total target direct compensation of our peer companies as a guideline, which supports Allstate’s ability to compete effectively for and to retain executive talent. Annual merit increases for named executives are based on evaluations of their performance, using the enterprise-wide merit increase budget as a guideline.

Annual Cash Incentive Awards

At the beginning of the year, after extensive review, the committee sets performance measure goals based on the operating plan. Target performance is equal to the operating plan. Threshold and maximum measures are informed by probability testing, historical results, and operational performance scenarios. To further test the appropriateness of the ranges, the committee’s independent consultant provides advice based on peer performance, market expectations and industry trends. The chief risk officer reviews the performance measures and ranges to ensure they are consistent with Allstate’s risk and return principles.

Actual performance on the performance measures determines the overall funding level of the corporate pool and the aggregate total award budget for eligible employees. In 2016, the pool was funded based on the collective results of four measures: Adjusted Operating Income, Total Premiums, Net Investment Income, and Total Return. Funding for each measure is equal to 0% below threshold, 50% at threshold, 100% at target and 200% at maximum, and results between threshold, target and maximum are subject to interpolation.

In the event of a net loss, the corporate pool funding is reduced by 50% of actual performance for senior executives. For example, if performance measures ordinarily would fund the corporate pool at 60% and there was a net loss, then the corporate pool would be funded at 30% for senior executives. This mechanism ensures alignment of pay and performance in the event of a natural catastrophe or extreme financial market conditions.

Target annual incentive compensation percentages for each named executive are based on market data pay levels of peer companies and our benchmark target for total direct compensation at the 50th percentile.

Individual awards are based on individual performance in comparison to position-specific compensation targets and overall company performance.

In order to qualify annual cash incentive awards as deductible performance-based compensation under Internal Revenue Code section 162(m), Allstate has established the maximum awards that could be paid to any of the named executives as the lesser of the stockholder approved maximum of $10 million under the Annual Executive Incentive Plan or a percentage of an award pool. For 2016, the award pool is equal to 1.0% of Adjusted Operating Income (defined on pages 64-65), and the percentage of the award pool for Mr. Wilson is 35%, Mr. Winter, 20%, and for each other named executive, 15%. Although section 162(m) does not apply to the compensation of the CFO, the CFO was included in the award pool consistent with the award opportunity available to the other named executives. The committee retains complete discretion to pay less than the maximums established by the Annual Executive Incentive Plan and the award pool.



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We paid the 2016 cash incentive awards in March 2017. The following table shows how the corporate pool was funded and distributed to individual participants:


Formulaic Calculation of
Corporate Funding Pool

Annual Corporate Pool Distribution

Actual performance is determined after the end of the performance period. The pool available for distribution is calculated in accordance with a formula based on four performance measures.

Adjusted Operating Income (aligns with stockholders’ expectations of current performance)(1)

Total Premiums (captures growth and competitive position of the businesses)(1)

Net Investment Income (a significant component of profitability)(1)

Total Return (captures all investment results for the business)(1)

    1.   Committee approves corporate pool based on review of actual performance in comparison to goals
2. CEO allocates portion of corporate pool for participants other than senior executives between business units and Areas of Responsibility based on relative performance against annual operating goals
   
CEO did not exercise discretion in allocating pool funding between the Market Facing Businesses or Areas of Responsibility for 2015
In 2016, the CEO applied positive discretion equal to 25% additional funding for the participants within the Investments group due to their strong results for the 2016 performance year. The positive discretion in Investments resulted in negative discretion of 5% for all other Market Facing Businesses and Areas of Responsibility
3. Committee’s compensation recommendations for the CEO are reviewed and approved by the independent directors of our Board in executive session
4. Committee reviews and approves CEO recommendations for executive officers based on individual performance and position-specific compensation targets
  5. Individual awards for other employees are determined by senior leaders of Market Facing Businesses and Areas of Responsibility and are subject to approval by CEO – senior leaders are required to ensure the appropriate pay for performance by ensuring that high performing participants earn awards (as a percent of funding) that are at least 1.5 times the awards earned by lower performing participants for the annual incentive plan. The ratio must be at least 2.0 times for the equity components of compensation

(1)         The committee has discretion to determine the amount of the awards paid from the corporate pool to the named executives. For treatment of catastrophe losses and performance-based long-term income in the funding calculation, see discussion of performance measures on pages 64-66.

Performance Stock Awards and Stock Options

We grant equity awards to executives based on scope of responsibility, consistent with our philosophy that a significant amount of compensation should be in the form of equity. Additionally, from time to time, equity awards are granted to attract new executives and to retain existing executives.
 

In 2016 and 2017, the mix of equity incentives for senior executives was 60% PSAs and 40% stock options. We believe both PSAs and stock options are forms of performance-based incentive compensation because PSAs are earned based on achieving established performance goals and stock options require stock price appreciation to deliver value to an executive. The PSAs are awarded based on results over a three-year period with the actual number of PSAs vesting between 0% to 200% of that period’s target PSAs based on Adjusted Operating Income ROE (70%) and Earned Book Value (30%) for the measurement period.
 

The committee selected Adjusted Operating Income ROE as a performance measure because it:

Measures performance in a way that is tracked and understood by investors.
 

Captures both income and balance sheet impacts, including capital management actions.
 

Provides a useful gauge of overall performance while limiting the effects of factors management cannot influence, such as extreme weather conditions.
 

Correlates to changes in long-term stockholder value.
 

Earned Book Value was selected to create greater alignment with the increase in performance-based assets in the investment portfolio.
 

Both measures are further described on pages 64-66. For both measures, the committee considered historical and expected performance, market expectations and industry trends when approving the range of performance.
 

For awards in 2014 and 2015, the number of PSAs that vest depends on the three-year Average Adjusted Operating Income ROE. Adjusted Operating Income ROE for those years is defined on pages 64-66.



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For all PSA awards, Adjusted Operating Income and Earned Book Value include a minimum or maximum amount of after-tax catastrophe losses if actual catastrophe losses are less than or exceed those amounts, respectively, which serves to decrease volatility and stabilize the measure.
 

The committee requires positive net income in order for our executives to earn PSAs based on Adjusted Operating Income ROE above target. If Allstate has a net loss in a measurement period, the number of PSAs vested would not exceed target, regardless of the Adjusted Operating Income ROE. This hurdle is included to prevent misalignment between Allstate reported net income and the PSAs vested based on the Adjusted Operating Income ROE result. This situation could occur if, for example, catastrophe losses or capital losses that are not included in Adjusted Operating Income ROE caused Allstate to report a net loss for the period.
 

At the end of each measurement period, the committee certifies the level of our Adjusted Operating Income ROE and Earned Book Value achievement. The committee does not have the discretion to adjust the performance achievement for any measurement period. 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).

For the 2017-2019 award, the Average Adjusted Operating Income ROE and Earned Book Value measures are calculated, respectively, as follows:

Adjusted
Operating Income(1)
 ±  Catastrophe
Losses Adjustment
 ÷  Adjusted Common
Shareholders’ Equity(2)
 =  Average Adjusted
Operating Income ROE

Average for three years in the performance cycle

Adjusted to reflect a minimum or maximum amount of catastrophe losses

Average of common shareholders’ equity excluding unrealized gains and losses, after tax, at December 2016, and at the end of each year in the performance cycle

70% of PSA Performance Measure

 
 

Earned Book Value: Compound annual growth rate between reported common shareholders’ equity at December 2016 and adjusted common shareholders’ equity at December 2019(3)

Common
Shareholders’ Equity

+

Capital
Transactions

±

Catastrophe
Losses Adjustment

 

Reported common shareholders’ equity at December 2019

Adjusted to add back common share repurchases and common share dividends during the performance period

Adjusted to reflect a minimum or maximum amount of catastrophe losses

30% of PSA Performance Measure

   
(1)         Adjusted Operating Income for the 2017-2019 PSA award is defined on pages 64-66.
(2) Adjusted Common Shareholders’ Equity for the 2017-2019 PSA award is defined on page 66.
(3) Earned Book Value is defined on page 66.

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2017-2019 PERFORMANCE STOCK AWARD RANGE OF PERFORMANCE

Performance Measures
      Threshold       Target       Maximum
Average Adjusted Operating Income ROE (70%)(1)      6.0 %   11.0 %    13.0 %
Earned Book Value (Compound Annual Growth) (30%) 6.0 % 9.0 %   11.0 %
Payout   0 % 100 % 200 %
(1)         Subject to positive Net Income hurdle

EQUITY OWNERSHIP AND RETENTION REQUIREMENTS

Instituted in 1996, stock ownership guidelines require each of the named executives to own Allstate common stock worth a multiple of base salary to link management and stockholders’ interests. The following chart shows the salary multiple guidelines and the equity holdings that count towards the requirement.

The current stock ownership guidelines apply to 93 of our 192 senior executives and other officers as of December 31, 2016 and require these executives to hold 75% of net shares received as a result of equity compensation awards until their salary multiple guidelines are met.



STOCK OWNERSHIP AS MULTIPLE OF BASE SALARY AS OF DECEMBER 31, 2016

Named Executive       Guideline       Actual       Vested In
The Money
Option
Value
(after-tax)
Mr. Wilson 6   34 35
Mr. Shebik 3 9 6
Mr. Civgin 3 10 1
Ms. Fortin 3 6 0
Mr. Winter 3 11 9

What Counts Toward the Guideline
   Allstate shares owned personally and beneficially
   Shares held in the Allstate 401(k) Savings Plan
   Restricted stock units
What Does Not Count Toward the Guideline
   Unexercised stock options
   Unvested performance stock awards


Retention Requirements

Beginning with awards granted in 2014, Allstate added a requirement that, regardless of a senior executive’s stock ownership level, senior executives must retain at least 75% of net shares received as a result of equity compensation awards for one year. In the case of PSAs and restricted stock units, senior executives must retain 75% of net after-tax shares after the three or four-year vesting period for one year. In the case of stock options, senior executives must retain 75% of all shares remaining after covering the exercise price of the shares and taxes. This retention requirement applies to approximately 9% of officers in 2016.

Policies on Hedging and Pledging Securities

We have a policy that prohibits all officers, directors, and employees from engaging in transactions in securities issued by Allstate or any of its subsidiaries that might be considered speculative or hedging, such as selling short or buying or selling options. We instituted a policy in 2014 that prohibits senior

executives and directors from pledging Allstate securities as collateral for a loan or holding such securities in a margin account, unless an exception is granted by the Chair or lead director.

Timing of Equity Awards and Grant Practices

Typically, the committee approves grants of equity awards during a meeting in the first fiscal quarter. The timing allows the committee to align awards with our annual performance and business goals.

Throughout the year, the committee may grant equity incentive awards to newly hired or promoted executives or to retain or recognize executives. The grant date for these awards was fixed as the third business day of a month following the later of committee action or the date of hire or promotion, or for recognition grants, such other date specified by the committee.

For additional information on the committee’s practices, see portions of the Board Leadership Structure and Practices section of this proxy statement on pages 23-24, and 26.



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PEER BENCHMARKING

The committee monitors performance toward goals throughout the year and reviews executive compensation program design and executive pay levels annually. As part of that evaluation, Compensation Advisory Partners, the committee’s independent compensation consultant, provided executive compensation data, information on current market practices, and alternatives to consider when determining compensation for our named executives. The committee benchmarks executive compensation program design, executive pay, and performance against a group of peer companies that are publicly-traded. Product mix, market segment, annual revenues, premiums,

assets, and market value were considered when identifying peer companies. The committee believes Allstate competes against these companies for executive talent, business and stockholder investment. The committee reviews the composition of the peer group annually with the assistance of its compensation consultant. In 2016, the committee made one change to the peer group. The Chubb Corporation and Ace Ltd. merged and the resulting entity (Chubb Limited) is now included in the peer group. CNA Financial Corporation will be included as a peer company for 2017 compensation benchmarking. The following table reflects the peer group used for 2016 compensation benchmarking.



PEER COMPANIES(1)

Total Shareholder Return (%)
Company Name    Revenue
($ in billions)
   Market Cap
($ in billions)
   Assets
($ in billions)
   Premiums
($ in billions)
   One
Year
   Three
Years
   Five
Years
AFLAC Inc. 22.6 28.2 129.8 19.2 19.0 12.2 81.4
American International Group, Inc. 52.4 65.0 498.3 37.1 7.5 33.3 194.5
Chubb Limited 31.7 61.6 159.8 28.7 15.4 36.9 111.3
The Hartford Financial Services Group, Inc. 18.3 17.8 223.4 14.8 11.6 38.5 218.5
Manulife Financial Corporation 29.1 26.3 400.5 15.6 22.7 -1.0 95.9
MetLife, Inc. 63.5 59.0 898.8 48.4 15.0 8.6 95.6
The Progressive Corporation 23.4 20.6 33.4 22.5 14.4 43.9 116.7
Prudential Financial, Inc. 58.8 44.7 784.0 36.9 31.3 22.2 136.0
The Travelers Companies, Inc. 27.6 34.2 100.2 24.5 10.8 43.9 130.5
Allstate 36.5 27.1 108.6 33.6 21.5 43.2 196.6
Allstate Ranking Relative to Peers:  
     — Property and Casualty
         Insurance Products 3 of 7 5 of 7 5 of 7 3 of 7 1 of 7 3 of 7 2 of 7
     — Life Insurance
         and Financial Products 4 of 7 5 of 7 7 of 7 4 of 7 3 of 7 1 of 7 2 of 7
     — All Peer Companies 4 of 10 7 of 10 8 of 10 4 of 10 3 of 10 3 of 10 2 of 10
(1)         Information as of year-end 2016.

In its executive pay discussions, the committee also considered compensation information for 19 general industry companies in the S&P 100 with fiscal year 2015 revenues between $24 billion and $53 billion. The committee uses compensation surveys for certain executives that provide information on companies of similar size and business mix as Allstate, as well as companies with a broader market context.

The committee uses the 50th percentile of our peer group as a guideline in setting the target total direct compensation of our named executives. Within the guideline, the committee balances the various elements of compensation based on individual experience, job scope and responsibilities, performance, and market practices.



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OTHER ELEMENTS OF COMPENSATION

To remain competitive with other employers and to attract, retain, and motivate highly talented executives and other employees, we offer the benefits listed in the following table.

Benefit or Perquisite       Named Executives       Other Officers and
Certain Managers
      All Full-time and
Regular Part-time
Employees
401(k)(1) and defined benefit pension  
Supplemental retirement benefit
Health and welfare benefits(2)
Supplemental long-term disability
Deferred compensation  
Tax preparation and financial planning services(3)  
Personal use of aircraft, ground transportation,
and mobile devices(4)
Tickets to Allstate events(5)
(1)         Allstate contributed $0.80 for every dollar of matchable pre-tax or Roth 401(k) deposits made in 2016 (up to 5% of eligible pay).
(2) Including medical, dental, vision, life, accidental death and dismemberment, long-term disability, and group legal insurance. For named executives and other senior officers, Allstate offers an executive physical program.
(3) All officers are eligible for tax preparation services. Financial planning services were provided only to senior executives.
(4) The Board encourages the CEO to use our corporate aircraft when it improves his efficiency in managing the company, even if it is for personal purposes. Personal usage is counted as taxable compensation. The committee also approved the President’s usage of corporate aircraft for personal use up to 40 hours annually. In limited circumstances approved by the CEO, other senior executives are permitted to use our corporate aircraft for personal purposes. Ground transportation is available to senior executives. Mobile devices are available to senior executives, other officers, and certain managers and employees depending on their job responsibilities.
(5) Tickets to Allstate sponsored events or the Allstate Arena are offered as recognition for service.

Retirement Benefits

Each named executive participates in two different defined benefit pension plans. The Allstate Retirement Plan (ARP) is a tax qualified defined benefit pension plan available to all of our regular full-time and regular part-time employees who meet certain age and service requirements. The ARP provides an assured retirement income based on an employee’s level of compensation and length of service at no cost to the employee. As the ARP is a tax qualified plan, federal tax law limits (1) the amount of an individual’s compensation that can be used to calculate plan benefits and (2) the total amount of benefits payable to a plan participant on an annual basis. For certain employees, these limits may result in a lower benefit under the ARP than would have been payable otherwise. Therefore, the Supplemental Retirement Income Plan (SRIP) is used to provide ARP-eligible employees whose compensation or benefit amount exceeds the federal limits with an additional defined benefit in an amount equal to what would have been payable under the ARP if the federal limits did not exist. Effective January 1, 2014, Allstate modified its defined benefit pension plans so that all eligible employees earn future pension benefits under a new cash balance formula.

Change-in-Control and Post-Termination Benefits

Consistent with our compensation objectives, we offer these benefits to attract, motivate, and retain executives. A change in control of Allstate could have a disruptive impact on both Allstate and our executives. Change-in-control benefits and post-termination benefits are designed to mitigate that impact and to maintain alignment between the interests of our executives and our stockholders.

The following summarizes Allstate’s change-in-control benefits for the executive officers:

The change-in-control severance plan (CIC Plan) does not include excise tax gross ups or a lump sum cash pension enhancement.
 

For the CEO, the amount of cash severance payable is three times the sum of base salary and target annual incentive. For the other executive officers, the amount of cash severance payable is two times the sum of base salary and target annual incentive.
 

In order to receive the cash severance benefits under the CIC Plan, a participant must have been terminated (other than for cause, death, or disability) or the participant must have terminated employment for good reason (such



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as adverse changes in the terms or conditions of employment, including a material reduction in base compensation, a material change in authority, duties, or responsibilities, or a material change in job location) within two years following a change in control.
 

Long-term equity incentive awards vest on an accelerated basis due to a change in control only if the participant has been terminated (other than for cause, death, or disability) or the participant terminated employment for good reason (as defined above) within two years following a change in control.

The change-in-control and post-termination arrangements which are described in the Potential Payments as a Result of Termination or Change in Control section on pages 60-62 are not provided exclusively to the named executives. A larger group of management employees is eligible to receive many of the post-termination benefits described in that section.

Clawback of Compensation

Awards made to executive officers after May 19, 2009, under short- and long-term incentive compensation plans, are subject to clawback in the event of certain financial restatements. Annual cash incentive and equity awards granted after May 19, 2009 are also subject to cancellation or recovery

in certain circumstances if the recipient violates non-solicitation covenants. Equity awards granted after February 21, 2012, are subject to cancellation in certain circumstances if the recipient violates non-competition covenants.

Impact of Tax Considerations on Compensation

We may take a tax deduction of no more than $1 million per executive for compensation paid in any year to our CEO and the three other most highly compensated executives, excluding any individual that served as CFO during the year, as of the last day of the fiscal year in which the compensation is paid, unless the compensation meets specific standards. We may deduct more than $1 million in compensation if the compensation is performance-based and paid under a plan that meets certain requirements. The committee considers the impact of this Internal Revenue Code rule in developing, implementing, and administering our compensation programs. However, the committee balances this consideration with our primary goal of structuring compensation programs to attract, motivate, and retain highly talented executives. In light of this balance and the need to maintain flexibility in administering compensation programs, the committee may authorize compensation in any year that exceeds $1 million and does not meet the required standards for deductibility.



EARNED ANNUAL CASH INCENTIVE AWARDS

In 2016, the total corporate pool was based on four measures: Adjusted Operating Income, Total Premiums, Net Investment Income, and Total Return. The 2016 annual incentive plan targets for Adjusted Operating Income and Net Investment Income were lower than actual 2015 performance to reflect the fact that 2015 catastrophe losses were below expected levels and continued low interest rates negatively impact net investment income. The 2016 targets did factor in improved auto insurance profitability, maintenance of attractive returns from homeowners insurance and continued strong expense controls. Modest adjustments were made

to the range between threshold and maximum for Total Premiums in alignment with the operating plan and the probability of achieving the results.

The 2017 annual incentive plan targets are not included since those targets do not relate to 2016 pay, and because target performance is set at the 2017 operating plan, which is proprietary information.

For a description of how the 2016 measures are determined, see pages 64-65. The ranges of performance and 2016 actual results are shown in the following table.



2016 ANNUAL CASH INCENTIVE AWARD RANGES OF PERFORMANCE

Measure       Threshold       Target       Maximum       Actual Results       %Target
Adjusted Operating Income (in millions) $1,500 $2,000 $2,500 $1,928 92.8%
Total Premiums (in millions) $34,200 $34,700 $35,200 $33,872 0.0%
Net Investment Income (in millions) $2,850 $3,050 $3,250 $3,042 98.0%
Total Return 0% 3.5% 6.5% 4.4% 130.0%
Payout Percentages
Named Executives(1) 50%(2) 100% 200% 55.1%
(1)         Payout percentages reflect contribution to incentive compensation pool. Actual awards are fully discretionary and vary depending on individual performance.
(2) Actual performance below threshold results in a 0% payout.

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PERFORMANCE STOCK AWARDS (“PSAs”)

For the last four PSA grants, the performance measures and levels of performance needed to earn the threshold, target and maximum number of PSAs, as well as actual results and payout percentages, are set forth in the table below. The total shareholder returns for Allstate and its peers are also shown.

PERFORMANCE STOCK AWARDS RANGES OF PERFORMANCE

Performance Cycle(1)       Threshold       Target       Maximum       Actual Results       Payout
Percentage
      Total
Shareholder
Returns

Allstate

      Peers
Vested Awards
     2013-2015(2) 6.0% 12.0% 13.5% 12.8% 154.8% 63.0% 63.1%
     2014-2016 6.0% 13.0% 14.5% 12.1% 87.1% 43.2% 26.8%
Outstanding Awards
     2015-2017 6.0% 13.5% 14.5% Two year results are currently
below target(3)
9.5% 16.5%
     2016-2018
     -Adjusted One year results are
currently below target for
both measures(3)
     Operating Income
     ROE (70%) 6.0% 13.0% 14.0%
     -Earned Book
     Value (30%) 6.0% 12.0% 15.0% 21.5% 16.5%
Payout 0% 100% 200%

Subject to positive Net Income hurdle
For Adjusted Operating Income ROE

(1)         For the performance cycles prior to 2016, Average Adjusted Operating Income ROE was the performance measure. In 2016, Earned Book Value was added as a second performance measure.
(2)         Represents the average of the separate 1-year performance goals and payouts. Actual results are 13.4%, 13.2%, 11.9% with payout percentage of 200.0%, 180.0% and 84.3% for 2013, 2014 and 2015, respectively.
(3) Payouts under the PSAs are based on performance over the three-year period, and actual results will not be known until the end of the performance period.

The following table shows the target number of PSAs granted to each of our named executives for the 2014-2016, 2015-2017 and 2016-2018 performance cycles.

PERFORMANCE CYCLE(1)

Named Executive         Target Number of PSAs for
2014-2016 Performance Cycle
        Target Number of PSAs for
2015-2017 Performance Cycle
        Target Number of PSAs for
2016-2018 Performance Cycle
Mr. Wilson 73,783 65,054 86,650
Mr. Shebik 17,248 15,910 26,476
Mr. Civgin 20,123 16,872 23,107
Ms. Fortin n/a 3,287 15,043
Mr. Winter 25,153 21,921 30,809
(1)         The actual number of PSAs that will vest will vary from 0% to 200% of the target PSAs based on Average Adjusted Operating Income ROE or Average Adjusted Operating Income ROE and Earned Book Value for the measurement period. The number of PSAs that vest will be determined in 2017, 2018 and 2019, respectively.

Compensation Committee Report

The compensation and succession committee has reviewed and discussed with management the Compensation Discussion and Analysis contained on pages 33-49 of this proxy statement. Based on such review and discussions, the committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

THE COMPENSATION AND SUCCESSION COMMITTEE

                 
John W. Rowe (Chair)   Michael L. Eskew   Herbert L. Henkel   Andrea Redmond

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Executive Compensation Tables

SUMMARY COMPENSATION TABLE

The following table summarizes the compensation of the named executives for the last three fiscal years. However, only the last fiscal year is shown for Ms. Fortin since this is the first year she is a named executive.

Name and
Principal Position
   Year    Salary
($)
   Bonus
($)
   Stock
Awards
($)
(1)
   Option
Awards
($)(2)
  

Non-Equity
Incentive
Plan
Compensation
($)

   Change in
Pension Value
and
Non-qualified
Deferred
Compensation
Earnings
($)(3)
   All
Other
Compensation
($)(4)
     Total
($)
    Total
Without
Change in
Pension
Value
($)(5)
Thomas J. Wilson 2016 1,200,000 5,400,028 3,600,000 1,982,880 1,574,760 55,847 13,813,515 12,238,755
Chair and Chief 2015 1,191,346 4,599,968 4,599,996 2,888,136 532,116 62,131 13,873,693 13,341,577
Executive Officer 2014 1,141,346 3,849,997 3,850,001 4,073,075 2,632,215 94,751 15,641,385 13,009,170
Steven E. Shebik 2016 770,673 1,649,984 1,100,001 600,000 479,800 28,690 4,629,148 4,149,348
Executive Vice 2015 750,000 1,124,996 1,124,999 850,000 185,312 28,180 4,063,487 3,878,175
President and Chief 2014 652,500 900,001 899,998 883,619 827,696 26,960 4,190,774 3,363,078
Financial Officer
Don Civgin 2016 776,885 1,440,028 959,999 535,066 88,721 38,727 3,839,426 3,750,705
President, Emerging 2015 760,808 1,193,019 1,192,993 768,629 46,822 37,195 3,999,466 3,952,644
Businesses 2014 700,000 1,050,018 1,049,996 1,000,000 135,885 26,560 3,962,459 3,826,574
Mary Jane Fortin 2016 632,752 937,480 625,006 291,774 27,366 30,682 2,545,060 2,517,694
President, Allstate
Financial
Matthew E. Winter 2016 820,673 1,920,017 1,279,999 1,017,513 121,710 153,663 5,313,575 5,191,865
President 2015 799,423 1,550,034 1,550,004 1,600,000 80,745 79,399 5,659,605 5,578,860
2014 766,539 1,312,484 1,312,504 1,500,000 139,076 39,016 5,069,619 4,930,543
(1)         The aggregate grant date fair value of PSAs granted in 2016, 2015, and 2014 are computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 718 (ASC 718). The fair value of PSAs is based on the final closing price of Allstate’s common stock on the grant date, which in part reflects the payment of expected future dividends. (See note 18 to our audited financial statements for 2016.) This amount reflects an accounting expense and does not correspond to actual value that will be realized by the named executives. The value of PSAs is based on the probable satisfaction of the performance conditions. The number of PSAs granted in 2016 to each named executive is provided in the Grants of Plan-Based Awards table on page 52. The value of the PSAs granted in 2016 at grant date share price if maximum corporate performance were to be achieved is as follows: Mr. Wilson $10,800,056, Mr. Shebik $3,299,969, Mr. Civgin $2,880,056, Ms. Fortin $1,874,960, and Mr. Winter $3,840,034.
(2) The aggregate grant date fair value of option awards is computed in accordance with FASB ASC 718. The fair value of each option award is estimated on the grant date using a binomial lattice model and the assumptions (see note 18 to our audited financial statements for 2016) as set forth in the following table:

               2016       2015       2014
Weighted average expected term 5.0 years 6.5 years 6.5 years
Expected volatility 16.0-34.3% 16.0-37.8% 16.8-42.2%
Weighted average volatility 24.3% 24.7% 28.3%
Expected dividends 1.9-2.1% 1.6-2.1% 1.7-2.2%
Weighted average expected dividends 2.1% 1.7% 2.1%
Risk-free rate 0.2-2.4% 0.0-2.4% 0.0-3.0%
        This amount reflects an accounting expense and does not correspond to actual value that will be realized by the named executives. The number of options granted in 2016 to each named executive is provided in the Grants of Plan-Based Awards table on page 52.
(3) Amounts reflect the aggregate increase in actuarial value of the pension benefits as set forth in the Pension Benefits table, accrued during 2016, 2015, and 2014. These are benefits under the Allstate Retirement Plan (ARP) and the Supplemental Retirement Income Plan (SRIP). Non-qualified deferred compensation earnings are not reflected since our Deferred Compensation Plan does not provide above-market earnings. The pension plan measurement date is December 31. (See note 17 to our audited financial statements for 2016.)

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The following table reflects the respective change in the actuarial value of the benefits provided to the named executives in 2016:


        Name       ARP
($)
      SRIP
($)
Mr. Wilson 113,353 1,461,407
Mr. Shebik 124,367 355,433
Mr. Civgin 14,350 74,371
Ms. Fortin 7,861 19,505
Mr. Winter 12,991 108,719
              

Interest rates and other assumptions can have a significant impact on the change in pension value from one year to another.

Effective January 1, 2014, Allstate modified its pension plans so that all eligible employees earn future pension benefits under a new cash balance formula. The change in actuarial value of benefits provided for each named executive in 2016 would have been as indicated in the following table under the prior formula:


         Name       ARP
($)
      SRIP
($)
Mr. Wilson 184,530 5,297,617
Mr. Shebik 203,850 2,426,861
Mr. Civgin 12,341 88,922
Ms. Fortin 6,979 1,368
Mr. Winter 10,271 86,457
(4)         The following table describes the incremental cost of other benefits provided in 2016 that are included in the “All Other Compensation” column.

         Name       Personal
Use of
Aircraft(1)
($)
      401(k)
Match(2)
($)
      Other(3)
($)
      Total
All Other
Compensation
($)
Mr. Wilson 16,837 10,600 28,410 55,847
Mr. Shebik 10,600 18,090 28,690
Mr. Civgin 10,600 28,127 38,727
Ms. Fortin 10,412 20,270 30,682
Mr. Winter 121,998 10,600 21,065 153,663
           (1)         The amount reported for personal use of aircraft is based on the incremental cost method, which is calculated based on Allstate’s average variable costs per flight hour. Variable costs include fuel, maintenance, on-board catering, landing/ramp fees, and other miscellaneous variable costs. The total annual variable costs are divided by the annual number of flight hours flown by the aircraft to derive an average variable cost per flight hour. This average variable cost per flight hour is then multiplied by the flight hours flown for personal use to derive the incremental cost. This method of calculating the incremental cost excludes fixed costs that do not change based on usage, such as pilots’ and other employees’ salaries, costs incurred in purchasing the aircraft, and non-trip related hangar expenses.
(2) Each of the named executives participated in our 401(k) plan during 2016. The amount shown is the amount allocated to their accounts as employer matching contributions. Ms. Fortin will not be vested in the employer matching contribution until she has completed three years of vesting service.
(3) “Other” consists of personal benefits and perquisites related to mobile devices, tax preparation services, financial planning, ground transportation, executive physical related items and supplemental long-term disability coverage. There was no incremental cost for the use of mobile devices. We provide supplemental long-term disability coverage to all regular full- and part-time employees who participate in the long-term disability plan and whose annual earnings exceed the level which produces the maximum monthly benefit provided by the long-term disability plan. This coverage is self-insured (funded and paid for by Allstate when obligations are incurred). No obligations for the named executives were incurred in 2016, and therefore, no incremental cost is reflected in the table. Mr. Civgin was also provided limited home security protection during the year.
(5) We have included an additional column to show total compensation minus the change in pension value. The amounts reported in this column may differ substantially from, and are not a substitute for, the amounts reported in the “Total” column required under SEC rules. The change in pension value is subject to several external variables, including interest rates, that are not related to company or individual performance and may differ significantly based on the formula under which the benefits were earned.

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Grants of Plan-Based Awards at Fiscal Year-end 2016

The following table provides information about awards granted to our named executives during fiscal year 2016.

Name    Grant
Date
   Plan Awards(1)   
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
(2)
   Estimated Future Payouts
Under Equity Incentive
Plan Awards(3)
   All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
   Exercise
or Base
Price of
Option
Awards
($/Sh)(4)
   Grant Date
Fair Value ($)(5)
Threshold
($)
   Target
($)
   Maximum
($)
Threshold
(#)
   Target
(#)
   Maximum
(#)
Stock
Awards
   Option
Awards
Mr. Wilson   Annual cash incentive   1,800,000   3,600,000   10,000,000  
02/11/2016 PSAs 0   86,650 173,300     5,400,028
02/11/2016 Stock options 295,324 62.32   3,600,000
Mr. Shebik Annual cash incentive 481,899 963,798 5,400,000  
  02/11/2016 PSAs 0 26,476 52,952 1,649,984
02/11/2016 Stock options 90,238 62.32 1,100,001
Mr. Civgin Annual cash incentive 485,717 971,434 5,400,000  
02/11/2016 PSAs 0 23,107 46,214 1,440,028
02/11/2016 Stock options 78,753 62.32 959,999
Ms. Fortin Annual cash incentive 284,800 569,600 5,400,000
02/11/2016 PSAs 0 15,043 30,086 937,480
02/11/2016 Stock options 51,272 62.32 625,006
Mr. Winter Annual cash incentive 923,668 1,847,336 7,200,000
02/11/2016 PSAs 0 30,809 61,618 1,920,017
02/11/2016 Stock options 105,004 62.32 1,279,999
(1)         Awards under the Annual Executive Incentive Plan and the 2013 Equity Incentive Plan.
(2)         The amounts in these columns consist of the threshold, target, and maximum annual cash incentive awards for the named executives. The threshold amount for each named executive is 50% of target, as the minimum amount payable (subject to individual performance) if threshold performance is achieved. If the threshold is not achieved, the payment to the named executives would be zero. The target amount is based upon achievement of the performance measures listed under the Earned Annual Cash Incentive Awards caption on page 48. The maximum amount is based on the maximum amount that could be paid to a named executive to qualify the annual cash incentive award as deductible under section 162(m). The maximum amount payable to any named executive who served as CFO during the year is an amount equal to 15% of the 162(m) award pool described on pages 64-65. The maximum amount payable to the CEO and the three most highly compensated executives, excluding any named executive who served as CFO during the year, is the lesser of a stockholder-approved maximum of $10 million under the Annual Executive Incentive Plan or a percentage, which varies by executive, of the award pool. The award pool is equal to 1.0% of Adjusted Operating Income with award opportunities capped at 35% of the pool for Mr. Wilson, 20% for Mr. Winter, and 15% of the pool for each other named executive. Adjusted Operating Income is defined on pages 64-65. For a description of the ranges of performance established by the committee for the 2016 annual incentive, which are lower than the section 162(m) limits, see page 48.
(3) The amounts shown in these columns reflect the threshold, target, and maximum PSAs for the named executives. The threshold amount for each named executive is 0% payout. The target and maximum amounts are based upon achievement of the performance measures listed under the Performance Stock Awards caption on page 49.
(4) The exercise price of each option is equal to the closing sale price on the New York Stock Exchange on the grant date or, if there was no such sale on the grant date, then on the last previous day on which there was a sale.
(5) The aggregate grant date fair value of the PSAs was $62.32 and stock option award was $12.19, computed in accordance with FASB ASC 718 based on the probable satisfaction of the performance conditions. The assumptions used in the valuation are discussed in footnotes 1 and 2 to the Summary Compensation Table on page 50.

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PERFORMANCE STOCK AWARDS (“PSAs”)

PSAs represent our promise to transfer shares of common stock in the future if certain performance measures are met. For the awards granted in 2016, 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 (70%) and Earned Book Value (30%) for the measurement period. For a definition of how those measures are calculated, see pages 64-66. 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 beginning in 2014 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 2016 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.



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Outstanding Equity Awards at Fiscal Year-end 2016

The following table summarizes the outstanding equity awards of the named executives as of December 31, 2016.

Name    Option Awards(1)    Stock Awards(2)
Option
Grant Date
   Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(3)
   Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(3)
   Option
Exercise
Price
($)
   Option
Expiration
Date
Stock Award
Grant Date
   Number
of Shares
or Units
of Stock
That Have
Not Vested
(#)(4)
   Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)(5)
   Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units, or
Other
Rights
that Have
Not Vested
(#)(6)
   Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units,
or Other
Rights that
Have Not
Vested
($)(5)
Mr. Wilson 02/26/2008 338,316 0 48.82 02/26/2018  
02/22/2010 417,576 0 31.41 02/22/2020
02/22/2011 447,808   0 31.74 02/22/2021
02/21/2012 444,060 0 31.56 02/21/2022
02/12/2013 272,556 90,853   45.61   02/12/2023  
  02/18/2014   206,158 103,079 52.18 02/18/2024   02/18/2014 64,265 4,763,322  
02/18/2015 98,164 196,330 70.71 02/18/2025 02/18/2015 65,054   4,821,802
02/11/2016 0 295,324 62.32 02/11/2026 02/11/2016 86,650 6,422,498
Mr. Shebik 02/22/2010 33,616 0 31.41 02/22/2020
02/22/2011 35,197 0 31.74 02/22/2021
02/21/2012 26,446 0 31.56 02/21/2022
03/06/2012 35,014 0 31.00 03/06/2022
02/12/2013 56,391 18,797 45.61 02/12/2023
02/18/2014 48,192 24,097 52.18 02/18/2024 02/18/2014 15,023 1,113,505
02/18/2015 24,007 48,016 70.71 02/18/2025 02/18/2015 15,910 1,179,249
02/11/2016 0 90,238 62.32 02/11/2026 02/11/2016 26,476 1,962,401
Mr. Civgin 02/12/2013 0 21,930 45.61 02/12/2023
02/18/2014 56,224 28,113 52.18 02/18/2024 02/18/2014 17,527 1,299,101
02/18/2015 25,458 50,918 70.71 02/18/2025 02/18/2015 16,872 1,250,553
02/11/2016 0 78,753 62.32 02/11/2026 02/11/2016 23,107 1,712,691
Ms. Fortin 10/05/2015 5,393 10,788 59.90 10/05/2025 10/05/2015 43,824 3,248,235 3,287 243,632
02/11/2016 0 51,272 62.32 02/11/2026 02/11/2016 15,043 1,114,987
Mr. Winter 02/22/2011 101,869 0 31.74 02/22/2021
02/21/2012 144,175 0 31.56 02/21/2022
02/12/2013 79,495 26,499 45.61 02/12/2023
02/18/2014 70,281 35,141 52.18 02/18/2024 02/18/2014 21,908 1,623,821
02/18/2015 33,077 66,155 70.71 02/18/2025 02/18/2015 21,921 1,624,785
02/11/2016 0 105,004 62.32 02/11/2026 02/11/2016 30,809 2,283,563
(1)         The options granted in 2014 and after vest over three years: one-third will become exercisable on the anniversary of the grant date for each of the three years. The options granted in 2012 and 2013 vest over four years: 50% on the second anniversary date and 25% on each of the third and fourth anniversary dates. The other options vest in four installments of 25% on each of the first four anniversaries of the grant date. The exercise price of each option is equal to the closing price of Allstate’s common stock on the grant date. If there was no sale on the grant date, the closing price is calculated as of the last previous day on which there was a sale.
(2) The awards listed in this table are PSAs, except for Ms. Fortin’s new hire award of restricted stock units in 2015. The 43,824 shares listed above represent three-fourths of her original award granted on October 5, 2015. The shares convert in four increments with one-fourth of the total shares converting on the anniversary of the grant date for the succeeding four years.

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(3)         The aggregate value and aggregate number of exercisable and unexercisable in-the-money options as of December 31, 2016, for each of the named executives are as follows:

Exercisable Unexercisable
         Name Aggregate
Number
(#)
Aggregate
Value
($)
Aggregate
Number
(#)
  Aggregate
Value
($)
  Mr. Wilson       2,224,638       76,899,780       685,586       9,006,081
Mr. Shebik   258,863 8,309,637 181,148   2,293,134
Mr. Civgin 81,682   1,320,366 179,714 2,344,939
Ms. Fortin 5,393 76,688 62,060 758,415
  Mr. Winter 428,897 14,374,456 232,799 2,991,116
(4)         The PSAs vest in one installment on the day before the third anniversary of the grant date.
(5)   Amount is based on the closing price of our common stock of $74.12 on December 30, 2016.
(6)   The PSAs vest in one installment on the day before the third anniversary of the grant date. The number of shares that ultimately vest may range from 0 to 200% of the target depending on actual performance during the three-year performance period. For a description of the PSA program and the performance measures used, see pages 43-45 and 49. The number of PSAs reflected in this column for the 2015 and 2016 awards are the number of shares that would vest if the target level of performance is achieved. Final payouts under the PSAs will not be known until the respective performance period is completed.

Option Exercises and Stock Vested During 2016

The following table summarizes the options exercised by the named executives during 2016 and the PSAs or restricted stock units that vested during 2016.

Option Awards(1) Stock Awards
Name Number of
Shares
Acquired on
Exercise
(#)
Value
Realized
on Exercise
($)
Number of
Shares
Acquired on
Vesting
(#)
Value
Realized
on Vesting
($)
Mr. Wilson       262,335       3,079,813       130,638       8,141,360
Mr. Shebik 61,334 1,631,726 32,356   2,019,478
Mr. Civgin   214,412   5,682,556   35,627 2,220,275
Ms. Fortin 0 0 14,607 990,939
Mr. Winter 55,785 2,003,768 43,050 2,682,876
(1)         Of the options exercised in 2016 by Mr. Wilson and Mr. Shebik, 262,335 and 15,571, respectively, were due to expire in the first quarter of 2017.

The Allstate Corporation  

  55




Table of Contents

2017 Proxy Statement       Executive Compensation

Retirement Benefits

The following table provides information about the pension plans in which the named executives participate. Each of the named executives participates in the Allstate Retirement Plan (ARP) and the Supplemental Retirement Income Plan (SRIP).

PENSION BENEFITS

Name        Plan Name        Number
of Years
Credited
Service
(#)
       Present
Value of
Accumulated
Benefit(1)(2)
($)
       Payments
During Last
Fiscal Year
($)
Mr. Wilson ARP 23.8 1,047,349   0
SRIP 23.8 14,448,421 0
Mr. Shebik ARP 28.2 1,275,795 0
SRIP 28.2 3,667,002 0
Mr. Civgin   ARP 8.3 63,328 0
SRIP 8.3   382,650 0
Ms. Fortin(3) ARP   1.3 7,861 0
SRIP 1.3 19,505 0
Mr. Winter ARP 7.2 53,032 0
SRIP 7.2 495,031 0
(1)         These amounts are estimates and do not necessarily reflect the actual amounts that will be paid to the named executives, which will be known only at the time they become eligible for payment. The present value of the accumulated benefit was determined using the same measurement date (December 31, 2016) and material assumptions that we use for year-end financial reporting purposes, except that we made no assumptions for early termination, disability, or pre-retirement mortality. Other assumptions include the following:
Retirement at the normal retirement age as defined in the plans (age 65).
Discount rate of 4.15%.
Other assumptions for the final average pay formula include the following:
80% paid as a lump sum and 20% paid as an annuity; for the cash balance formula, 100% paid as a lump sum.
Lump-sum/annuity conversion segmented interest rates of 2.75% for the first five years, 5.00% for the next 15 years, and 5.75% for all years after 20.
Lump sum calculations were done using the RP-2014 mortality table projected with the MP-2016 projection table, with a blend of 50% males and 50% females. The RP-2014 mortality table and MP-2016 projection table were created by the Society of Actuaries. Allstate adopted these tables for accounting on December 31, 2016 to measure retirement program obligations in the United States; however, benefits are not determined using these factors in 2016 or 2017.
Annuity calculations were done using the RP-2014 white collar mortality table for annuitants projected with the MP-2016 projection table.
See note 17 to our audited financial statements for 2016 for additional information.
(2) The following table shows the lump sum present value of the non-qualified pension benefits for each named executive earned through December 31, 2016, if the named executives’ employment terminated on that date.

          Name       Plan Name