DEF 14A 1 allstate3288151-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      

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  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 2018 Annual Meeting
and Proxy Statement














What’s Inside

Letter from Independent Directors to Stockholders
Information on Five Voting Issues
Election of Directors
Advisory Vote on Compensation
Ratification of External Auditor
Two Stockholder Proposals
Independent Board Chair
Reporting Political Contributions


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LETTER FROM INDEPENDENT
DIRECTORS TO STOCKHOLDERS

The Allstate Corporation
2775 Sanders Road
Northbrook, IL 60062

March 28, 2018

Fellow Stockholders,

Thank you for trusting us to oversee the long-term health and sustainability of Allstate. We focus on continuous improvement and transparency, informed by our stockholder engagement, outside advisors and best practices. Below is a list of our major initiatives and accomplishments in 2017.

Corporate Governance

Once again last year, we reached out to stockholders representing over one-third of our outstanding shares to discuss performance, strategy, corporate governance, and Board composition, diversity, tenure and independence as part of our effort to continuously get better. Our Chair and CEO, Tom Wilson, Lead Director, Judy Sprieser, and nominating and governance committee chair, Andrea Redmond, participated in these conversations. We implemented the following improvements to our governance practices:

Board Composition – We added two new directors to our Board, Gregg Sherrill and Margaret Keane. Gregg is Executive Chairman and former CEO at Tenneco. His strategic, operating and leadership experience in the automotive industry will add to our capabilities and discussions, especially related to the rapid transformation occurring in the personal transportation industry. Margaret is President and CEO of Synchrony Financial. She is an accomplished leader with financial services expertise and a passion for innovation, customer focus and employee development that will further strengthen our operating and strategic dialogue.

Mary Alice Taylor and John Rowe are retiring from the Board in May 2018. Mary Alice has served as a director for 20 years under different operating environments and management teams. The breadth and depth of her Allstate experience has been extremely beneficial to our new directors and in her role leading the audit committee for the last three years. John joined Allstate in 2012 following nearly three decades as CEO of a highly regulated business and led our compensation and succession and nominating and governance committees. We are extremely grateful for their service and dedication to Allstate.
 

Board Capabilities and Refreshment – To effectively represent your long-term interests, we strive to maintain an appropriate balance of tenure, diversity, skill sets and experience on our Board. A comprehensive Board evaluation process is utilized to ensure governance and oversight responsibilities are updated and well executed. This includes assessing our performance at the end of every meeting, an annual Board assessment and individual director evaluations. The members of our Board reflect diverse
 

perspectives, experiences and backgrounds and have an average tenure of 6.8 years, demonstrating our commitment to ensure continual refreshment. Half of the Board nominees are women or ethnic minorities who currently hold four of the Board’s leadership roles.
 

Sustainability Report – In response to stockholder input, Allstate issued a Sustainability Report in 2017, detailing environmental, social, and governance practices, including diversity measures and fair pay practices.

Performance and Strategy

We regularly review Allstate’s relative competitive positioning, and actively participate and discuss strategies and key initiatives for each market-facing business and the entire corporation. We also devoted significant time to Allstate’s strategy and how to effectively capture opportunities presented by changes in the automobile industry, including autonomous vehicle technology and ride-sharing.

Allstate delivered on all five operating priorities in 2017 which focused on both near-term performance and long-term value creation.
 

The Net Promoter Score, which measures how likely customers are to recommend Allstate, improved.
 

Investment income was strong, reflecting equity and fixed income market appreciation and increased allocations to performance-based investments.
 

Allstate achieved its target economic returns on capital, despite significant catastrophe events. Particularly impressive was the increased profitability from auto insurance.
 

Total policies in force increased due to the acquisition of SquareTrade and continued growth at Allstate Benefits.
 

Long-term growth was enhanced through existing businesses and the creation of new businesses. Allstate agencies are being positioned as trusted advisors; Allstate Benefits continues to expand; SquareTrade is growing; and significant investments are being made in automotive telematics.

Risk Oversight

Oversight of Allstate’s enterprise risk and return program is the responsibility of the full Board and the risk and return and audit committees. We implemented several enhancements:

Independent Review – Allstate uses economic capital to quantify returns and provide transparency into risk-return decision making. Allstate had an


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independent external review of its methodologies for determining economic capital and allocating it within the enterprise to provide insight into its business risk profile and risk-return opportunities. The review, performed by leading experts in economics and regulation, confirmed Allstate has a sound process for determining economic capital.
 

Cybersecurity Oversight – The relationship with our independent cybersecurity advisor, hired by the audit committee in 2016, was expanded in 2017 to further strengthen Allstate’s cybersecurity defenses and cybersecurity risk management practices. The full Board and audit committee participated in this important work.

Executive Compensation and Succession

We completed our annual evaluation of the executive compensation program to ensure alignment with long-term interests of stockholders. The say-on-pay proposal received 95% support at the 2017 annual meeting. No significant changes were made to our programs in 2017.

Management succession for the CEO and senior leaders is reviewed four times annually across multiple time periods (immediate, less than 2 years, 3 to 5 years, and over 5 years) and under different operating scenarios. Most recently, our robust succession strategy and careful planning resulted in several internal senior leadership promotions in connection with the retirement of Matt Winter, Allstate’s President, including Steve Shebik to Vice Chair, Glenn Shapiro to President of Allstate Personal Lines, and Mario Rizzo to Executive Vice President and Chief Financial Officer. We are confident these leadership changes will enable Allstate’s long-term success.

Capital Management and Stockholder Return

Capital allocation decisions are aligned with Allstate’s enterprise risk and return management principles: maintain a strong foundation, build strategic value, and optimize return per unit of risk. Investments were made in existing businesses to support long-term profitable growth. With the acquisition of SquareTrade, Allstate expanded the protection products it offers to customers.

Dividends – The quarterly dividend was increased 12% to $0.37 cents per share in 2017.
 

Share Repurchase Program – Allstate completed the $1.5 billion share repurchase authorization that was approved in 2016 and instituted an additional $2 billion share repurchase planned to be completed by February 2019.
 

Total Shareholder Return – Allstate achieved returns of 43.3%, 56.8%, and 183.7% over the last one, three and five years, respectively, which compares favorably to the company’s peers and the Standard & Poor’s (“S&P”) 500 index.

Societal Responsibilities

Allstate maintains a strong reputation by operating with integrity, serving customers and improving local communities. This includes the following:

Allstate was named “a most ethical company” for the fourth year in a row by Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices.
 

Allstate and The Allstate Foundation contributed more than $41 million to community service projects across the nation in 2017, including funding for more than 3,290 nonprofit organizations. Over 4,700 Allstate agencies earned Allstate Foundation Helping Hands Grants to support their involvement in local causes.
 

The Allstate Foundation, Allstate and its employees and agency force contributed more than $2.1 million to disaster relief and recovery efforts in 2017, including grants to social service organizations and resources to help consumers navigate the rebuilding process.
 

Our employees and agency force engage in numerous community service programs and volunteered over 258,000 reported hours to over 2,430 community groups in 2017.

We welcome your feedback on this letter or other matters important to Allstate. You can reach us by email at directors@allstate.com.

We pledge to continue to work hard for you to ensure the sustainability and success of Allstate’s long-term strategies and commitment to enhance the communities it serves. Thank you for your continued support.


Kermit R. Crawford Michael L. Eskew Margaret M. Keane
Siddharth N. (Bobby) Mehta Jacques P. Perold Andrea Redmond
John W. Rowe Gregg M. Sherrill Judith A. Sprieser
Mary Alice Taylor Perry M. Traquina

2018 Proxy Statement      3


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NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS





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
Ratification of appointment of Deloitte & Touche LLP as Allstate’s independent registered public accountant for 2018.
 
Proposals
4-5
Two 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 13, 2018. 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 pages 81-82.

Date of Mailing:
On or about March 28, 2018, 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
March 28, 2018




When:

Friday, May 11, 2018, at 11:00 a.m. Central time.
Registration begins at 10:00 a.m.

Where:

Allstate, West Plaza Auditorium
3100 Sanders Road
Northbrook, Illinois 60062

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 11, 2018

The Notice of 2018 Annual Meeting, Proxy Statement, and 2017 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 nominee.
Diverse slate of directors with broad leadership experience; four leadership roles bring gender or ethnic diversity.
All candidates are highly successful executives with relevant skills and expertise.
Average director tenure of 5.5 years with 9 of 10 independent of management.
Strong corporate governance practices and stockholder engagement program that receive exceptional corporate governance ratings.
  See pages 10-15 for further information

 

  

Name

  

Principal Professional Experience

  

Years of
Tenure

  

# of
Other
Public
Company
Boards

  



Committee Memberships
(1)

AC(2)

  

CSC(3)

  

NGC

  

RRC

  

EC

Kermit R. Crawford President and Chief Operating Officer of Rite Aid Corporation 5 1
Michael L. Eskew Former Chairman and CEO of United Parcel Service, Inc. 4 3
NEW Margaret M. Keane(4) President and CEO of Synchrony Financial <1 1
Siddharth N. Mehta Former President and CEO of TransUnion 4 2
Jacques P. Perold Former President of Fidelity Management & Research Company 2 1
Andrea Redmond Former Managing Director of Russell Reynolds Associates Inc. 8 0
NEW Gregg M. Sherrill(4) Executive Chair and former Chair and CEO of Tenneco Inc. <1 2
Judith A. Sprieser
Lead Independent Director
Former CEO of Transora, Inc. and senior executive at Sara Lee Corporation 19 2
Perry M. Traquina Former Chairman, CEO and Managing Partner of Wellington Management Company, LLP 1 2
Thomas J. Wilson Chair, President, and CEO of The Allstate Corporation 12 0

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)

Committee assignments for 2018 will be made after the annual election of directors.

(2)

Mary Alice Taylor serves as the chair of the audit committee and will continue to serve until the annual meeting. Mr. Crawford is expected to fill this role after the annual meeting.

(3)

John W. Rowe serves as the chair of the compensation and succession committee and will continue to serve until the annual meeting. Mr. Eskew is expected to fill this role after the annual meeting.

(4)

Consistent with Allstate’s onboarding practices, committee assignments for Ms. Keane and Mr. Sherrill will be established during their first year of service. It is expected that Ms. Keane will be assigned to the Compensation and Succession Committee, and Mr. Sherrill will be assigned to the Audit and Nominating and Governance Committees after the annual meeting.


2018 Proxy Statement      5


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Proxy Summary   Meeting Agenda and Voting Recommendations

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

Nine of our nominees have other public company board experience

Nine of our nominees have served as a CEO or President

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

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

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 over time to align with best practices, drive sustained stockholder value and serve the interests of stockholders.

Stockholder Rights

Annual election of directors with a majority vote standard in uncontested elections

Proxy access rights

No stockholder rights plan (“poison pill”) and no supermajority voting provisions

Confidential voting

Right to call a special meeting and request action by written consent for stockholders with 10% or more of outstanding shares

Independent Oversight

Strong independent lead director and committee chair roles with clearly articulated responsibilities

Independent Board committees

Eleven out of twelve current directors are independent

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

Independent reviews by the Board, audit, and risk and return committees of Allstate’s strategy, business, and the related key risks and mitigation activities.

 See page 20 for information about current developments related to risk oversight in 2017.

Good Governance

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

Annual letter to stockholders from the independent directors on Board accomplishments

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

NEW

Enhanced Board and committee self-evaluation process, including at the end of each in-person meeting and annual reviews for the entire Board and each individual director

 See page 17 for more information, including a new annual evaluation to ensure Board effectiveness

NEW

Comprehensive Sustainability Report with information on public policy, climate change, information security, environmental, social, and governance performance and management and inclusive diversity

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

Effective director education program

Strong equity ownership requirements for executives


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Meeting Agenda and Voting Recommendations   Proxy Summary

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 aligned with short-and long-term business goals and strategy.
Compensation programs are working effectively. Annual incentive compensation funding for our named executives in 2017 was 181.4% of target, from 55.1% of target in the prior year, reflecting significant improvement in operating results.
Compensation compares favorably to Total Shareholder Return.
  See pages 30-67 for further information

EXECUTIVE COMPENSATION HIGHLIGHTS

We compensated our named executives using the following elements for total target direct compensation in 2017:

   Element    Description    Further Information
(pages)

Targeted
at 50th
percentile
of peers

Salary

A competitive level of cash is provided to attract and retain executive talent

35, 40

Annual Cash Incentive

A funding pool for 2017 of 181.4% of target was based on performance against four performance measures: Performance Net Income, Total Premiums, Net Investment Income, and Total Return
Amounts awarded were based on pool funding, established target amounts, and individual performance

35, 40-41

Long-term Equity Incentive

The mix of equity incentives granted in 2017 was 60% performance stock awards (“PSAs”) and 40% stock options
Awards granted were based on target amounts and individual performance
Actual PSAs vesting will be determined by Average Performance Net Income Return on Equity (“ROE”) (70%) and Earned Book Value (30%) results (both measured over a three-year period)

35, 41-43

Our executive compensation programs have delivered pay supported by performance. The following charts show CEO total compensation in comparison to Total Shareholder Return and Adjusted Net Income per Diluted Common Share over the last three years.

Total CEO Compensation ($M)
vs. One-Year Total Shareholder Return (%)

Total CEO Compensation ($M)
vs. Adjusted Net Income
per Diluted Common Share ($)

(1)

As reported in the “Total” column of the Summary Compensation Table.

(2)

The Adjusted Net 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.


2018 Proxy Statement      7


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Proxy Summary   Meeting Agenda and Voting Recommendations

PROPOSAL
3
Ratification of Deloitte & Touche LLP as the Independent Registered Public Accountant for 2018
The Board recommends a vote FOR ratification of Deloitte & Touche LLP for 2018.
Independent firm with few ancillary services and reasonable fees.
Significant industry and financial reporting expertise.
The audit committee annually evaluates Deloitte & Touche LLP and determined that its retention continues to be in the best interests of Allstate and its stockholders.
  See pages 69-71 for further information

PROPOSAL
4
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.
Allstate’s independent lead director is selected through a robust process, and her performance is evaluated annually.
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 72-74 for further information

PROPOSAL
5
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.allstatesustainability.com).
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 75-76 for further information

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TABLE OF CONTENTS

Letter from Independent Directors to Stockholders 2
Notice of 2018 Annual Meeting of Stockholders 4
How To Vote In Advance 4
Proxy Summary 5
Meeting Agenda and Voting Recommendations 5
Corporate Governance 10
 
Proposal 1 Election of 10 Directors 10
Director Nominees 11
Board Composition and Nominee Considerations 16
Board Leadership Structure and Practices 18
Board Meetings and Committees 26
Director Compensation 28
Executive Compensation 30
 
Proposal 2 Say-on-Pay: Advisory Vote on the Compensation of the Named Executives 30
Compensation Discussion and Analysis 31
Compensation Committee Report 49
Summary Compensation Table 50
Grants of Plan-Based Awards at Fiscal Year-end 2017 52
Outstanding Equity Awards at Fiscal Year-end 2017 54
Option Exercises and Stock Vested During 2017 55
Retirement Benefits 56
Non-Qualified Deferred Compensation at Fiscal Year-end 2017 59
Potential Payments as a Result of Termination or Change in Control (CIC) 60
Estimate of Potential Payments upon Termination 63
Performance Measures for 2017 64
CEO Pay Ratio 67
Audit Committee Matters 69
 
Proposal 3 Ratification of Deloitte & Touche LLP as the Independent Registered Public Accountant for 2018 69
Audit Committee Report 71
Stockholder Proposals 72
 
Proposal 4 Stockholder Proposal on Independent Board Chairman 72
Board of Directors’ Statement in Opposition to the Stockholder Proposal on Independent Board Chairman 73
Proposal 5 Stockholder Proposal on Reporting Political Contributions 75
Board of Directors’ Statement in Opposition to the Stockholder Proposal on Reporting Political Contributions 76
Stockholder Proposals or Director Nominations for the 2019 Annual Meeting 77
Stock Ownership Information 78
Security Ownership of Directors and Executive Officers 78
Security Ownership of Certain Beneficial Owners 79
Section 16(a) Beneficial Ownership Reporting Compliance 79
Other Information 80
Proxy and Voting Information 80
Appendix A – Definitions of Non-GAAP Measures 83
Appendix B – Categorical Standards of Independence 87
Appendix C – Executive Officers 87



About Allstate

We Are
The Good Hands.

The Allstate Corporation is the largest publicly held personal lines insurer in the United States. 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 offers a broad array of protection products through multiple brands and diverse distribution channels, including auto, home, life and other insurance offered through its Allstate®, Esurance®, Encompass® and Answer Financial® brands. The company provides additional protection products and services through Allstate Benefits, Allstate Roadside Services, Allstate Dealer Services, Arity and SquareTrade.


Report Highlights

See information about the Board’s oversight of risk on page 20
 
See information about Allstate’s sustainability initiatives on page 25
 
See information about our compensation decisions for our named executives in 2017 on pages 36-38


2018 Proxy Statement      9


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CORPORATE GOVERNANCE

PROPOSAL
1
Election of 10 Directors
The Board recommends a vote FOR each nominee.
Diverse slate of directors with broad leadership experience; four leadership roles bring gender or ethnic diversity.
All candidates are highly successful executives with relevant skills and expertise.
Average director tenure of 5.5 years with 9 of 10 independent of management.
Strong corporate governance practices and stockholder engagement program that receive exceptional corporate governance ratings.

The Board recommends 10 nominees for election to the Allstate Board for one-year terms beginning in May 2018 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. Sherrill and Ms. Keane, was previously elected at Allstate’s annual meeting of stockholders on May 25, 2017, for one-year terms. Mr. Sherrill and Ms. Keane were elected by the Board effective October 1, 2017, and January 1, 2018, respectively. 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. Mrs. Taylor is not standing for re-election at the annual meeting. Mr. Rowe is retiring at the annual meeting in accordance with Allstate’s retirement policy and is not standing for re-election.

Director Nominees’ Skills and Experience

Our Board selected the nominees based on their diverse set of skills and experiences, which align with our business strategy and contribute to the effective oversight of Allstate.
Core Competencies Required of All Director Nominees
Additional Capabilities that Facilitate Oversight of Our Business

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Director Nominees   Corporate Governance

Director Nominees

KERMIT R. CRAWFORD
Age: 58

Allstate Board Service
Tenure: 5 years (2013)
Audit committee
Nominating and governance committee
INDEPENDENT
Professional Experience
Current President and Chief Operating Officer of Rite Aid Corporation, which operates the third largest retail drugstore chain in the United States based on both revenues and number of stores.
Former Executive Vice President and 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.
Other Public Board Service
LifePoint Health
2016–present

Committee Expertise Highlights
Audit Committee Member
Responsible for all aspects of strategic, operational, and profit and loss management of one of the largest drugstore chains 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.
MICHAEL L. ESKEW
Age: 68

Allstate Board Service
Tenure: 4 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.
Other Public Board Service
Eli Lilly and Company
IBM
3M Company
2008–present
2005–present
2003–present

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 and member of the Eli Lilly compensation committee.


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Corporate Governance   Director Nominees

MARGARET M. KEANE NEW
Age: 58

Allstate Board Service
Tenure: <1 year
Elected to the Board effective on January 1, 2018
INDEPENDENT
Professional Experience
Current President and CEO of Synchrony Financial, a consumer financial services company.
Former President and CEO of GE Capital Retail Finance.

Relevant Skills
Extensive operational and strategic experience in the financial services industry as President and CEO of Synchrony Financial.
Valuable insights into innovation, emerging technology, and employee development.
Successful leadership experience across roles spanning consumer finance, vendor financial services, operations and quality.
Expanded the business focus on ecommerce and mobile capabilities, developing new tools for both business clients and consumers.
Other Public Board Service
Synchrony Financial
2014–present

Nomination Considerations
Ms. Keane meets all of the Board’s qualifications for Board service. In addition, her extensive experience leading one of the nation’s premier financial services companies complements the Board’s diverse skill sets and strengthens the strategic dialogue. For more information about the Board’s nomination considerations, please refer to page 16.
Committee Expertise Highlights
Consistent with past practice, committee assignments will be established during first year of service. It is expected that Ms. Keane will be assigned to the Compensation and Succession Committee after the annual meeting.
SIDDHARTH N. (BOBBY) MEHTA
Age: 59

Allstate Board Service
Tenure: 4 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 CEO, 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.
Other Public Board Service
Piramal Enterprises Ltd.
TransUnion
2013–present
2012–present

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.

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Director Nominees   Corporate Governance

JACQUES P. PEROLD
Age: 59

Allstate Board Service
Tenure: 2 years (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.
Other Public Board Service
MSCI Inc.
2017–present

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.
ANDREA REDMOND
Age: 62

Allstate Board Service
Tenure: 8 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.


2018 Proxy Statement      13


Table of Contents

Corporate Governance   Director Nominees

GREGG M. SHERRILL NEW
Age: 65

Allstate Board Service
Tenure: <1 year
Elected to the Board effective on October 1, 2017
INDEPENDENT
Professional Experience
Current Executive Chairman, and former Chairman and CEO of Tenneco, Inc., a producer of automotive emission control and ride control products and systems (will become non-Executive Chairman in May 2018).
Former Corporate Vice President and President of Power Solutions at Johnson Controls Inc., a global diversified technology and industrial company.

Relevant Skills
Extensive operational and strategic experience in the automotive industry as Chair and CEO at Tenneco, which provides valuable insights into Allstate’s strategic discussions related to the rapid changes in the personal transportation system.
Successful experience managing the international operations as CEO at a global public company with employees across 23 countries.
Established a strong track record of revenue growth, higher earnings and improved profitability during his tenure at Tenneco.
Other Public Board Service
Snap-On, Inc.
Tenneco, Inc.
2010–present
2007–present

Nomination Considerations
Mr. Sherrill meets all of the Board’s qualifications for Board service, including its guidelines on the number of other public company boards on which he can serve. In addition, the timing of his appointment at Allstate coincided with his election as Executive Chairman at Tenneco, which helped him manage the transition as a new director at Allstate. Mr. Sherrill will become the non-Executive Chairman at Tenneco in May 2018. For more information about the Board’s nomination considerations please refer to page 16.
Committee Expertise Highlights
Consistent with past practice, committee assignments will be established during first year of service. It is expected that Mr. Sherrill will be assigned to the Audit and Nominating and Governance Committees after the annual meeting.
JUDITH A. SPRIESER
LEAD DIRECTOR
Age: 64

Allstate Board Service
Tenure: 19 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 operating executive positions at Sara Lee Corporation, a global manufacturer and marketer of brand-name consumer goods.
Former director at 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, and other consumer goods and services companies.
Extensive evaluation of financial statements and supervision of financial executives.
Other Public Board Service
Intercontinental Exchange, Inc.
Reckitt Benckiser Group plc
2004–present
2003–present

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., CFO of Sara Lee Corporation, and CEO of Sara Lee’s Food Group.
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.


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Director Nominees   Corporate Governance

PERRY M. TRAQUINA
Age: 61

Allstate Board Service
Tenure: 1 year (2016)
Compensation and succession committee
Risk and return committee
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 world’s largest institutional investors.
Strong financial services and global investment management expertise through 34 years at Wellington.
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.
Other Public Board Service
Morgan Stanley
eBay
2015–present
2015–present

Committee Expertise Highlights
Compensation and Succession Committee Member
Significant management experience as former Chairman and CEO of Wellington Management Company, LLP from 2004 through June 2014 and as a director of other publicly-traded companies.
Risk and Return Committee Member
Current chair of the risk committee at Morgan Stanley.
THOMAS J. WILSON
Board Chair, President, and Chief Executive Officer
Age: 60

Allstate Board Service
Tenure: 12 years (2006)
Executive committee chair
 
Professional Experience
CEO since January 2007 and Chair of Board since May 2008.
President from June 2005 to January 2015, and from February 23, 2018 to present.
Held senior executive roles other than CEO, leading all major operating units over a 23-year period.

Relevant Skills
Key leadership roles throughout Allstate over a 23-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 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 23 years of leadership experience at the company.


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Corporate Governance   Board Composition and Nominee Considerations

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 experience in the areas listed on page 10.

The Board and committee expect each non-employee director to be free of interests or affiliations that could give rise to a biased approach or a conflict of interest and be free of any significant relationship with Allstate that would interfere with the 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.

The Board also has limits on the number of other public boards on which our directors may sit. Directors who are active executives may serve on the board of no more than two other public companies, and other directors

may serve on the board of no more than four other public companies (in addition to Allstate’s Board in each case).

Board nominees are identified through a retained search firm, suggestions from current directors and stockholders, and through other methods including self-nominations. Our newest directors, Ms. Keane and Mr. Sherrill, were identified by a search firm.

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.

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 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 126 candidates since 2010
 
 
Meet with qualified
candidates
To ensure appropriate personal qualities, such as independence of mind, 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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Board Composition and Nominee Considerations   Corporate Governance

EVALUATION PROCESS

Allstate’s Board evaluation processes include multiple layers performed throughout the year. They ensure that the Board’s governance and oversight responsibilities are updated to reflect best practice and are well executed. They include discussions after every meeting, an annual Board assessment and individual director evaluations.

Steps to Achieve Board Effectiveness

Process Performed By Description
  

Evaluation at every in-person meeting

  

Independent Directors

  
Measures effectiveness of Board and committee oversight
Ensures objectives were satisfied, all agenda items sufficiently considered and information presented was sufficient, complete, understandable and organized
Identifies issues that need additional dialogue
  

OUTCOME

Based on the Board’s new evaluation process, enhancements were made to Board meeting schedules, agendas and materials.

Biennial review of responsibilities and time allocation

Board and Committees

Ensures all necessary agenda items were considered to fulfill Board and committee responsibilities
Adjustments made to future agendas and timelines

Annual evaluation
NEW

Board

Ensures Boards and committees are functioning effectively
Results reviewed by nominating and governance committee and summarized for full Board; recommendations for improvement are reviewed and plans initiated

Annual evaluation

Lead Director, NGC Chair, and Chair

Review contributions and performance in light of Allstate’s business and strategies and confirm continued independence
Feedback provided to each director by the Lead Director, Nominating and Governance Chair, or Board Chair

OUTCOME

Results of evaluations are used by the nominating and governance committee in connection with the annual nomination process; additional interactions with senior management are being added to support directors on key business and strategic matters.

Biennial evaluation

Lead Director, NGC Chair, and Chair

Discuss each director’s future plans for continued Board service
Determine whether overall skills align with business strategy

Change in circumstances

Board

Determine appropriateness of director’s continued membership on the Board after a change in primary employment
Review potential conflicts and whether change impacts director’s ability to devote the necessary time and effort to Board service

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Corporate Governance   Board Leadership Structure and Practices

NOMINEE INDEPENDENCE DETERMINATIONS

The Board has determined that all non-employee directors who served during 2017 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 longest-serving director, Ms. Sprieser. Ms. Sprieser has significant experience serving at Allstate under different operating environments and management teams, and served on the Board under two CEOs and prior to Mr. Wilson’s appointment. The Board concluded that Ms. Sprieser is an effective director who fulfills her responsibilities with integrity and independence of thought. She appropriately challenges management and the status quo, and is reasoned, balanced, and thoughtful in Board deliberations and in communications with management. The Board determined that her independence from management has not been diminished by her years of service.


Board Leadership Structure and Practices

BOARD CHAIR

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 that is 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 23 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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Board Leadership Structure and Practices   Corporate Governance

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 seven 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.

The lead director is elected annually by the independent directors, and it is generally expected that the lead director serve more than one year.

JUDITH A. SPRIESER

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

The independent directors consider several factors, including the director’s corporate 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 in multiple 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 Independent Director Responsibilities

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 Allstate’s strategy and performance
Performs additional duties designated by the independent directors
 
Succession Plans
Facilitates the development of a succession plan for the Chair and CEO
 
Board and Individual Director Evaluations
Facilitates the evaluation of individual director, Board and committee performance 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 with the chair of the compensation and succession committee
 
Communication Between Chair and Independent Directors
Serves as liaison between the Chair and independent directors
Consults with the Chair and discusses items raised in executive sessions
 
Communication with Stockholders
Communicates with significant stockholders and other stakeholders on matters involving broad corporate policies and practices, when appropriate
 
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 committee reports to the Board


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Corporate Governance   Board Leadership Structure and Practices

BOARD ROLE IN RISK OVERSIGHT

The Board oversees enterprise risk and return management practices (“ERRM”) and regularly reviews Allstate’s significant risk exposures and management’s design and implementation of ERRM. Allstate’s overall risk position and alignment with risk and return principles is reviewed twice a year. External resources are used when appropriate. Material risks, including those affected by climate, investment markets, and cybersecurity, are regularly identified, measured, managed, and reported to senior management and the Board.

The key risk areas overseen by each Board committee are included below.

BOARD OF DIRECTORS
Formal Review at Least Twice a Year
 
Audit Committee
Reviews Risk At Least Four Times Annually
Oversees Allstate’s internal controls related to key risks and the major financial risk exposures and how they are managed
Reported through a semi-annual risk control dashboard
Conducts quarterly reviews to oversee the efficacy of cybersecurity risk initiatives and related policies and procedures
Receives regular reports from the chief risk officer, chief information security officer, and outside experts
Reviews Risk Factors included in our Form 10-K
The risk and return committee chair is an audit committee member to enhance cross-committee communication
The chief audit executive attends all meetings and has regular executive sessions with committee
The chief risk officer attends all meetings
        
 
 
 
 
 
        
Risk and Return Committee
Reviews Risk At Least Five Times Annually
Oversees the effectiveness of Allstate’s ERRM framework, governance structure and decision making
Reported through a quarterly risk dashboard that identifies key risks and provides an overall perspective of Allstate’s risk profile
Includes a review of Allstate’s risk and return position, capital level, and strategic/ operating plans
Reviews extremely low frequency scenarios (“ELFs”) at least annually
Reviews regulatory Own Risk and Solvency Assessment (“ORSA”) report
Reviews Risk Factors included in our Form 10-K
The audit committee chair is a risk and return committee member to enhance cross-committee communication
The chief risk officer attends all meetings and has regular executive sessions with committee
 
 
 
 
 
 
 
 
Nominating and Governance Committee
Reviews Risk As Needed
Oversees the major risks and mitigation activities related to its area of responsibility, i.e., director elections and corporate governance practices, to ensure they appropriately reflect Allstate’s risk and return appetite

 
 
Compensation and Succession Committee
Reviews Risk At Least Once Annually
Oversees executive compensation programs (including the design, performance measures and ranges in incentive plans)
Includes a review of incentive compensation programs from a risk and return perspective
Oversees talent development and succession planning to ensure they appropriately reflect Allstate’s risk and return appetite
 
 

Current Developments in the Board’s Risk Oversight
Independent
Risk Review
    The risk and return committee oversaw an independent external review of Allstate’s methodologies for  determining economic capital and allocating it within the enterprise to provide insight into our business risk profile and risk-return opportunities. The review, performed by leading experts in economics and regulation, confirmed Allstate has a sound process for determining economic capital.
   
Cybersecurity
   

In 2016, the audit committee engaged an independent cybersecurity advisor to provide additional independent oversight. This relationship was expanded in 2017 to further strengthen Allstate’s cybersecurity defenses and risk management practices.

   
Severe
Weather Risks
   

The Board and risk and return committee continued to oversee efforts to assess and mitigate weather-related risks. The impact of several major hurricanes in 2017 validated the effectiveness of Allstate’s catastrophe response and risk management programs.

   

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Board Leadership Structure and Practices   Corporate Governance

RISK MANAGEMENT AND COMPENSATION

We believe our compensation policies and practices are appropriately structured and do not provide incentives for employees to take unnecessary or excessive risks, utilizing analysis provided by an external consultant, the chief risk officer, and a review by the compensation and succession committee. Compensation plans provide a balanced and appropriate mix of cash and equity through annual and long-term incentives that 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 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 requirements.

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 discussed four times annually in compensation and succession committee meetings, Board meetings, and 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.


Board Review of Succession Planning and Talent Development Practices

OUTCOME

Based on these succession planning discussions, in early 2018, Allstate announced several internal senior leadership promotions in connection with the retirement of Matt Winter, Allstate's President. Steve Shebik was promoted to Vice Chair, Glenn Shapiro to President of Allstate Personal Lines, and Mario Rizzo to Executive Vice President and Chief Financial Officer.


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Corporate Governance   Board Leadership Structure and Practices

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 the 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 six out of seven compensation and succession committee meetings in 2017.

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 the nominating and governance committee with competitive information on director compensation, including updates on practices and emerging trends.


STOCKHOLDER ENGAGEMENT

Allstate proactively discusses corporate governance issues with significant stockholders throughout the year. Dialogue, transparency, and responsiveness are the cornerstones of our stockholder engagement program. Such discussions are held before the annual meeting, during stockholder voting, and after the annual meeting and include our lead director, chair of the 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 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.


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Board Leadership Structure and Practices   Corporate Governance

Stockholder Engagement Cycle

OUTCOME

During 2017, Allstate reached out to stockholders representing approximately 38% of outstanding shares and spent a significant amount of time discussing the Board’s diversity and refreshment practices, Board leadership structure (including the strengthened role of the committee chairs), and Allstate’s approach to environmental, social and governance issues, particularly those related to inclusive diversity and weather-related risks.

BOARD ATTENDANCE

Each incumbent director attended at least 75% of the combined Board meetings and meetings of committees of which he or she was a member. Directors are expected to attend Board and committee meetings and the annual meeting of stockholders. All directors who stood for election at the 2017 annual meeting of stockholders attended the annual meeting.

99%
Average attendance of incumbent directors as a group at Board and committee meetings during 2017.

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 2017.

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 more than 5% 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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Corporate Governance   Board Leadership Structure and Practices

MANAGEMENT PARTICIPATION IN COMMITTEE MEETINGS

Key members of management regularly attend and participate in Board meetings, presenting on key topics for the Board. Regular attendees include the CEO, Vice Chair, CFO, General Counsel, President of Allstate Personal Lines, President of Allstate Financial, President of Service Businesses, Chief Investment and Corporate Strategy Officer, and Chief Risk Officer. Other senior leaders attend as meeting topics warrant. In addition, senior leadership also participates in committee meetings.

Audit Committee   

The CFO, chief audit executive, chief compliance executive, chief risk officer, CEO, vice chair, general counsel and controller all actively participate in 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 meetings. The committee regularly meets in executive sessions that include just the independent compensation consultant or executive vice president, human resources, when necessary.
 
The 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.
 
The CFO discusses financial results relevant to incentive compensation, other financial measures, and accounting rules.
 
The CEO advises on the alignment of incentive plan performance measures with strategy and the design of 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 meetings. The committee regularly meets in executive session without management present.

Risk and Return
Committee

The chief risk officer, CFO, general counsel, CEO, vice chair, chief audit executive, and operating unit risk officers participate in 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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Board Leadership Structure and Practices   Corporate Governance

   

CORPORATE SUSTAINABILITY

The Board believes operating sustainably benefits Allstate’s many different stakeholders and drives long-term value creation.

    Priorities Recent Progress

Privacy and
Information
Security

An integral part of Allstate’s commitment to its customers is preventing the loss of their data and ensuring that their data is protected and kept private. Allstate leverages a risk-based approach to implementing its information security program.
Allstate has established an Information Security Council, which reviews and ensures alignment of the program with regulatory and industry standards.
Allstate has a clear privacy policy and requires training and annual compliance confirmation by its employees.
Allstate’s program maps to the National Institute of Standards and Technology Cybersecurity Framework, and International Organization for Standardization (“ISO”) 27001.

Workforce
and Diversity

We manage talent by providing employees with training, interesting work, mentoring, and career development; promoting from within; emphasizing inclusive diversity; retaining existing talent; attracting new employees by offering appropriate employee benefits; and monitoring engagement on annual employee surveys.
Allstate invests in training opportunities for its employees, and in 2017, employees completed 317,055 courses and 356,971 hours of learning.
Allstate strives for a workforce that mirrors the diversity of its customers and communities, and in 2017, 69% of Allstate employees were diverse.
In 2017, Allstate retained 86.4% of its employees.
In its last annual employee survey, which measures the general health of the work environment, Allstate achieved an engagement score of 83%.

Risk and
Climate

In 2017, Allstate continued its efforts to assess and refine its exposure management, pricing, modeling, and underwriting practices related to climate risks. Some of Allstate’s initiatives included:
Strengthening its catastrophe response and risk management programs through technology such as drone usage, QuickFoto Claim®, and Mobile Claims Centers, which expedited Allstate’s catastrophe response.
Addressing the risk of loss from catastrophes by continuing to purchase reinsurance for specific states and countrywide for its personal lines property insurance.
Active participation in shaping federal legislation for the Write Your Own Flood Insurance Program.
Being selective with personal homeowners insurance new business underwritings in certain coastal areas, as well as other deductibles or exclusions where appropriate.
Assisting customers in mitigating their carbon footprint through an endorsement that allows customers to replace covered, damaged, or destroyed items with more energy efficient ones.

Community

Allstate Foundation Purple Purse is the longest-running national campaign focused on ending domestic violence through financial empowerment services for survivors. Since 2005, The Allstate Foundation has helped over 1.3 million survivors and invested more than $60 million to help end domestic violence.
Good Starts Young is The Allstate Foundation’s program supporting America’s youth and it was instrumental in helping over five million youth participate in service-based learning last year. Since 2014, the Allstate Foundation has invested over $45 million in youth empowerment.
Allstate employees and agency force engage in numerous community service programs and volunteered over 258,000 reported hours to over 2,430 local nonprofit organizations in 2017.

To learn more about our corporate sustainability efforts, please view Allstate’s 2016/2017 Sustainability Report at http://allstatesustainability.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 CEO, CFO, vice chair, 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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Table of Contents

Corporate Governance Board Meetings and Committees

Board Meetings and Committees

THE ALLSTATE CORPORATION BOARD OF DIRECTORS

Meetings in 2017: 7
Independent Lead Director: Judith A. Sprieser
Chair: Thomas J. Wilson
11 of 12 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
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


AUDIT COMMITTEE(1)     COMPENSATION AND
SUCCESSION COMMITTEE
Meetings in 2017: 10
Chair: Mary Alice Taylor
Other Members:
Kermit R. Crawford
Michael L. Eskew
Siddharth N. Mehta
Report, pg. 71 
Meetings in 2017: 7
Chair: John W. Rowe
Other Members:
Michael L. Eskew
Andrea Redmond
Perry M. Traquina
Report, pg. 49 

“Cybersecurity risk oversight continued to be an area of attention and we enhanced our risk management practices in this area in 2017 by expanding our relationship with our independent cybersecurity advisor. Allstate’s reporting segments and property and casualty reserve methodology and process were also areas of focus.”
Mary Alice Taylor, Chair

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
Evaluates retaining independent cybersecurity advisor
Oversees Allstate’s internal audit function
Has authority to engage independent counsel and other advisors to carry out its duties

“In 2017, we spent a considerable amount of time on management succession, which resulted in several senior leadership changes in anticipation of Matt Winter’s retirement. We also concentrated our review on Allstate’s talent development practices, including inclusive diversity initiatives and pay equity practices.”
John W. Rowe, Chair

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
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. Sherrill and Traquina also have the background and experience to qualify as audit committee financial experts.


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Board Meetings and Committees   Corporate Governance

 

Judith A. Sprieser,
Independent Lead Director
Strengthened Role of Independent Committee Chairs
Each of the committee chair roles was enhanced to include the approval of meeting agendas and committee materials. Prior to each meeting, each committee chair has a separate conference call with the CEO and relevant operating executives. The committee chairs discuss meeting materials and agendas in advance of each meeting, which fosters independence and successful execution of each committee’s responsibilities.
Use of Independent Advisors
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 2017.

“Oversight of risk management and strategy continued to be areas of focus for our Board in 2017, and significant time was devoted to reviewing the risks and opportunities presented by changes in the personal lines insurance industry. Management succession was also an important area of focus, and several senior leadership changes were made in early 2018, demonstrating the effectiveness of our management succession programs. With the addition of two new directors, we believe our Board is well positioned to oversee the long-term sustainability of Allstate’s business.”
 


NOMINATING AND
GOVERNANCE COMMITTEE

  

RISK AND
RETURN COMMITTEE

  

EXECUTIVE
COMMITTEE

Meetings in 2017: 6
Chair: Andrea Redmond
Other Members:
Kermit R. Crawford
Jacques P. Perold
John W. Rowe
Judith A. Sprieser
Meetings in 2017: 5
Chair: Siddharth N. Mehta
Other Members:
Jacques P. Perold
Judith A. Sprieser
Mary Alice Taylor
Perry M. Traquina
Meetings in 2017:
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

Director refreshment continued to be an area of emphasis. Since the last annual meeting, we added two highly accomplished and collaborative leaders to our Board. We also instituted an additional annual Board evaluation process to supplement our existing process and to ensure continuous improvement in our corporate governance practices.”
Andrea Redmond, Chair

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

“In 2017, we enhanced our enterprise risk management processes by overseeing an independent review of Allstate’s economic capital determination processes. We spent considerable time reviewing risks related to severe weather, including climate-related scenarios with low frequency but high severity.”
Siddharth N. Mehta, Chair

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
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

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Corporate Governance Director Compensation

Director Compensation

DIRECTOR COMPENSATION PROGRAM

The nominating and governance committee reviews non-employee director compensation annually and proposes changes, as appropriate, based on its review, benchmark information from peer companies and relevant compensation surveys. The following table
describes each component of our non-employee director compensation program for 2017. No meeting fees or other professional fees were paid to the directors.


Role     Quarterly
Cash Retainer
(1)
    Equity

Non-Employee Director

$31,250

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

Lead Director

$12,500

Audit Committee Chair

$8,750

Compensation and
Succession Committee
Chair and Risk and Return
Committee Chair

$6,250

Nominating and Governance
Committee Chair

$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.

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 Ms. Keane, and Messrs. Mehta, Perold, Sherrill, and Traquina, who joined the Board in the last five years.

2017 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 2017. Margaret Keane has not been included as she was elected to the Board effective January 1, 2018.

Name    Leadership Roles
Held During 2017
   Fees Earned or
Paid in Cash
($)(1)
   Stock
Awards
($)(2)(3)
   All Other
Compensation
($)
   Total
($)
Mr. Crawford 125,000 155,014 280,014
Mr. Eskew 125,000 155,014 280,014
Mr. Henkel Retired May 2017 62,500 0 62,500
Mr. Mehta Risk and Return Committee Chair 150,000 155,014 305,014
Mr. Perold 125,000 155,014 280,014
Ms. Redmond Nominating and Governance Committee Chair 145,000 155,014 300,014
Mr. Rowe Compensation and Succession Committee Chair 150,000 155,014 305,014
Mr. Sherrill 31,250 103,399 134,649
Ms. Sprieser Lead Director 175,000 155,014 330,014
Mrs. Taylor Audit Committee Chair 160,000 155,014 315,014
Mr. Traquina 125,000 155,014 280,014
(1)

Under the 2017 Equity Compensation Plan for Non-Employee Directors, directors may elect to receive Allstate common stock in lieu of cash compensation. In 2017, none of the directors 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


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Director Compensation   Corporate Governance

on 90-day dealer commercial paper; (c) S&P 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 2017, Messrs. Eskew and Traquina elected to defer their cash retainer into common share units.

(2)

Grant date fair value for restricted stock units granted in 2017 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 2017.) Mr. Sherrill received a prorated award when he joined the Board in 2017. The final grant date closing price was $86.94, except with respect to the prorated award granted to Mr. Sherrill, which was $91.91. 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 3).

(3)

The following table provides outstanding restricted stock units and stock options as of December 31, 2017, for each director.

Outstanding Awards at Fiscal Year-End 2017

        Name       Restricted
Stock Units
(#)
      Stock
Options
(#)
Mr. Crawford 13,066 0
Mr. Eskew 8,405 0
Mr. Henkel 0 0
Mr. Mehta 9,544 0
Mr. Perold 5,190 0
Ms. Redmond 28,538 0
Mr. Rowe 17,687 0
Mr. Sherrill 1,125 0
Ms. Sprieser 42,196 0
Mrs. Taylor 42,196 4,000
Mr. Traquina 3,749 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, 2017.

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. 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).

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Table of Contents

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 aligned with short- and long-term business goals and strategy.
Compensation programs are working effectively. Annual incentive compensation funding for our named executives in 2017 was 181.4% of target, from 55.1% of target in the prior year, reflecting significant improvement in operating results.
Compensation compares favorably to Total Shareholder Return. 
 

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 31-67 of the Notice of 2018 Annual Meeting and Proxy Statement.



Allstate achieved all five 2017 operating priorities, and financial results improved, with net income rising to $3.07 billion in 2017 from $1.76 billion in the prior year.
Total shareholder return was 43.3% for 2017 in comparison to 19.1% for the compensation peer group.
Total 2017 compensation for the CEO increased from 2016 by $4,830,432 to $17,069,187 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 181.4% of target in 2017. Based on company and individual performance, the named executives received the following annual incentive payments, which were higher than the prior two years’ awards:
  
       Named Executive       2015 Annual
Incentive
($)
      2016 Annual
Incentive
($)
      2017 Annual
Incentive
($)
Mr. Wilson 2,888,136 1,982,880 6,759,264
Mr. Shebik 850,000 600,000 2,600,000
Mr. Civgin 768,629 535,066 1,806,645
Mr. Dugenske(1) 1,377,908
Mr. Winter 1,600,000 1,017,513 3,625,590
(1)

For Mr. Dugenske, only the last fiscal year is shown since this is the first year he is a named executive. The award was pro-rated based on his March 2017 start date.


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Compensation Discussion and Analysis   Executive Compensation

Compensation Discussion and Analysis

EXECUTIVE OVERVIEW

Our Compensation Discussion and Analysis describes Allstate’s executive compensation program, including total 2017 compensation for our named executives listed below(1):

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
John E. Dugenske — Executive Vice President and Chief Investment Officer
Matthew E. Winter — President
(1)

The titles and responsibilities for certain of these officers changed in 2018. Additionally, Mr. Winter retired effective February 23, 2018. See Appendix C for current titles and a list of Allstate’s other executive officers.

Business Highlights

In 2017, Allstate delivered strong results and implemented multiple initiatives to drive long-term profitable growth. Our management team continued to advance all five operating priorities:

$1.9 billion
Distributed to stockholders in cash through stock repurchases and common stock dividends


Operating Priorities Results
Better serve
our customers
Net Promoter Score increased.
Customer retention improved for Allstate brand in the second half of 2017, and Esurance auto insurance improved in each quarter of 2017 compared to 2016.
Expanded QuickFoto Claim® utilization.
Achieve target
economic returns
on capital
Property-Liability recorded combined ratio of 93.6 for the full year.
Auto insurance underlying combined ratio* improved across all three underwritten brands.
Allstate brand homeowners insurance generated an underwriting profit of $725 million despite $2.1 billion of catastrophe losses.
Allstate Annuities income increased significantly, while returns remained low.
Grow customer base
Total policies in force increased to 82.3 million, due to acquisition of SquareTrade.
Property-Liability policies in force declined as a result of profit improvement actions.
SquareTrade policies grew 10 million or 35.8% for the year.
Allstate Benefits policy growth of 7.4%.
Proactively manage
investments
Total return of 5.9%, reflecting strong results from both the market-based and performance-based strategies.
Build long-term
growth platforms
SquareTrade expanded U.S. retail distribution and European cellphone protection.
Arity continued to support Allstate and Esurance telematics expansion; signed first third-party insurance carrier.
*

Measures used in this proxy statement that are not based on generally accepted accounting principles (“non-GAAP”) are denoted with an asterisk (*). These measures are defined and reconciled to the most directly comparable GAAP measures in Appendix A.


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Table of Contents

Executive Compensation   Compensation Discussion and Analysis

Allstate’s one-year total shareholder return was 43.3%. 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 2017 compensation benchmarking (identified on page 45).

Comparison of Total Shareholder Return (%)


(1) Market Cap Weighted Average

Compensation Highlights

Compensation Governance

Allstate’s executive compensation program includes industry best practices with a focus on pay for performance and a strong link between performance measures and strategic objectives.

     

Shareholder Feedback

The Board considers feedback from shareholders on matters including compensation. At our last shareholder meeting, 95% of votes cast supported our executive compensation program. The committee considered the vote results, investor input, and current market practices and determined that no significant changes should be made to the program.

  

Comparison with Peers

The committee uses the 50th percentile of our peer companies as a guideline when setting total target direct compensation.

Independent Consultant

An independent compensation consultant provides advice on incentive design and the overall executive compensation program and pay levels.


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Compensation Discussion and Analysis   Executive Compensation

Alignment of Pay with Performance

Annual Cash Incentive


(1) For a description of how these measures are determined, see pages 64-66
(2) This performance measure has been utilized in prior years, and was previously called Adjusted Operating Income

Annual Incentive Plan ("AIP") % of Target


2015-2017 Performance Stock Awards


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Table of Contents

Executive Compensation   Compensation Discussion and Analysis

2017 COMPENSATION MIX

The committee designs the executive compensation program to award 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 2017 for our CEO and the average of our other named executives is shown in the chart below.

Chief Executive Officer

 

Other NEOs

ALLSTATE’S EXECUTIVE COMPENSATION PRINCIPLES

Allstate’s executive compensation program is designed to ensure that the interests of our executives are aligned with our shareholders:

We Pay for Performance

The majority of our CEO and other NEOs compensation opportunity is at-risk and based on measurable performance goals.

We Establish A Strong Link between Performance Measures and Strategic Objectives

Performance measures are linked to operating priorities designed to create long-term stockholder value.

Moreover, our program adheres to high standards of compensation governance.

What We Do
Benchmark to Peers of Similar Industry, Size and Business Complexity.
Target Pay at 50th Percentile of Peers. Independent Compensation Consultant. Moderate Change-in-Control Benefits.
Double Trigger in the Event of a Change in Control.
Maximum Payout Caps for Annual Cash Incentive Compensation and Performance Stock Awards (“PSAs”).
Robust Equity Ownership Requirements.
Clawback of Certain Compensation if Restatement or Covenant Breach.
What We Do Not Do
No Employment Agreements for Executive Officers.
No Guaranteed Annual Salary Increases or Bonuses.
No Special Tax Gross Ups.
No Repricing or Exchange of Underwater Stock Options.
No Plans that Encourage Excessive Risk-Taking.
No Hedging or Pledging of Allstate Securities.
No Inclusion of Equity Awards in Pension Calculations.
No Dividends Paid on Unvested PSAs.
No Excessive Perks.

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Compensation Discussion and Analysis   Executive Compensation

COMPENSATION ELEMENTS

The following table lists the elements of target direct compensation for our 2017 executive compensation program.

Type Element and
Delivery(1)
   Why We Pay This
Element
   Key Characteristics    How We Determine Amount
 
 
Base Salary; Cash
Attract and retain executives with competitive level of cash compensation. Reviewed annually and adjusted when appropriate. Amounts based on experience, job scope, market data, and individual performance.
               
Annual Cash
Incentive
Awards; Cash

Motivate and reward executives for performance on key strategic, operational, and financial measures during the year.

A corporate-wide funding pool based on performance on four measures:
Performance Net Income(2)
Total Premiums(2)
Net Investment Income(2)
Total Return(2)
Pool is then allocated based on individual performance.

Individual awards are based on job scope, market data, pool funding, and individual performance.




Performance
Stock Awards
(“PSAs”); Equity

Motivate and reward executives for performance on key long-term measures.

Align the interests of executives with long-term stockholder value.

Retain executive talent.

PSAs vest on the day before the third anniversary of the grant date.

Awards based on job scope, market data, and individual performance.

Actual amounts of PSAs vesting based on performance on three-year Performance Net Income Return on Equity(2) and Earned Book Value(2) with a requirement of positive Net Income for any payout above target.

Stock Options; Equity

Align the interests of executives with long-term stockholder value.

Retain executive talent.

Non-qualified stock options to purchase shares at the market price when awarded. Vest ratably over three years.

Expire in ten years or, in the event of retirement, the earlier of five years or normal expiration.

Awards granted based on job scope, market data, and individual performance.

(1)

Represents the average of the target direct compensation elements for all of the named executives in 2017.

(2)

For a description of how these measures are determined, see pages 64-66.

(3)

The compensation and succession committee may award cash and/or restricted stock units in connection with the hire of a new executive. Awards are typically to cover compensation amounts forfeited at prior employer.


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Table of Contents

Executive Compensation   Compensation Discussion and Analysis

COMPENSATION DECISIONS FOR 2017

THOMAS J. WILSON
Chair and Chief Executive Officer(1)
Key Responsibilities
Our Chair and CEO was responsible for managing the company’s business operations and the oversight of senior management. He led the execution of Allstate’s overall strategic direction, performance, and operations.
2017 Compensation (millions)
 
2017 Performance
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. Achieved all five 2017 operating priorities.
Total Shareholder Returns. Strong shareholder returns over one, three, and five years.
Long-term Strategy. Improved competitive position of existing businesses and building or acquiring new long-term growth platforms.
High-Performance Team. Extremely competent, highly engaged team that had excellent operating performance.
Board Effectiveness. Excellent governance processes, Board diversity, and shareholder engagement.
Compensation Decisions
During the 2017 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 2017, the Board increased Mr. Wilson’s salary from $1,200,000 to $1,250,000. 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 2017. The committee approved an annual cash incentive award of $6,759,264, which was 181.4% of target and equal to the funding level as determined by the actual results for the four performance measures. This was 67.6% of the maximum payment established by the Board.
Equity Incentive Awards. In February 2017, based on its assessment of Mr. Wilson’s performance in delivering strong business results in 2016, the committee granted him equity awards of stock options with a grant date fair value of $3,599,997 and performance stock awards with a grant date fair value of $5,400,039, which was Mr. Wilson’s target equity incentive award opportunity of 750% of salary.
Other. The change in pension value for Mr. Wilson in 2017 of $1,688,142 was $2,599,785 lower than the change would have been had management not recommended a change in pension benefits beginning in 2014, as discussed on page 46. The total value of Mr. Wilson’s pension benefit as of December 31, 2017, is $16,043,029 less than it would have been without the 2014 pension change.

(1)

Served in these roles during 2017.


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Compensation Discussion and Analysis   Executive Compensation

STEVEN E. SHEBIK
Executive Vice President and Chief Financial Officer(1)
Key Responsibilities
Our CFO had primary responsibility for the management of the company’s overall financial condition, as well as for financial analysis and reporting. Mr. Shebik served as interim Chief Investment Officer until Mr. Dugenske joined the company in March 2017. Mr. Shebik also served as interim Chief Risk Officer until the election of Mr. Merten in December 2017.
2017 Compensation (millions)
 
2017 Performance
Exceptional performance as Chief Financial Officer and acted as an interim Chief Investment Officer and Chief Risk Officer.
Compensation Decisions
Salary. The committee approved an increase from $750,000 to $800,000 during 2017, based on an evaluation of his performance, level of responsibility, and target compensation as compared to the peer group.
Incentive Targets. Mr. Shebik’s AIP Target was increased during 2017. Mr. Shebik’s annual incentive target was 175% 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 $2,600,000 for Mr. Shebik. This award was slightly above pool funding based on his expanded responsibilities in 2017. This was 36.8% of the maximum payment established by the committee.
Equity Incentive Awards. In February 2017, based on a review of Mr. Shebik’s performance during 2016, the committee granted him equity awards with a grant date fair value of $3,325,020, which was approximately $1,000,000 above his target equity incentive award opportunity.

DON CIVGIN
President, Emerging Businesses(1)
Key Responsibilities
Mr. Civgin oversaw Allstate Emerging Businesses including Allstate Dealer Services, Allstate Roadside Services, Answer Financial, Arity, and SquareTrade. Mr. Civgin also oversaw Esurance.
2017 Compensation (millions)
 
2017 Performance
Significant improvement in Esurance profitability, continued building Arity strategy and business capabilities, and strong growth of SquareTrade.
Compensation Decisions
Salary. The committee approved an increase from $780,000 to $800,000 during 2017, 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 2017. 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 $1,806,645 for Mr. Civgin, which was at the calculated pool funding and 25.6% of the maximum payment established by the committee.
Equity Incentive Awards. In February 2017, based on a review of Mr. Civgin’s performance during 2016, the committee granted him equity awards with a grant date fair value of $2,340,028, which is aligned with his target equity incentive award opportunity.

(1)

Served in this role during 2017.


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Executive Compensation   Compensation Discussion and Analysis

JOHN E. DUGENSKE
Executive Vice President and Chief Investment Officer(1)
Key Responsibilities
Mr. Dugenske was Executive Vice President and Chief Investment Officer of Allstate Insurance Company and President of Allstate Investments. He oversaw the company’s $83 billion investment portfolio.
2017 Compensation (millions)
 
2017 Performance
Strong investment results with a total return of 5.9%, which exceeded relevant benchmarks.
Compensation Decisions
Salary. $725,000
Bonus. Mr. Dugenske received a sign-on bonus of $4,000,000 payable in cash in two installments to offset the value of awards forfeited upon leaving his prior employer. The first installment of $2,000,000 became payable within sixty days of his start date, with the balance of $2,000,000 becoming payable within thirty days after the first anniversary of his start date. In order to receive the second installment, Mr. Dugenske must be employed by Allstate on the date the installment becomes payable. If Mr. Dugenske terminates his employment within twenty-four months of either sign-on payment date, he must repay a prorated amount calculated over a twenty-four month period from the payment date.
Incentive Targets. Mr. Dugenske’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 $1,377,908 for Mr. Dugenske. The award was pro-rated based on his March 2017 start date. The award was calculated at pool funding and 19.5% of the maximum payment establishment by the committee.
Equity Incentive Awards. Mr. Dugenske received a $4,000,002 grant of restricted stock units on April 5, 2017, to offset the value of awards forfeited upon leaving his prior employer. These RSUs will become 100% vested on April 4, 2020. The committee also granted Mr. Dugenske equity awards with a grant date fair value of $2,175,017, which is aligned with his target equity incentive award opportunity.

MATTHEW E. WINTER
President(1)
Key Responsibilities
Mr. Winter was President of The Allstate Corporation and Chief Executive Officer of Allstate Life Insurance Company. He led the personal property-liability businesses, including the Allstate agency and Encompass operations. He was responsible for all business operations and distribution, which includes the 15 field offices located across the United States and in Canada. Mr. Winter retired effective February 23, 2018.
2017 Compensation (millions)
 
2017 Performance
Significant improvement in auto insurance margins, implementation of Allstate Agency trusted advisor initiative, and meaningful contributions to corporate-wide initiatives.
Compensation Decisions
Salary. The committee approved an increase from $825,000 to $900,000 during 2017, 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 2017. 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 $3,625,590 for Mr. Winter, which was at calculated pool funding and 38.5% of the maximum payment established by the committee.
Equity Incentive Awards. In February 2017, based on a review of Mr. Winter’s performance during 2016, the committee granted him equity awards with a grant date fair value of $3,093,772, which is aligned with his target equity incentive award opportunity.

(1)

Served in this role during 2017.


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Compensation Discussion and Analysis   Executive Compensation

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-June
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 and executive pay levels
The consultant provides compensation data from the peer group and information on current market practices and industry trends
 
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 will vest for the applicable measurement period based on actual performance
Approve specific measurable goals for current year for annual incentive plan and three-year performance stock awards
Review and approve salary adjustments and annual incentive and equity targets for executive officers
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
 
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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Executive Compensation   Compensation Discussion and Analysis

Salary

In setting 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

The committee sets performance measure goals based on the operating plan. Target performance is equal to the operating plan. Threshold and maximum measures are based on a range of sensitivities relative to the operating plan. 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 2017, the pool was funded based on the collective results of four measures: Performance Net 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 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 job scope, market data, pool funding, and individual performance.
 
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, which we refer to herein as the “162(m) Pool.” For 2017, the 162(m) Pool is equal to 1.0% of Performance Net 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%. Allstate established these maximums in order to qualify annual cash incentive awards for 2017 as deductible performance-based awards under Internal Revenue Code Section 162(m) as was in effect prior to the passage of the Tax Cuts and Jobs Act (the “Tax Legislation”). Under the Tax Legislation, the exemption for deductibility of performance-based compensation under Internal Revenue Code Section 162(m) has generally been eliminated for fiscal years beginning after December 31, 2017. 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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Compensation Discussion and Analysis   Executive Compensation

We paid the 2017 cash incentive awards in March 2018. The following table shows how the corporate pool was funded and distributed to individual participants:


      Formulaic Calculation of Corporate Funding Pool

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.

Performance Net Income
(aligns with stockholders’ expectations of current performance) (43%)(1)

Total Premiums
(captures growth and competitive position of the businesses) (43%)(1)

Net Investment Income
(reflects a significant component of profitability) (10%)(1)

Total Return
(captures all investment results for the business) (4%)(1)

  

Annual Corporate Pool Distribution

1.Committee approves corporate pool based on review of actual performance in comparison to goals.
2.CEO allocates corporate pool between Market-Facing Businesses and Areas of Responsibility based on relative performance against annual operating goals, for participants other than senior executives.
In 2017, the CEO did not exercise discretion in allocating pool funding between the Market-Facing Businesses or 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.
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 tasked to ensure high-performing participants earn awards (as a percent of funding) that are at least 2.0 times the awards earned by lower-performing participants for the annual incentive plan. The same level of discretion is targeted for 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 64-67.


Performance Stock Awards and Stock Options

We grant equity awards annually to executives consistent with market practice and 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.
 

Since 2016, the mix of equity incentives for senior executives has been 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 vest based on results for Performance Net Income ROE (70%) and Earned Book Value (30%) over the three-year measurement period. The actual number of PSAs vesting is between 0% to 200% of target number of PSAs granted.


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Executive Compensation   Compensation Discussion and Analysis

The committee selected Performance Net 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 64-67. For both measures, the committee considered historical and expected performance, market expectations and industry trends when approving the range of performance.
 

For awards granted in 2015, the number of PSAs that vested depended on the three-year Average Performance Net Income ROE. Performance Net Income ROE for 2015 is defined on pages 64-67.
 

For all PSA awards, Performance Net 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 Performance Net 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 Performance Net Income ROE. This positive Net Income hurdle is included to prevent misalignment between Allstate reported net income and the PSAs vested based on the Performance Net Income ROE result. This situation could occur if, for example, catastrophe losses or capital losses that are not included in Performance Net 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 Performance Net Income ROE and Earned Book Value achievement. 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).



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For the 2018-2020 award, the Average Performance Net Income ROE and Earned Book Value measures are calculated, respectively, as follows:

Performance
Net Income(1)
± Catastrophe Losses
Adjustment
÷ Adjusted Common
Shareholders’ Equity(2)
= Average Performance
Net 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 2017, and at the end of each year in the performance cycle 70% of PSA Performance Measure
   
Common
Shareholders’ Equity
+ Capital Transactions ± Catastrophe Losses
Adjustment
Earned Book Value:
Compound annual growth
rate between reported
common shareholders’
equity at December 2017
and adjusted common
shareholders’ equity at
December 2020(3)
Reported common shareholders’ equity at December 2020 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
   
Three-Year Measurement Period

(1)

Performance Net Income for the 2018-2020 PSA award is defined on pages 64-67.

(2) Adjusted Common Shareholders’ Equity for the 2018-2020 PSA award is defined on page 66.
(3) Earned Book Value is defined on pages 66-67.

2018-2020 Performance Stock Award Range of Performance

    Performance Measures
      Threshold       Target       Maximum
Average Performance Net Income ROE (70%)(1)   7.0% 13.5% 15.0%
Earned Book Value (Compound Annual Growth) (30%)   7.0% 12.5% 14.0%
Payout   0% 100% 200%
(1)

Subject to positive Net Income hurdle

Equity Ownership 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 toward the requirement.

The current stock ownership guidelines apply to 94 of our senior executives and other officers as of December 31, 2017, 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.



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Executive Compensation   Compensation Discussion and Analysis

Stock Ownership as Multiple of Base Salary as of December 31, 2017

Named Executive     Guideline     Actual     Vested in
The Money
Option
Value
(after-tax)
     

49 times
annual salary

The value of shares of Allstate's Common Stock held by Mr. Wilson as of December 31, 2017

Mr. Wilson 6 49 60
Mr. Shebik 3 13 8
Mr. Civgin 3 15 5
Mr. Dugenske 3 7 0
Mr. Winter 3 16 8

What Counts Toward the Guideline

Allstate shares owned personally and beneficially

Shares held in the Allstate 401(k) Savings Plan

Unvested restricted stock units

Retention Requirements

Allstate no longer utilizes additional equity holding requirements for any equity awards outstanding. Allstate previously required, regardless of stock ownership level, senior executives to retain 75% of net shares received as a result of equity compensation awards for one year. After benchmarking peers and reviewing leading practices, it was determined that the additional equity holding requirements are not aligned with the market, and are a minority practice.

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 also have a policy 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.

What Does Not Count Toward the Guideline

Unexercised stock options

Unvested performance stock awards

  

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 21-22, and 24.


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Compensation Discussion and Analysis   Executive Compensation

Peer Benchmarking

The committee monitors performance toward goals throughout the year and reviews the 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 2017, the committee made one change to the peer group. CNA Financial Corporation is now included in the peer group for 2017 compensation benchmarking. The following table reflects the peer group used for 2017 compensation benchmarking. No changes were made to the peer group for 2018.


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. 21.7 34.3 137.2 18.5 28.6 54.0 85.3
American International Group Inc. 49.5 53.6 498.3 34.3 -6.8 12.2 80.4
Chubb Limited 32.4 67.8 167.0 29.0 12.7 35.4 103.2
CNA Financial Corporation 9.5 14.4 56.6 7.0 35.3 68.8 149.9
The Hartford Financial Services Group Inc. 17.0 20.1 225.3 14.3 20.1 42.2 172.1
Manulife Financial Corporation 43.7 41.4 581.7 21.8 20.6 20.1 77.8
MetLife Inc. 62.1 52.8 719.9 44.5 8.3 14.5 96.2
The Progressive Corporation 26.8 32.8 38.7 25.7 60.6 121.1 201.6
Prudential Financial Inc. 59.7 48.6 831.9 37.4 13.4 37.9 144.1
The Travelers Companies Inc. 28.9 36.8 103.5 25.7 13.1 36.4 109.6
Allstate 38.5 37.1 112.4 34.7 43.3 56.8 183.7
Allstate Ranking Relative to Peers:
Property and Casualty Insurance Products
3 of 8 4 of 8 5 of 8 2 of 8 2 of 8 3 of 8 2 of 8
Life Insurance and Financial Products
5 of 7 5 of 7 7 of 7 3 of 7 1 of 7 1 of 7 1 of 7
All Peer Companies 5 of 11 6 of 11 8 of 11 3 of 11 2 of 11 3 of 11 2 of 11
(1)

Information as of year-end 2017.


In its executive pay discussions, the committee also reviewed compensation information for 19 general industry companies in the S&P 100 with fiscal year 2016 revenues between $16 billion and $56 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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Executive Compensation   Compensation Discussion and Analysis

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 2017 (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.



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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 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 that 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

In 2017, we were able to 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 otherwise deductible, unless the compensation met specific standards. Under Internal Revenue Code Section 162(m) as in effect before the passage of the Tax Legislation, we were able to deduct more than $1 million in compensation if the compensation was performance-based and paid under a plan that met certain requirements. The committee considered the impact of this Internal Revenue Code rule in developing, implementing, and administering our compensation programs for 2017. Under the Tax Legislation, the exemption for deductibility of performance-based compensation under Internal Revenue Code Section 162(m) has generally been eliminated for fiscal years beginning after December 31, 2017. The committee has and will continue to consider the deductibility of compensation, including in light of the revisions to Internal Revenue Code Section 162(m). However, the committee balances this consideration with our primary goals of structuring compensation programs to attract, motivate and retain executives and ensuring that pay aligns with performance. 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 for which we may not be able to recognize a tax deduction.

Earned Annual Cash Incentive Awards

In 2017, the total corporate pool was based on four measures: Performance Net Income, Total Premiums, Net Investment Income, and Total Return. The 2017 annual incentive plan targets for Net Investment Income and Total Return were both lower than actual 2016 performance to reflect the business and market conditions in the operating plan. Modest adjustments were made to the range between threshold and maximum for each of the performance measures in alignment with the operating plan and the probability of achieving the results.

The 2018 annual incentive plan targets are not included since those targets do not relate to 2017 pay, and because target performance is set at the 2018 operating plan, which is proprietary information.


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Executive Compensation   Compensation Discussion and Analysis

For a description of how the 2017 measures are determined, see pages 64-66. The ranges of performance and 2017 actual results are shown in the following table.

2017 Annual Cash Incentive Award Ranges of Performance

Measure     Threshold     Target     Maximum     Actual Results     %Target
Performance Net Income (in millions) $1,400 $2,000 $2,600 $2,703 200
Total Premiums (in millions) $34,125 $34,900 $35,275 $35,120 159
Net Investment Income (in millions) $2,825 $3,000 $3,175 $3,188 200
Total Return -1.5% 3.5% 6.5% 5.9% 180
Payout Percentages
Named Executives(1) 50% (2) 100% 200% 181.4
(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.

Performance Stock Awards (“PSAs”)

For the last five 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

Payout
Percentage
Total Shareholder
Returns
Performance Cycle(1)    Threshold    Target    Maximum     Actual Results             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%
2015-2017 6.0% 13.5% 14.5% 12.2% 82.7% 56.8% 40.0%
Outstanding Awards
2016-2018
- Performance Net Income ROE (70%) 6.0% 13.0% 14.0% Two year results are above
target for both measures
 
(3)
74.1% 40.2%
- Earned Book Value (30%) 6.0% 12.0% 15.0%
2017-2019
- Performance Net Income ROE (70%) 6.0% 11.0% 13.0% One year results are above
target for both measures
 
(3)
43.3% 19.1%
- Earned Book Value (30%) 6.0% 9.0% 11.0%
Payout Percentages    0% 100% 200%
 

Subject to positive Net Income hurdle
For Performance Net Income ROE

(1)

For the performance cycles prior to 2016, Average Performance Net 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 one-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.


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Compensation Committee Report   Executive Compensation

The following table shows the target number of PSAs granted to each of our named executives for the 2015-2017, 2016-2018, and 2017-2019 performance cycles.

Performance Cycle(1)

Named Executive       Target Number of PSAs for
2015-2017 Performance Cycle
      Target Number of PSAs for
2016-2018 Performance Cycle
      Target Number of PSAs for
2017-2019 Performance Cycle
Mr. Wilson 65,054 86,650 68,922
Mr. Shebik 15,910 26,476 25,463
Mr. Civgin 16,872 23,107 17,920
Mr. Dugenske N/A N/A 15,942
Mr. Winter 21,921 30,809 23,692
(1)

The actual number of PSAs that will vest will vary from 0% to 200% of the target PSAs based on Average Performance Net Income ROE or Average Performance Net Income ROE and Earned Book Value for the measurement period. The number of PSAs that vest will be determined in 2018, 2019, and 2020, respectively.

Compensation Committee Report

The compensation and succession committee has reviewed and discussed with management the Compensation Discussion and Analysis contained on pages 31-49 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 Andrea Redmond Perry M. Traquina

2018 Proxy Statement      49


Table of Contents

Executive Compensation   Summary Compensation Table

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 Mr. Dugenske since this was the first year he is a named executive. The titles and responsibilities for the officers listed below changed in 2018. Additionally, Mr. Winter retired effective February 23, 2018. See Appendix C for their current titles.

Name and
Principal Position
  Year   Salary
($)
  Bonus
($)(1)
  Stock
Awards
($)(2)(3)
  Option
Awards
($)(4)
  Non-Equity
Incentive
Plan
Compensation
($)
  Change in
Pension Value
and
Non-qualified
Deferred
Compensation
Earnings
($)(5)
  All
Other
Compensation
($)(6)
  Total
($)
    Total
Without
Change in
Pension
Value
($)(7)
 
Thomas J. Wilson 2017 1,241,346   5,400,039   3,599,997 6,759,264 1,688,142 68,541 18,757,329 17,069,187
Chair and Chief 2016 1,200,000   5,400,028   3,600,000 1,982,880 1,574,760 55,847 13,813,515 12,238,755
Executive Officer 2015 1,191,346   4,599,968   4,599,996 2,888,136 532,116 62,131 13,873,693 13,341,577
Steven E. Shebik 2017 795,673   1,995,026   1,329,994 2,600,000 512,201 38,398 7,271,292 6,759,091
Executive Vice 2016 770,673   1,649,984   1,100,001 600,000 479,800 28,690 4,629,148 4,149,348
President and Chief 2015 750,000   1,124,996   1,124,999 850,000 185,312 28,180 4,063,487 3,878,175
Financial Officer
Don Civgin 2017 796,538   1,404,032 935,996 1,806,645 83,779 27,730 5,054,720 4,970,941
President, Emerging 2016 776,885   1,440,028 959,999 535,066 88,721 38,727 3,839,426 3,750,705
Businesses 2015 760,808   1,193,019   1,192,993 768,629 46,822 37,195 3,999,466 3,952,644
John Dugenske 2017 593,942   2,000,000   5,305,014 870,005 1,377,908 0 17,026 10,163,895 10,163,895
Executive Vice
President and Chief
Investment Officer
Matthew E. Winter 2017 887,020   1,856,268   1,237,504 3,625,590 101,812 101,513 7,809,707 7,707,895
President 2016 820,673   1,920,017   1,279,999 1,017,513 121,710 153,663 5,313,575 5,191,865
2015 799,423   1,550,034   1,550,004 1,600,000 80,745 79,399 5,659,605 5,578,860
(1)

Mr. Dugenske received a sign-on bonus in connection with the commencement of his employment on March 1, 2017. The cash bonus is payable in two installments. The first installment was paid within sixty days of his start date, and the second installment will be paid within thirty days after the first anniversary of his start date.

(2)

Mr. Dugenske received a sign-on grant of restricted stock units on April 5, 2017. These RSUs will become 100% vested on April 4, 2020.

(3)

The aggregate grant date fair value of PSAs granted in 2017, 2016, and 2015, and the RSUs granted in 2017 to Mr. Dugenske, is computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 718 (ASC 718). The fair value of PSAs and RSUs 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 2017). 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 2017 to each named executive, and RSUs granted in 2017 to Mr. Dugenske, is provided in the Grants of Plan-Based Awards table on page 52. The value of the PSAs granted in 2017 at grant date share price if maximum corporate performance were to be achieved is as follows: Mr. Wilson $10,800,078, Mr. Shebik $3,990,052, Mr. Civgin $2,808,064, Mr. Dugenske $2,610,024 and Mr. Winter $3,712,536.

(4)

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 2017) as set forth in the following table:


             2017       2016       2015
Weighted average expected term 6.1 years 5.0 years 6.5 years
Expected volatility 15.7-32.7% 16.0-34.3% 16.0-37.8%
Weighted average volatility 21.0% 24.3% 24.7%
Expected dividends 1.4-1.9% 1.9-2.1% 1.6-2.1%
Weighted average expected dividends 1.9% 2.1% 1.7%
      Risk-free rate 0.5-2.5% 0.2-2.4% 0.0-2.4%

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Summary Compensation Table   Executive Compensation

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 2017 to each named executive is provided in the Grants of Plan-Based Awards table on page 52.

(5)

Amounts reflect the aggregate increase in actuarial value of the pension benefits as set forth in the Pension Benefits table, accrued during 2017, 2016, and 2015. 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 2017.)

The following table reflects the respective change in the actuarial value of the benefits provided to the named executives in 2017:


Name       ARP
($)
      SRIP
($)
Mr. Wilson 107,137 1,581,005
Mr. Shebik 119,463 392,738
Mr. Civgin 15,313 68,466
Mr. Dugenske 0 0
Mr. Winter 13,412 88,400

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 2017 would have been as indicated in the following table under the prior formula:

Name       ARP
($)
      SRIP
($)
Mr. Wilson 188,144 4,099,783
Mr. Shebik 147,659 1,728,615
Mr. Civgin 13,039 60,960
Mr. Dugenske 0 0
Mr. Winter 11,761 77,711
(6)

The following table describes the incremental cost of other benefits provided in 2017 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 28,181 10,800 29,560 68,541
Mr. Shebik 10,800 27,598 38,398
Mr. Civgin 10,800 16,930 27,730
Mr. Dugenske 6,004 11,022 17,026
Mr. Winter 69,623 10,800 21,090 101,513
(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 2017. The amount shown is the amount allocated to their accounts as employer matching contributions. Mr. Dugenske will not be vested in the employer matching contribution until he has completed three years of vesting service.


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Table of Contents

Executive Compensation   Grants of Plan-Based Awards at Fiscal Year-end 2017

(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 that 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 2017, and therefore, no incremental cost is reflected in the table.

(7)

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.

Grants of Plan-Based Awards at Fiscal Year-end 2017

The following table provides information about awards granted to our named executives during fiscal year 2017.

Name    Grant
Date


  

Date of
Committee
Action
for Equity
Incentive
Plan
Awards
   Plan
Awards(1)


Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
(2)
Estimated Future Payouts
Under Equity Incentive
Plan Awards(3)
   All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(4)
   All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
  

Exercise
or Base
Price of
Option
Awards
($/Sh)(5)

Grant Date
Fair Value ($)(6)
   Threshold
($)
   Target
($)
   Maximum
($)
   Threshold
(#)
   Target
(#)
   Maximum
(#)
   Stock
Awards

  

Option
Awards

Mr. Wilson Annual 1,863,494 3,726,987 10,000,000
cash
incentive
02/09/2017 02/09/2017 PSAs 0 68,922 137,844 5,400,039
02/09/2017 02/09/2017 Stock 248,447 78.35 3,599,997
options
Mr. Shebik Annual 666,919 1,333,838 7,056,000
cash
incentive
02/09/2017 02/09/2017 PSAs 0 25,463 50,926 1,995,026
02/09/2017 02/09/2017 Stock 91,787 78.35 1,329,994
options
Mr. Civgin Annual 498,083 996,165 7,056,000
cash
incentive
02/09/2017 02/09/2017 PSAs 0 17,920 35,840 1,404,032
02/09/2017 02/09/2017 Stock 64,596 78.35 935,996
options
Mr. Dugenske Annual 379,882 759,764 7,056,000
cash
incentive
03/03/2017 02/09/2017 PSAs 0 15,942 31,884 1,305,012
03/03/2017 02/09/2017 Stock 57,540 81.86 870,005
options
04/05/2017 09/28/2016 RSUs 49,128 4,000,002
Mr. Winter Annual 999,556 1,999,112 9,408,000
cash
incentive
02/09/2017 02/09/2017 PSAs 0 23,692 47,384 1,856,268
02/09/2017 02/09/2017 Stock 85,404 78.35 1,237,504
options
(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


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Grants of Plan-Based Awards at Fiscal Year-end 2017   Executive Compensation

measures listed under the Earned Annual Cash Incentive Awards caption on page 47. 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) as in effect prior to the passage of the Tax Legislation. 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) 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 Performance Net 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. Performance Net Income is defined on pages 64-65. For a description of the ranges of performance established by the committee for the 2017 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 48.

(4)

Mr. Dugenske received a sign-on grant of restricted stock units on April 5, 2017. These RSUs will become 100% vested on April 4, 2020.

(5)

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.

(6)

The aggregate grant date fair value of the PSAs was $78.35 and stock option awards was $14.49, with the exception of Mr. Dugenske’s, which for the PSAs was $81.86, the stock option award was $15.12, and the RSUs was $81.42, 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 3 and 4 to the Summary Compensation Table on page 50.

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 2017, the actual number of PSAs that vest will vary from 0% to 200% of target PSAs based on Average Performance Net Income ROE (70%) and Earned Book Value (30%) results for a three-year measurement period. For a definition of how those measures are calculated, see pages 64-67. 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 canceled 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 2017 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.

RESTRICTED STOCK UNITS

Each restricted stock unit represents our promise to transfer one fully vested share of stock in the future if and when the restrictions expire (when the unit “vests”). Under the terms of the restricted stock unit award, the executive has only the rights of a general unsecured creditor of Allstate and no rights as a stockholder until delivery of the underlying shares. The restricted stock units granted to Mr. Dugenske in 2017 will become 100% vested on the day prior to the third anniversary of the grant date, except in certain change-in-control situations or under other special circumstances approved by the Committee. The restricted stock units granted to Mr. Dugenske include the right to receive previously accrued dividend equivalents payable in cash when the underlying restricted stock units vest.

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Executive Compensation   Outstanding Equity Awards at Fiscal Year-end 2017

Outstanding Equity Awards at Fiscal Year-end 2017

The following table summarizes the outstanding equity awards of the named executives as of December 31, 2017.

Option Awards(1) Stock Awards(2)
Name 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   02/22/2011   447,808   0   31.74   02/22/2021  
02/21/2012 444,060 0 31.56 02/21/2022
02/12/2013 363,409 0 45.61 02/12/2023
02/18/2014 309,237 0 52.18 02/18/2024
02/18/2015 196,329 98,165 70.71 02/18/2025 02/18/2015 53,780 5,631,304
  02/11/2016   98,441   196,883   62.32   02/11/2026   02/11/2016       173,300   18,146,243
02/09/2017 0 248,447 78.35 02/09/2027 02/09/2017 137,844   14,433,645
Mr. Shebik 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 75,188 0 45.61 02/12/2023
02/18/2014 72,289 0 52.18 02/18/2024
02/18/2015 48,015 24,008 70.71 02/18/2025 02/18/2015 13,153 1,377,251
02/11/2016 30,079 60,159 62.32 02/11/2026 02/11/2016 52,952 5,544,604
02/09/2017 0 91,787 78.35 02/09/2027 02/09/2017 50,926 5,332,461
Mr. Civgin 02/12/2013 21,930 0 45.61 02/12/2023
02/18/2014 84,337 0 52.18 02/18/2024
02/18/2015 50,917 25,459 70.71 02/18/2025 02/18/2015 13,948 1,460,495
02/11/2016 26,251 52,502 62.32 02/11/2026 02/11/2016 46,214 4,839,068
02/09/2017 0 64,596 78.35 02/09/2027 02/09/2017 35,840 3,752,806
Mr. Dugenske 03/03/2017 0 57,540 81.86 03/03/2027 03/03/2017 31,884 3,338,574
04/05/2017 49,128 5,144,193
Mr. Winter 02/12/2013 105,994 0 45.61 02/12/2023
02/18/2014 105,422 0 52.18 02/18/2024
02/18/2015 66,154 33,078 70.71 02/18/2025 02/18/2015 18,122 1,897,555
02/11/2016 35,001 70,003 62.32 02/11/2026 02/11/2016 61,618 6,452,021
02/09/2017 0 85,404 78.35 02/09/2027 02/09/2017 47,384 4,961,579
(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.


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Option Exercises and Stock Vested During 2017   Executive Compensation

(2)

The awards listed in this table are PSAs, except for Mr. Dugenske’s sign-on award of 49,128 restricted stock units in 2017. Each restricted stock unit represents the right to receive, without the payment of any consideration, one share of Allstate common stock on the conversion date, which is April 5, 2020.

(3)

The aggregate value and aggregate number of exercisable and unexercisable in-the-money options as of December 31, 2017, for each of the named executives are as follows:


      Exercisable Unexercisable
  Name Aggregate
Number
(#)
Aggregate
Value
($)
Aggregate
Number
(#)
Aggregate
Value
($)
  Mr. Wilson      1,859,284      113,729,331      543,495      18,232,543
  Mr. Shebik 287,031 15,663,918 175,954 5,785,917
  Mr. Civgin 183,435 8,570,244 142,557 4,793,917
  Mr. Dugenske 0 0 57,540 1,314,789
  Mr. Winter 312,571 15,534,991 188,485 6,343,328
(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 $104.71 on December 29, 2017.

(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 41-43 and 48. The number of PSAs reflected in this column for the 2016 and 2017 awards is the number of shares that would vest if the maximum 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 2017

The following table summarizes the options exercised by the named executives during 2017 and the PSAs or restricted stock units that vested during 2017.

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      755,892      45,549,954      64,265      5,169,477
Mr. Shebik 68,813 4,010,172 15,023 1,208,450
Mr. Civgin 0 0 17,527 1,409,872
Mr. Dugenske 0 0 0 0
Mr. Winter 246,044 13,689,101 21,908 1,762,280
(1)

Of the options exercised in 2017 by Mr. Wilson, 338,316 were due to expire in the first quarter of 2018.


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Executive Compensation   Retirement Benefits

Retirement Benefits

The following table provides information about the pension plans in which the eligible named executives participate. Each of the named executives participates, or will become eligible to participate, 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      24.8      1,154,486      0
SRIP 24.8 16,029,426 0
Mr. Shebik ARP 29.2 1,395,258 0
SRIP 29.2 4,059,740 0
Mr. Civgin ARP 9.3 78,641 0
SRIP 9.3 451,116 0
Mr. Dugenske(3) ARP 0.8 0 0
SRIP 0.8 0 0
Mr. Winter ARP 8.2 66,444 0
SRIP 8.2 583,431 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, 2017) 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 3.68%.
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. ARP lump-sum/annuity conversion segmented interest rates of 2.50% for the first five years, 4.75% for the next 15 years, and 5.50% for all years after 20.
SRIP lump-sum conversion segmented interest rates of 2.00% for the first five years, 4.50% for the next 15 years, and 5.50% for all years after 20.
Lump-sum calculations were done using the IRS Section 417(e)(3) mortality table projected with the MP-2017 projection table. Allstate adopted this table for accounting on December 31, 2017, to measure retirement program obligations in the United States.
Annuity calculations were done using the RP-2014 white-collar mortality table for annuitants projected with the MP-2017 projection table.
See note 17 to our audited financial statements for 2017 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, 2017, if the named executive’s employment terminated on that date.


       Name      Plan Name Lump Sum
Amount
($)
     Mr. Wilson SRIP      17,060,041
Mr. Shebik SRIP 4,343,669
Mr. Civgin SRIP 439,565
Mr. Dugenske SRIP 0
Mr. Winter SRIP 576,135

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Retirement Benefits   Executive Compensation

The amount shown is based on the lump-sum methodology used by the Allstate pension plans in 2018. Specifically, the interest rate for 2018 is based on 100% of the average corporate bond segmented yield curve from August of the prior year. As required under the Internal Revenue Code, the mortality table used for 2018 is the 2018 combined static Pension Protection Act funding mortality table with a blend of 50% males and 50% females.

(3)

Mr. Dugenske was not a member of the ARP or the SRIP in 2017 and therefore had not accrued a benefit under the ARP or the SRIP.

ALLSTATE RETIREMENT PLAN (ARP)

Contributions to the ARP are made entirely by Allstate and are paid into a trust fund from which benefits are paid. Before January 1, 2014, ARP participants earned benefits under one of two formulas (final average pay or cash balance) based on their date of hire or their choice at the time Allstate introduced the cash balance formula. In order to better align our pension benefits with market practices, provide future pension benefits more equitably to Allstate employees, and reduce costs, final average pay benefits were frozen as of December 31, 2013. As of January 1, 2014, all eligible participants earn benefits under a cash balance formula only.

Final Average Pay Formula — Frozen as of 12/31/13

Benefits under the final average pay formula were earned and are stated in the form of a straight life annuity payable at the normal retirement age of 65. Messrs. Shebik and Wilson have earned final average pay benefits equal to the sum of a Base Benefit and an Additional Benefit. The Base Benefit equals 1.55% of the participant’s average annual compensation, multiplied by credited service after 1988 through 2013. The Additional Benefit equals 0.65% of the amount of the participant’s average annual compensation that exceeds the participant’s covered compensation, multiplied by credited service after 1988 through 2013. Covered compensation is the average of the maximum annual salary taxable for Social Security over the 35-year period ending the year the participant would reach Social Security retirement age. Messrs. Shebik and Wilson are

eligible for a reduced early retirement benefit which would reduce their Base Benefit by 4.8% for each year of early payment before age 65 and their Additional Benefit by 8% for each year of early payment from age 62 to age 65 and 4% for each year of early payment from age 55 to age 62, prorated on a monthly basis based on age at the date payments begin.

Cash Balance Formula — For all Participants Beginning 1/1/14

All named executives, except Mr. Dugenske, earned benefits under the cash balance formula in 2017. Mr. Dugenske will earn benefits under the cash balance formula after completing one year of vesting service. Under this formula, participants receive pay credits while employed at Allstate, based on a percentage of eligible annual compensation and years of service, plus interest credits. Pay credits are allocated to a hypothetical account in an amount equal to 3% to 5% of eligible annual compensation, depending on years of vesting service. Interest credits are allocated to the hypothetical account based on the interest crediting rate in effect for that plan year as published by the Internal Revenue Service. The interest crediting rate is set annually and is currently based on the average yield for 30-year U.S. Treasury securities for August of the prior year. Prior to 2014, Messrs. Civgin and Winter earned cash balance credits equal to 2.5% of eligible annual compensation after they completed one year of vesting service based on the prior cash balance formula.


SUPPLEMENTAL RETIREMENT INCOME PLAN (SRIP)

SRIP benefits are generally determined using a two-step process: (1) determine the amount that would be payable under the ARP formula(s) specified above if Internal Revenue Code limits did not apply, then (2) reduce the amount described in (1) by the amount actually payable under the applicable ARP formula(s).

The normal retirement date under the SRIP is age 65. If eligible for early retirement under the ARP, the employee also is eligible for early retirement under the SRIP. SRIP benefits are not funded and are paid out of Allstate’s general assets.


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Executive Compensation   Retirement Benefits

CREDITED SERVICE

No additional service credit beyond service with Allstate or its predecessors is granted under the ARP or the SRIP to any of the named executives. Messrs. Shebik and Wilson have combined service with Allstate and its former parent company, Sears, Roebuck and Co., of 29.2 and 24.8 years, respectively. As a result, a portion of their retirement benefits will be paid from the Sears pension plan. Consistent with the pension benefits of

other employees with Sears service who were employed by Allstate at the time of the spin-off from Sears in 1995, Messrs. Shebik’s and Wilson’s final average pay pension benefits under the ARP and the SRIP are calculated as if each had worked his combined Sears-Allstate career with Allstate through December 31, 2013, and then are reduced by amounts earned under the Sears pension plan.


ELIGIBLE COMPENSATION

Under both the ARP and SRIP, eligible compensation consists of salary, annual cash incentive awards, and certain other forms of compensation, but does not include long-term cash incentive awards or income related to equity awards. Compensation used to determine benefits under the ARP is limited in

accordance with the Internal Revenue Code. For final average pay benefits, average annual compensation is the average compensation of the five highest consecutive calendar years within the last ten consecutive calendar years through 2013.


PAYMENT OPTIONS

Payment options under the ARP include a lump sum, straight life annuity, and various survivor annuity options. The lump sum under the final average pay benefit is calculated in accordance with the applicable interest rate and mortality assumptions as required under the Internal Revenue Code. The lump-sum

payment under the cash balance benefit is generally equal to a participant’s account balance. Payments from the SRIP are paid in the form of a lump sum using the same interest rate and mortality assumptions used under the ARP.


TIMING OF PAYMENTS

Eligible employees are vested in the normal ARP and SRIP retirement benefits on the earlier of the completion of three years of service or upon reaching age 65.

Final average pay benefits are payable at age 65. A participant with final average pay benefits may be entitled to a reduced early retirement benefit on or after age 55 if he or she terminates employment after completing 20 or more years of vesting service.

A participant earning cash balance benefits who terminates employment with at least three years of vesting service is entitled to a lump sum benefit equal to his or her cash balance account balance.

The following SRIP payment dates assume a retirement or termination date of December 31, 2017:

Messrs. Shebik’s and Wilson’s SRIP benefits earned prior to 2005 would become payable as early as January 1, 2018. Benefits earned after 2004 would be paid on July 1, 2018, or following death.
 
Mr. Civgin’s SRIP benefit would be paid on July 1, 2018, or following death.
 
Mr. Dugenske is not currently a member of the SRIP and therefore has not accrued a benefit under the SRIP.
 
Mr. Winter’s SRIP benefit would be paid on July 1, 2018, or following death.


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Table of Contents

Non-Qualified Deferred Compensation at Fiscal Year-end 2017   Executive Compensation

Non-Qualified Deferred Compensation at Fiscal Year-end 2017

The following table summarizes the non-qualified deferred compensation contributions, earnings, and account balances of our named executives in 2017. All amounts relate to The Allstate Corporation Deferred Compensation Plan.

Name     Executive
Contributions
in Last FY
($)
    Registrant
Contributions
in Last FY
($)
    Aggregate
Earnings
in Last FY
($)(1)
    Aggregate
Withdrawals/
Distributions
in Last FY
($)
   

Aggregate
Balance
at Last FYE
($)(2)

Mr. Wilson 0 0 156,189 0 1,047,797
Mr. Shebik 0 0 30,342 0 186,139
Mr. Civgin 0 0 0 0 0
Mr. Dugenske 0 0 0 0 0
Mr. Winter 0 0 0 0 0
(1)

Aggregate earnings were not included in the named executive’s compensation in the last completed fiscal year in the Summary Compensation Table.

(2)

There are no amounts reported in the Aggregate Balance at Last FYE column that previously were reported as compensation in the Summary Compensation Table.


In order to remain competitive with other employers, we allow the named executives and other employees whose annual compensation exceeds the amount specified in the Internal Revenue Code ($270,000 in 2017), to defer under the Deferred Compensation Plan up to 80% of their salary and/or up to 100% of their annual cash incentive award that exceeds the Internal Revenue Code limit. Allstate does not match participant deferrals and does not guarantee a stated rate of return.

Deferrals under the Deferred Compensation Plan are credited with earnings or debited for losses based on the results of the notional investment option or options selected by the participants. The notional investment options available in 2017 under the Deferred Compensation Plan are: stable value, S&P 500, international equity, Russell 2000, mid-cap, and bond funds. Under the Deferred Compensation Plan, deferrals are not actually invested in these funds, but instead are credited with earnings or debited for losses based on the funds’ investment returns. Because the rate of return is based on actual investment measures in our 401(k) plan, no above-market earnings are credited, recorded, or paid. Our Deferred Compensation Plan and 401(k) plan allow participants to change their investment elections daily, subject to certain trading restrictions.

The Deferred Compensation Plan is unfunded. This means that Allstate does not set aside funds for the plan in a trust or otherwise. Participants have only the rights of general unsecured creditors and may lose their balances in the event of the company’s bankruptcy. Account balances are 100% vested at all times.

An irrevocable distribution election is required before making any deferrals into the plan. Generally, a named executive may elect to begin receiving a distribution of his or her account balance immediately upon separation from service or in one of the first through fifth years after separation from service. The earliest distribution date for deferrals on or after January 1, 2005, and earnings and losses on these amounts, is six months following separation from service. The named executive may elect to receive payment in a lump sum or in annual cash installment payments over a period of two to ten years. In addition, a named executive may elect an in-service withdrawal of his or her entire balance earned and vested prior to January 1, 2005, and earnings and losses on these amounts, subject to forfeiture of 10% of such balance. Upon proof of an unforeseen emergency, a plan participant may be allowed to access certain funds in a deferred compensation account earlier than the dates specified above.



2018 Proxy Statement      59


Table of Contents

Executive Compensation   Potential Payments as a Result of Termination or Change in Control (CIC)

Potential Payments as a Result of Termination or Change in Control (CIC)

The following table lists the compensation and benefits that Allstate would generally provide to the named executives in various scenarios involving a termination of employment, other than compensation and benefits

generally available to salaried employees. The table describes equity granting practices for the 2017 equity incentive awards. Relevant prior practices are described in the footnotes.



Termination Scenarios
Compensation
Elements
   Termination(1)    Retirement    Termination due to
Change-in-Control(2)
   Death    Disability

Base Salary