DEF 14A 1 all3645741-def14a.htm DEFINITIVE PROXY STATEMENT

Table of Contents

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

SCHEDULE 14A

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

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

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
  No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:


Table of Contents

Notice of 2020 Annual Meeting
and Proxy Statement




We create long-term
value by serving our
stakeholders, taking
appropriate risks and
leveraging our capabilities
and strategic assets.



What’s Inside              
Letter from Independent Directors to Stockholders
Information on Three Voting Issues
Election of Directors
Advisory Vote on Compensation
Ratification of External Auditor


Table of Contents

The Allstate Corporation
2775 Sanders Road
Northbrook, IL 60062

Letter from Independent Directors

April 6, 2020

Fellow Stockholders,

On your behalf, we oversee Allstate’s responsibilities to stockholders, customers, employees and communities. This oversight includes reviewing strategy, human capital and culture, and risk and return policies. We utilize extensive dialogue with stockholders and continually improve governance practices. While a long-term perspective guides this work, our letter summarizes the Board’s efforts over the last year.

Strategy

Allstate’s purpose is to help customers realize their hopes and dreams by protecting them from life’s uncertainties. Our strategy is to increase market share of the personal property-liability businesses and expand the protection products offered to customers. The Board discusses strategy at every Board meeting and has a 2½ day session that focuses solely on long-term strategy.
   
Allstate initiated a bold Transformative Growth Plan in 2019 to increase market share in personal property-liability, which reduces long-term strategic risk. The plan has three components: expand customer access, enhance the customer value proposition and invest in marketing and technology. Measurements are in place to assess progress against these important efforts and will be reviewed by the Board.
   
Substantial success has been achieved in broadening Allstate’s protection offerings, with total policies in force increasing over 27% to 145.9 million in 2019. Allstate Protection Plans, formerly SquareTrade, accounted for the majority of this growth. In late 2018, we approved the acquisition of an identity protection business, now Allstate Identity Protection, which also had rapid growth last year. New insurance relationships have been established with shared economy companies that are further driving growth.
   
Innovation is an engine of strategic success and we are proud that Allstate was ranked one of the top 10 innovative companies in 2019, out of 640 candidates, by the Drucker Institute.
 

Accelerated Transformative Growth Plan with three components:

 
Expanding customer access
Enhancing customer value
Investing in marketing and technology
 

2       www.allstateproxy.com


Table of Contents

Human Capital and Culture

As a service organization, Allstate’s success is highly dependent on human capital and an ethical culture that is fair and performance-oriented. A comprehensive review of organizational health is discussed every year and covers employee engagement, development, retention, compensation and inclusive diversity. This year we utilized an outside consultant to review pay equity and were pleased that Allstate’s pay practices compare favorably to companies of similar size and scope.
   
Culture is vital to serving your interests. Allstate was once again named “A Most Ethical Company” by Ethisphere as a result of focus from the boardroom to frontline employees. We define culture as “a self-sustaining system of shared values, principles and priorities that shapes beliefs, drives behavior and influences decision making within an organization.” This definition creates a foundation for the risk and return committee, which added culture as a key risk category.
   
Leadership is also critical to success. Substantial time is spent interacting with the senior leaders and reviewing their performance. Senior leadership succession was discussed multiple times in 2019, including using scenario planning so succession alternatives exist for unplanned departures.
 

External pay equity review determined Allstate’s pay practices compare favorably to companies of similar size and scope.

 

Risk and Return

The risk and return committee and the full Board ensure strategic, operational and financial risks are balanced with generating attractive returns on capital. We continue the industry leading practices of using an independent consultant to assess cybersecurity preparedness and the chief risk officer to assess Allstate’s political engagement using Principles and Guidance for Responsible Corporate Political Engagement published by Transparency International UK.
   
Climate change has a significant impact on Allstate’s business and for 25 years the company has successfully advocated for addressing the impacts of climate change. Hurricane and earthquake insurance pools, stronger building codes, new insurance products and pricing approaches, and reinsurance have been used to serve both customers and stockholders. Allstate discloses significant information related to climate-related risks, including the Board’s oversight, the impact on the company’s business and strategy, and the practices to assess, identify and manage these risks.
   
In 2019, the oversight of sustainability was formally assigned to the nominating and governance committee, which reviews sustainability twice a year including once in conjunction with the full Board.
 

Independent nominating and governance committee formally assumed oversight of sustainability matters.

 

2020 Proxy Statement       3


Table of Contents

Governance

As a Board, we oversaw and participated in a comprehensive dialogue throughout the year with stockholders representing 40% of Allstate’s outstanding shares. This dialogue led us to broaden and accelerate disclosure of political activity, modify the performance stock award metrics to include Relative Total Shareholder Return, and expand executive compensation clawback policies.
Board performance is evaluated at every meeting and annually for the full Board and individual members. Feedback is acted on, including modifying topics, agendas and materials. Future Board involvement is now discussed with every member every year instead of biennially.
We were pleased that these efforts resulted in a top score on governance from a significant proxy advisory firm.
The roles of corporations and capitalism in society are being actively debated in many venues. Allstate is at the forefront and building a better future by serving customers, making a profit, creating jobs and improving communities. As your representatives, we take these conversations seriously and actively debate the trade-offs in fulfilling these broad responsibilities.
     
Stockholder feedback informed the Board’s decisions, which resulted in changes to governance and compensation practices.
     

We welcome your feedback on this letter or other matters of importance to Allstate. You can reach us by email at directors@allstate.com. We pledge to continue to independently represent your interests. Thank you for your continued support.


     
For more information on how we measure up, see Allstate’s Prosperity Report.
     


KERMIT R. CRAWFORD SIDDHARTH N. (BOBBY) MEHTA GREGG M. SHERRILL
     
MICHAEL L. ESKEW JACQUES P. PEROLD JUDITH A. SPRIESER
     
MARGARET M. KEANE ANDREA REDMOND PERRY M. TRAQUINA

4       www.allstateproxy.com


Table of Contents

Notice of 2020 Annual Meeting of Stockholders

When

Tuesday, May 19, 2020, at 11:00 a.m. Central time. Registration begins at 10:00 a.m.

Where

www.virtualshareholdermeeting.com/ALL2020

As part of our precautions regarding the coronavirus (COVID-19) and to support the health and well-being of our stockholders, the 2020 Annual Meeting of Stockholders will be held in a virtual meeting format only. You will not be able to attend the annual meeting physically. The accompanying proxy materials include instructions on how to participate in the meeting and how you may vote your shares.

         
Items of Business
1 Election of 10 directors.
   
2 Say-on-pay: advisory vote on the compensation of the named executives.
   
3 Ratification of appointment of Deloitte & Touche LLP as Allstate’s independent registered public accountant for 2020.
     

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



     How To Vote In Advance

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

To express our appreciation for your participation, Allstate will make a $1 charitable donation to the American Red Cross on behalf of every stockholder account that votes.

       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 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 with your tablet or smartphone by scanning the QR code.

Who Can Vote       Who Can Attend       Date of Mailing
Holders of Allstate common stock at the close of business on March 20, 2020. Each share of common stock is entitled to one vote for each director position and one vote for each of the other proposals. Stockholders who wish to participate in the meeting should review pages 85-86. On or about April 6, 2020, these proxy materials and annual report are being mailed or made available to stockholders and to participants in the Allstate 401(k) Savings Plan.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 19, 2020
The Notice of 2020 Annual Meeting, Proxy Statement, and 2019 Annual Report and the means to vote by Internet are available at proxyvote.com.

By Order of the Board,


SUSAN L. LEES
SECRETARY
APRIL 6, 2020


2020 Proxy Statement       5


Table of Contents

Allstate’s Shared Purpose Guides the Company

Our Shared Purpose

We are the Good Hands® We help customers realize their hopes and dreams by providing the best products and services to protect them from life’s uncertainties and prepare them for the future.

6       www.allstateproxy.com


Table of Contents

Allstate’s Shared Purpose Guides the Company

The Value We Create

Financial Highlights

ADJUSTED NET
INCOME*
      ADJUSTED NET INCOME
PER COMMON SHARE*
      ADJUSTED NET INCOME RETURN
ON COMMON EQUITY*
      BOOK VALUE PER
COMMON SHARE

POLICIES IN FORCE TOTAL SHAREHOLDER RETURN VS. PEER(1) RETURNS
     

Excluding Allstate Protection Plans (formerly known as SquareTrade)
Allstate Protection Plans

 
2019 Highlights

Operating Priorities Human Capital Management
 
Better serve customers - Enterprise net promoter score increased with improvement at most businesses.
Grow customer base - Property-Liability policies increased 1.3% from prior year to 33.7 million. Total policies in force increased 27.7% to 145.9 million.
Achieve target returns on capital - Adjusted Net Income Return on Common Equity* of 16.9%.
Proactively manage investments - Total return of 9.2% on $88.4 billion investment portfolio in 2019.
Build long-term growth platforms - Accelerating Transformative Growth Plan, a multi-year initiative to increase property-liability market share. Expanding circle of protection with Allstate Protection Plans, Allstate Identity Protection and Arity.
     
Living into inclusive diversity, with 69% diverse employees and 30% female and 12% minority officer representation.
Invested in re-skilling opportunities, with over 10,000 employees attending Allstate’s Global Learning Week and 3,600 participating in quarterly skill building sessions.
11 employee resource groups (voluntary, employee-led groups designed to foster an inclusive workplace) increased to 9,166 members in 2019 (29% higher than the prior year).

 
Innovation Corporate Responsibility
 
Recognized as a top 10 innovative company by the Drucker Institute two years in a row.
Expanded shared economy solutions with commercial coverage for drivers of a transportation networking company to 15 states.
Expanded use of telematics-based auto insurance products to more accurately price insurance and encourage safe driving.
     
Gave nearly $46 million in charitable contributions throughout the nation, including contributions from Allstate, The Allstate Foundation, employees and agency owners.
Helped over 14 million youth participate in service-based and social-emotional learning through The Allstate Foundation’s youth empowerment program.
Empowered more than 2 million domestic violence survivors since 2005 through The Allstate Foundation’s program focused on breaking the cycle of domestic violence through financial empowerment.
Supported state and local communities through investments in $3.08 billion of municipal bonds.
Expanded access to affordable housing by investing in $281 million of federal low-income housing tax credits and $57 million in state low-income housing tax credits.
Amplified Allstate’s community connections with more than 35% of our executives serving on nonprofit boards.

Allstate brand Drivewise® available in 50 states and the District of Columbia.

Allstate brand Milewise® available in 14 states.

Esurance brand DriveSense® available in 37 states.





Encompass brand Route ReportSM available in 16 states.




See our Prosperity Report for more information on how Allstate is building a better future.

*

Measures used in this proxy statement that are not based on generally accepted accounting principles (“non-GAAP”) are denoted with an asterisk (*). For definitions of these terms, please see the definitions of non-GAAP measures on pages 88-91 of our 2020 Proxy Statement.

(1)

The peers are listed on page 58.

(2)

Market Cap Weighted Average

2020 Proxy Statement       7


Table of Contents

Proxy Voting Roadmap

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

              
Proposal
 1

Election of 10 Directors

The Board recommends a vote FOR each nominee.  ✓

All candidates are highly successful executives with relevant skills and expertise.
Average tenure of 7.5 years, with 9 of 10 directors independent of management.
Diverse slate of directors with broad leadership experience; three out of four committee chairs and the independent Lead Director bring gender or ethnic diversity.
Industry-leading stockholder engagement program and highly-rated corporate governance practices.

See
pages 13-18
for further
information

 

A Balanced Board

The Board is composed of 10 directors with a broad and complementary set of business skills, educational and professional experiences, personalities, backgrounds, perspectives and genders.

 
INDEPENDENT DIRECTOR TENURE BOARD DIVERSITY RELEVANT SKILLS AND EXPERIENCE
 
    6.8 years    50%    80%       90%    
average independent director tenure diverse Board governance experience Corporate leadership experience
 

           NOMINATION PROCESS FOR BOARD ELECTION           
   

The Board regularly considers potential director candidates in anticipation of retirements, resignations, or changing business dynamics. This graphic describes the process to identify highly qualified candidates for Board service.

                                           
                                           
 
CONSIDER CURRENT BOARD SKILL SET AND NEEDS MEET WITH QUALIFIED CANDIDATES CHECK CONFLICTS OF INTEREST BOARD DIALOGUE
Ensure Board is strong in strategic oversight, corporate governance, stockholder advocacy, and leadership and has diversity of expertise, perspectives and backgrounds
     
The nominating and governance committee, Lead Director, Board Chair and others meet candidates to ensure desired qualities such as independence of mind, tenacity and skill set to meet existing and future business needs
     
All candidates are screened for conflicts of interest and independence
     
After deliberations, recommend director candidates; added four highly qualified directors in the past five years

8       www.allstateproxy.com


Table of Contents

Proxy Voting Roadmap

The Director Nominees at a Glance

Career Highlights Committees

THOMAS J. WILSON
Chair, President, and CEO of The Allstate Corporation

Industry thought leader with a thorough understanding of Allstate’s business, industry, risk management processes, and strategic initiatives through holding key leadership roles over a 25-year career at Allstate

JUDITH A. SPRIESER
Former CEO of Transora Inc. and senior executive at Sara Lee Corporation
Independent Lead Director

Wide-ranging operational and leadership experience at technology services and consumer goods companies and significant experience serving on public company boards

KERMIT R. CRAWFORD
Former President and Chief Operating Officer of Rite Aid Corporation
Audit Committee Chair

Managed strategy, performance and operational change of highly competitive consumer-focused service businesses where he championed affordable and accessible healthcare that led to delivery innovations, including regulatory changes allowing pharmacists to administer vaccines

MICHAEL L. ESKEW
Former Chairman and CEO of United Parcel Service, Inc.
Compensation and Succession Committee Chair

Guided the successful transformation of a customer-focused global delivery company through the use of digital technologies to more effectively deliver service

SIDDHARTH N. MEHTA
Former President and CEO of TransUnion
Risk and Return Committee Chair

Extensive strategic and operational leadership experience in the financial services industry, and proven success in expanding global reach through the use of technology and advanced analytics

ANDREA REDMOND
Former Managing Director of Russell Reynolds Associates Inc.
Nominating and Governance Committee Chair

Expertise in public company CEO and senior management succession planning, human capital management, and executive compensation across a wide range of industries, including financial services

MARGARET M. KEANE
CEO of Synchrony Financial

Directs the strategy and operations of a financial services business, expanding its focus on e-commerce and mobile capabilities to deliver an innovative consumer experience

JACQUES P. PEROLD
Former President of Fidelity Management & Research Company

Strong investment expertise in the financial services industry, and led the strategy and operations of one of the world’s largest asset management firms

GREGG M. SHERRILL
Non-Executive Chair and former Chair and CEO of Tenneco Inc.

Broad strategic and operational leadership experience in the automotive industry, and brings valuable insights into anticipated transformation of the personal transportation system

PERRY M. TRAQUINA
Former Chairman, CEO, and Managing Partner of Wellington Management Company LLP

Strong financial services and investment management expertise as leader of one of the world’s largest global investment management firms

Committee Chair

Audit Committee

Compensation and Succession Committee

Executive Committee

Nominating and Governance Committee

Risk and Return Committee

2020 Proxy Statement       9


Table of Contents

Proxy Voting Roadmap

              
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 2019 was 117.5% of target, reflecting above target performance on Performance Net Income and below target performance on Total Premiums and Net Investment Income.

See
pages 42-77
for further
information

 

Executive Compensation Highlights

We compensated our named executive officers (“NEOs”) using the following elements for total target direct compensation in 2019:

Target
Compensation Mix
   Element Description CEO Other NEOs   


 
Targeted
at 50
th
percentile
of peers
 
 

Salary

Targeted at 50th percentile of peers to support Allstate’s goal of attracting and retaining executive talent

Annual Cash Incentive

Targets established based on company performance against three performance measures: Total Premiums, Performance Net Income, and Net Investment Income

Amounts awarded to each NEO based on pool funding and individual performance

Long-term Equity Incentive

The mix of equity incentives granted in 2019 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)
For the 2020-2022 PSAs, a Relative Total Shareholder Return (TSR) performance measure replaced the Earned Book Value measure. The 2020 award will vest based on results for Average Performance Net Income ROE (70% weighting) and Relative TSR (30% weighting).

Allstate had excellent performance on all five 2019 Operating Priorities, and financial results improved, with adjusted net income* rising to $3.48 billion in 2019 from $3.13 billion in the prior year. TSR exceeded peer indices in 2019.
Total 2019 compensation for the CEO declined from 2018 by $1,552,937 to $16,261,139, excluding the change in pension value, as shown in the Summary Compensation Table.
Based on company and individual performance, the named executives received the following annual incentive payments during the last three years:
      Named Executive       2017 Annual
Incentive
($)
     2018 Annual
Incentive
($)
     2019 Annual
Incentive
($)
  Mr. Wilson 6,759,264 6,719,194 4,730,100
  Mr. Rizzo(1) 1,510,788 1,053,000
  Mr. Civgin 1,806,645 1,900,000 1,400,000
  Mr. Shapiro(1) 2,050,000 1,366,000
  Mr. Shebik 2,600,000 2,945,289 2,037,000
*

This measure is defined and reconciled to the most directly comparable GAAP measures in Appendix A.

(1)

For Messrs. Rizzo and Shapiro, only the last two fiscal years are shown as this is their second year as named executives.

10        www.allstateproxy.com


Table of Contents

Proxy Voting Roadmap

              
PROPOSAL
   3

Ratification of Deloitte & Touche LLP as the Independent Registered Public Accountant for 2020

The Board recommends a vote  FOR  ratification of   ✓
Deloitte & Touche LLP for 2020.

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 79-81
for further
information

 

2020 Proxy Statement       11


Table of Contents

Table of Contents

2      Letter from Independent Directors
5 Notice of 2020 Annual Meeting of Stockholders
8 Proxy Voting Roadmap
13 Corporate Governance
13 Proposal 1 Election of 10 Directors
13 Director Nominees’ Skills and Experience
19 Effective Board Governance at Allstate
20 Board Composition
21 Board Effectiveness
24 Board Oversight
31 Board Accountability
33 Board Structure
34 Board Meetings and Committees
38 Board Independence and Related Person Transactions
39 Director Compensation
42 Executive Compensation
42 Proposal 2 Say-on-Pay: Advisory Vote on the Compensation of the Named Executives
42 Compensation Discussion and Analysis
61 Compensation Committee Report
62 Summary Compensation Table
64 Grants of Plan-Based Awards at Fiscal Year-end 2019
66 Outstanding Equity Awards at Fiscal Year-end 2019
67 Option Exercises and Stock Vested During 2019
68 Retirement Benefits
70 Non-Qualified Deferred Compensation at Fiscal Year-end 2019
71 Potential Payments as a Result of Termination or Change in Control (“CIC”)
74 Estimate of Potential Payments Upon Termination
75 Performance Measures for 2019
78 CEO Pay Ratio
79 Audit Committee Matters
79 Proposal 3 Ratification of Deloitte & Touche LLP as the Independent Registered Public Accountant for 2020
81 Audit Committee Report
82 Stock Ownership Information
82 Security Ownership of Directors and Executive Officers
83 Security Ownership of Certain Beneficial Owners
84 Other Information
84 Proxy and Voting Information
88 Appendix A – Definitions of Non-GAAP Measures
92 Appendix B – Categorical Standards of Independence
93 Appendix C – Executive Officers
   
         

About Allstate
Allstate is one of the nation’s largest insurers with 145.9 million policies in force, protecting cars, homes, motorcycles, lives, personal devices and identities. Its products are sold through Allstate agents, independent agents, call centers, online, major retailers and voluntary benefits brokers. The company harnesses the talent of approximately 88,000 Allstaters. It recently was included in the Drucker Institute list of the nation’s 250 best managed companies.
 
 
         
 NEW 

Report Highlights

 

See information about the Board’s oversight of sustainability initiatives and human capital management on pages 28-30

See information about Allstate’s comprehensive process for ensuring pay equity page 28

See information about increased oversight of culture on page 27
   
   

12       www.allstateproxy.com


Table of Contents

Corporate Governance

        
PROPOSAL
1

Election of 10 Directors

The Board recommends a vote FOR each nominee.   ✓

All candidates are highly successful executives with relevant skills and expertise.
Average tenure of 7.5 years, with 9 of 10 directors independent of management.
Diverse slate of directors with broad leadership experience; three out of four committee chairs and the independent Lead Director bring gender or ethnic diversity.
Industry-leading stockholder engagement program and highly-rated corporate governance practices.
 

 
 
 
 
     

The Board recommends 10 nominees for election to the Allstate Board for one-year terms beginning in May 2020 and until a successor is duly elected and qualified or his or her earlier resignation or removal.

Each nominee was previously elected at Allstate’s annual meeting of stockholders on May 21, 2019, for a one-year term. 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.

Director Nominees’ Skills and Experience

Our Board selected the nominees based on their diverse set of skills and experience, which align with our business strategy and contribute to the effective oversight of Allstate. Our nominees are talented, both as individual business leaders and as a team. Fifty percent of our Board is ethnically or gender diverse. 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 dialogue and thoughtful decision-making on Allstate’s Board.

Core Competencies Required of All Director Nominees

    

STRATEGIC
OVERSIGHT

100% of Directors

STOCKHOLDER
ADVOCACY

100% of Directors

CORPORATE
GOVERNANCE

100% of Directors

LEADERSHIP

100% of Directors

 

Additional Capabilities that Facilitate Oversight of Our Business

Financial Services
Assists with understanding the business and strategy of our company.

         

Complex, Highly Regulated Businesses
Our business is regulated in all 50 states and is subject to government regulations by the U.S. federal government, Canada and the United Kingdom.

Risk Management
Aids in the Board’s role in overseeing the risks facing our company and provides effective oversight of our enterprise risk and return management (“ERRM”) program.

Sustainability
Sustainability drives long-term value creation and as a public company and good corporate citizen, stockholders expect effective oversight and transparency.

Accounting and Finance
Financial reporting, audit knowledge, and experience in capital markets are elements of Allstate’s success.

Succession Planning and Human Capital Management
Important for ensuring Allstate has sufficient talent available for all senior management positions and supporting our commitment to be a great place to work.

Technology and/or Cybersecurity
Relevant to how Allstate approaches improving its internal operations and the customer experience and protects customer information.

Innovation and Customer Focus
Helps Allstate grow its brand, enhance its reputation, generate disruptive innovation, and extend or create new business models.

Global Perspective
Provides valuable insights on how Allstate should continue to grow and manage its businesses outside the United States.

Government, Public Policy and Regulatory Affairs
Assists in identifying and understanding compliance issues and the effect of governmental actions on our business.

2020 Proxy Statement       13


Table of Contents

Corporate Governance  >  Director Nominees

Director Nominees

Kermit R. Crawford

Independent
Age 60

           

Michael L. Eskew

Independent
Age 70

Kermit effectively transformed the pharmacy experience from a model focused primarily on drug delivery to a pharmacist-patient centric model. Michael led the redesign of UPS’ operational platforms using digital technologies to more effectively and efficiently deliver a customer-focused worldwide service.

Professional Experience

Former President and Chief Operating Officer of Rite Aid Corporation, which operates one of the leading retail drugstore chains in the United States.
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.
Former Director at LifePoint Health.

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 of analyzing consumer experience and insights.

Other Public Board Service

TransUnion (2019–present)

Professional Experience

Former Chairman and CEO of United Parcel Service, Inc., a provider of specialty transportation and logistics services.
Lead director at International Business Machines Corporation since May 2014 and Lead Director at 3M Company since 2012.

Relevant Skills

Expertise in strategy, leadership development, human capital management and corporate culture.
Oversight of a highly regulated company as a director of Eli Lilly and Company.

Other Public Board Service

Eli Lilly and Company (2008–present)
IBM (2005–present)
3M Company (2003–present)
 

Allstate Board Service
Director since 2013 (7 years of tenure)

Committee Assignments and Rationale
Audit Committee (Chair)

Responsibility for all aspects of strategic, operational, and profit and loss management of one of the largest drugstore chains in the United States.
Board leadership and seven years tenure on Allstate Board.
Former member of the audit and compliance committee at LifePoint Health.

Risk and Return Committee

Operational experience at large, geographically dispersed service organizations.
Chair of Allstate audit committee.

Allstate Board Service
Director since 2014 (6 years of tenure)

Committee Assignments and Rationale
Compensation and Succession Committee (Chair)

Significant management experience as former Chairman and CEO of UPS from 2002 to 2007 and director of other publicly traded companies.
Former chair of the 3M compensation committee and member of the Eli Lilly compensation committee.

Audit Committee

Chair of the IBM audit committee, former chair of Eli Lilly audit committee, member of the Eli Lilly audit committee and a past member of the 3M audit committee.
Successful execution of financial oversight responsibilities as CEO of UPS.

14       www.allstateproxy.com


Table of Contents

Director Nominees   Corporate Governance

Margaret M. Keane

Independent
Age 60

           

Siddharth N. (Bobby) Mehta

Independent
Age 61

Margaret is an active CEO leading strategic, operational, and technology transformation in the rapidly changing consumer payments industry. As a CEO, Bobby demonstrated successful leadership that increased revenues and global reach through the use of technology and advanced analytics.

Professional Experience

Current CEO and former President 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 CEO of Synchrony Financial.
Valuable insights into innovation, technology transformation, human capital management and employee development.
Successful leadership experience across roles spanning consumer finance, vendor financial services, operations and quality.

Other Public Board Service

Synchrony Financial (2014–present)

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.
Former Director of Piramal Enterprises Ltd.

Relevant Skills

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

JLL (Jones Lang LaSalle Incorporated) (2019–present)
Northern Trust Corp. (2019–present)
TransUnion (2012–present)
 

Allstate Board Service
Director since 2018 (2 years of tenure)

Committee Assignments and Rationale
Compensation and Succession Committee

Substantial experience in establishing management performance objectives and specific goals.
Significant current market knowledge of executive compensation as CEO of Synchrony Financial.

Nominating and Governance Committee

Significant management experience as the CEO of Synchrony Financial.
Thought leader and driver of inclusion and diversity initiatives.

Allstate Board Service
Director since 2014 (6 years of tenure)

Committee Assignments and Rationale
Risk and Return Committee (Chair)

Significant experience in financial markets and utilization of data and analytics.
In-depth understanding and experience in risk and return management as a director and former chief executive officer.

Audit Committee

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.

2020 Proxy Statement       15


Table of Contents

Corporate Governance  >  Director Nominees

Jacques P. Perold

Independent
Age 61

           

Andrea Redmond

Independent
Age 64

Jacques successfully led the investments and operations for Fidelity’s family of mutual funds with over $1.8 trillion in assets under management. Andrea’s insights and judgment on leadership helped companies and high-performance organizations execute their corporate strategies.

Professional Experience

Former President of Fidelity Management & Research Company, a privately-held investment and asset management company serving clients worldwide.
Founder, former 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 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.

Other Public Board Service

MSCI Inc. (2017–present)

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 human capital management services.

Relevant Skills

Expert in public company succession planning, human capital management, and executive compensation across a wide range of industries.
Substantial experience in financial services leadership selection and executive development.
Extensive experience in assessing required board capabilities and evaluating director candidates.

Other Public Board Service

None
 

Allstate Board Service
Director since 2015 (4 years of tenure)

Committee Assignments and Rationale
Nominating and Governance Committee

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

Significant experience in management and oversight of risk for three large asset management firms.
Current trustee of several mutual funds.

Allstate Board Service
Director since 2010 (10 years of tenure)

Committee Assignments and Rationale
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.

Compensation and Succession Committee

Experience in executive recruiting, succession planning, and human capital management.
Extensive experience working with numerous publicly traded companies to recruit and place senior executives.

16       www.allstateproxy.com


Table of Contents

Director Nominees   Corporate Governance

Gregg M. Sherrill

Independent
Age 67

           

Judith A. Sprieser

Independent Lead Director
Age 66

Gregg created the strategies and implemented operating plans to increase revenues and profitability during his tenure at Tenneco. Judith has extensive service on boards of publicly traded and international companies, and significant operating experience.

Professional Experience

Current Non-Executive Chair and former Chair and CEO of Tenneco Inc., a producer of automotive emission control and ride control products and systems.
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 international operations as CEO at a global public company with employees in 23 countries.

Other Public Board Service

Snap-on Inc. (2010–present)
Tenneco Inc. (2007–present)

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, Experian, Reckitt Benckiser Group plc and Jimmy Choo plc.

Relevant Skills

More than 20 years of 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

Newell Brands Inc. (2018–present)
Intercontinental Exchange Inc. (2004–present)
 

Allstate Board Service
Director since 2017 (2 years of tenure)

Committee Assignments and Rationale
Audit Committee

Multiple leadership positions with financial oversight responsibility, including as Chairman and CEO at Tenneco.

Nominating and Governance Committee

Significant board leadership experience as the Chairman and former CEO of Tenneco, including oversight over sustainability and governance matters.
Experience on boards of publicly traded and international companies.

Allstate Board Service
Director since 1999 (21 years of tenure)

The Board has determined that Ms. Sprieser’s independence from management has not been diminished by her tenure on the Board. She is a valued leader who fulfills her responsibilities with integrity and independence of thought and has significant experience serving at Allstate under different operating environments and management teams.

Committee Assignments and Rationale
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

Significant experience on boards of publicly traded and international companies.
Current member of nominating and governance committee at Intercontinental Exchange Inc. and former member of nominating and governance committee at Newell Brands.

Risk and Return Committee

Insight from service as prior chair of Allstate’s audit committee and current audit committee chair at Intercontinental Exchange Inc.
Tenure as an Allstate director has provided experience through multiple operating environments.

2020 Proxy Statement       17


Table of Contents

Corporate Governance  >   Director Nominees

Perry M. Traquina

Independent
Age 63
 

           

Thomas J. Wilson

Board Chair, President, and
Chief Executive Officer
Age 62

Perry had significant success as an investor, building a world-class investment organization and overseeing the strategies and operating performance of public companies. Tom possesses a thorough and in-depth understanding of Allstate’s business, including its employees, agencies, products, investments, customers, and investors.

Professional Experience

Former Chairman, CEO and Managing Partner of Wellington Management Company LLP, one of the world’s largest global investment management firms with over $900 billion of assets under management.
Held a series of positions of increasing responsibility at Wellington, including Partner and President.

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.
During ten-year leadership tenure, Wellington more than doubled its assets under management.
Fostered a culture of diversity and inclusion at Wellington.
Brings valuable market-oriented investor perspective.

Other Public Board Service

Morgan Stanley (2015–present)
eBay Inc. (2015–present)

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, having led all major operating units.
Former director at State Street Corporation.

Relevant Skills

Key leadership roles throughout Allstate over 25 years.
Developed Allstate’s Shared Purpose and corporate strategy to grow market share in protecting people from life’s uncertainties.
Created and implemented Allstate’s risk and return optimization program, allowing Allstate to simultaneously 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, chair of the U.S. Chamber of Commerce, co-chair of a public-private partnership to reduce violence in Chicago, and national and Illinois co-chair for WE.

Other Public Board Service

None
 

Allstate Board Service
Director since 2016 (3 years of tenure)

Committee Assignments and Rationale
Compensation and Succession Committee

Significant management experience as former Chairman and CEO of Wellington Management Company LLP from 2004 through June 2014.
Stockholder perspective on compensation and succession as a significant investor and director of other public companies.

Risk and Return Committee

In-depth understanding of financial markets, asset allocation strategies, and investment performance management.
Current chair of the risk committee at Morgan Stanley.

Allstate Board Service
Director since 2006 (14 years of tenure)

Committee Assignments and Rationale
Executive Committee (Chair)

Comprehensive knowledge of Allstate’s business and industry, with 25 years of leadership experience at the Company.

18       www.allstateproxy.com


Table of Contents

Effective Board Governance at Allstate  <  Corporate Governance

Effective Board Governance at Allstate

2020 Proxy Statement       19


Table of Contents

Corporate Governance  >  Board Composition

Board Composition

20       www.allstateproxy.com


Table of Contents

Board Effectiveness  <  Corporate Governance

Board Effectiveness

Evaluation Process

Allstate’s Board evaluation process includes multiple assessments and reviews performed throughout the year. This process ensures that the Board’s governance and oversight responsibilities are updated to reflect best practices and are well executed. These evaluations include discussions after every meeting, an annual Board assessment and individual director evaluations.

Steps to Achieve Board Effectiveness

Board and Committees
FREQUENCY Evaluation at every in-person meeting Annual Evaluation Biennial review of responsibilities and time allocation

PERFORMED BY

Independent Directors

Board

Board and Committees

DESCRIPTION

Measures effectiveness of Board and committee oversight
Ensures objectives were satisfied, all agenda items sufficiently considered and information. presented was complete, understandable and organized
Identifies issues that need additional dialogue
Ensures Board 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
Ensures all necessary agenda items were considered to fulfill Board and committee responsibilities
Adjustments made to future agendas and timelines

Individual Directors
FREQUENCY Annual evaluation Change in circumstances
PERFORMED BY Lead Director, nominating and governance committee chair, and Board Chair Board

DESCRIPTION

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 committee chair, or Board Chair
Discuss each director’s future plans for continued Board service
Determine whether overall skills align with business strategy
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

   
   
2019 OUTCOME

Based on the Board’s annual evaluation process, the nominating and governance committee reviewed feedback and established action items for the upcoming year. Results of individual director evaluations were used by the nominating and governance committee in connection with the annual nomination process. Specific action plans were discussed with each director.

 
   

2020 Proxy Statement       21


Table of Contents

Corporate Governance  >  Board Effectiveness

2019 Annual Evaluation Feedback and Action Items

FEEDBACK ON EVALUATIONS IS PROVIDED TO THE NOMINATING AND GOVERNANCE COMMITTEE AND ACTION
ITEMS ARE DEVELOPED FOR THE UPCOMING YEAR.

                                                                 
Strategy and Operational Oversight. Directors value the annual 2 1/2 day strategy session and the materials and discussions related to management succession, financial performance and risk and return management.
  
Board Structure and Governance. Directors believe their governance processes are effective, particularly those related to involving the Lead Director and committee chairs in the formulation of meeting agendas and materials.
  
Information and Resources.Directors value the information, resources and support they receive from management.
Action Item - Management will provide additional reports to the Board on the implementation of the Transformative Growth Strategy.
Action Item - The committee agendas and charters will be reviewed to ensure the clear delineation of responsibilities for environmental, social and governance (“ESG”) matters among the committees.
Action Item – Management will provide quarterly education materials to directors, which could include significant developments related to investors, customers, employees, agents and competitors.

Director Onboarding and Continuing Education

       
 
 

ORIENTATION

     

CONTINUING PERSONAL DEVELOPMENT

     

BEYOND THE BOARDROOM

All new directors participate in a robust director orientation and onboarding process to ensure a working knowledge of Allstate’s business, strategies, operating performance and culture and a successful integration into boardroom discussions as soon as possible. To assist with their development, all new directors are invited to attend all committee meetings prior to their appointment to a particular committee.

As part of their onboarding and during their tenure, directors regularly meet with senior leaders and employees below the senior leadership level. These interactions are offered in various forums, including one-on-one meetings and larger group sessions.

Allstate encourages and facilitates director participation in continuing education programs, and each director is given the opportunity to become a member of the National Association of Corporate Directors.

Throughout their tenure, directors continue to participate in informal meetings with other directors and senior leaders to share ideas, build stronger working relationships, gain broader perspectives, and strengthen their working knowledge of Allstate’s business, strategy, operating performance and culture. In 2019, more than 20 additional meetings were held.

22       www.allstateproxy.com


Table of Contents

Board Effectiveness  <  Corporate Governance

Our Commitment to Effective Governance

Allstate has a history of strong corporate governance guided by three primary principles: dialogue, transparency and responsiveness. The Board has enhanced governance policies over time to align with best practices, drive sustained stockholder value and serve the interests of stockholders. Allstate’s key governance practices are included below.

STOCKHOLDER RIGHTS

Annual election of directors with a majority vote standard in uncontested elections
Proxy access rights permitting 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 to nominate director candidates constituting up to 20% of the Board
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
Nine out of ten 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 pages 27-30 for information on expanded Board oversight of culture and sustainability initiatives
Use of outside experts such as independent auditors, compensation consultants, governance specialists, cybersecurity experts, board search firm representatives, and financial advisors
See page 28 for information about the external pay equity analysis completed in 2019

GOOD GOVERNANCE

Extensive Board dialogue with formal processes for stockholder engagement and frequent cross-committee communications
Annual letter to stockholders from the directors on Board accomplishments since 2012
Requests for stockholder engagement with holders of at least 1/3 of outstanding shares each year
Robust 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
Enhanced comprehensive Sustainability Report with information on public policy (including political contributions), 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 and directors
CEO emergency succession plan reviewed and formalized

INVESTOR STEWARDSHIP GROUP

Allstate believes that strong and effective governance practices are critical to long-term value creation. To achieve that goal, Allstate follows the six corporate governance principles set out by the Investor Stewardship Group for U.S.-listed companies. These principles are:

(1)boards are accountable to stockholders;
(2)stockholders should be entitled to voting rights in proportion to their economic interest;
(3)boards should be responsive to stockholders and be proactive in order to understand their perspectives;
(4)boards should have a strong, independent leadership structure;
(5)boards should adopt structures and practices that enhance their effectiveness; and
(6)boards should develop management incentive structures that are aligned with the long-term strategy of the company.

2020 Proxy Statement       23


Table of Contents

Corporate Governance  >  Board Oversight

Board Oversight

Risk Management

The Board oversees Enterprise Risk and Return Management (“ERRM”), including management’s design and implementation of ERRM practices. The chief risk officer’s assessment of Allstate’s overall risk position and alignment with risk and return principles is reviewed throughout the year. Significant risks, including those affected by climate change, financial markets, cybersecurity and privacy threats, are regularly identified, measured, managed, and reported. Risk and return perspectives are shared with the Board across six risk types: financial, insurance, investment, operational, strategic, and culture (elevated to a risk category in 2019). The key risk areas overseen by each Board committee are included below.

Board of Directors
REVIEWS ENTERPRISE RISK AND RETURN AT LEAST TWICE A YEAR

                               
               
 

Risk and Return Committee
REVIEWS RISK AND RETURN AT LEAST FIVE TIMES ANNUALLY

       

Audit Committee
REVIEWS RISK AT LEAST FOUR TIMES ANNUALLY

 
 
Oversees the effectiveness of Allstate’s ERRM framework, governance structure and decision making
Reported at each meeting through a risk summary report that identifies key risks, measurement of the risk profile, and alignment with risk and return principles
Includes a review of the chief risk officer’s assessment of strategic and 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, including risks related to climate change and severe weather
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 the committee
The chief audit executive attends all meetings
Culture was elevated to a key risk category in Allstate’s enterprise risk and return management framework and was reviewed over multiple meetings
   
Oversees Allstate’s internal controls related to key risks and the major financial risk exposures
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
Utilizes an external, independent cybersecurity advisor
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 the committee
The chief risk officer attends all meetings
Regular data privacy reviews were added to the committee’s agenda and were formalized in the committee’s charter
 
 

Compensation and Succession Committee
REVIEWS RISK AT LEAST ONCE ANNUALLY

   

Nominating and Governance Committee
REVIEWS RISK AS NEEDED

 
 
Oversees executive compensation programs (including the design, performance measures and ranges in incentive plans)
Includes a review of the chief risk officer’s assessment of incentive compensation programs
Oversees talent development and senior executive succession planning to ensure they appropriately align with Allstate’s risk and return principles
Senior leadership development programs were enhanced and a CEO Emergency Succession Plan was formalized
   
Oversees director elections and corporate governance practices to ensure they appropriately align with Allstate’s risk and return principles
Includes a review of the chief risk officer’s assessment of political activities
Oversees the company’s political contributions and activities, as well as its sustainability practices
Allstate’s major sustainability programs were reviewed, including in joint session with the Board given the importance of sustainability to Allstate’s long-term success
 
           

24       www.allstateproxy.com


Table of Contents

Board Oversight  <  Corporate Governance

Risk Management and Participation in the Political Process

Allstate engages in public policy advocacy at the state and federal levels to foster market innovation, fight for consumers, promote safety and security, ensure a healthy regulatory system, promote fiscal responsibility, and advocate for small businesses.

Allstate is regulated in all 50 states and at the federal level on many aspects of its business, including customer communications, privacy, sales practices, underwriting standards, insurance pricing, claims practices, investments and capital. As a result, it must participate in public policy issues to appropriately serve customers and generate adequate returns for stockholders. The scope of issues is expanding as Allstate introduces innovative products and services through Arity, Allstate Protection Plans, Allstate Identity Protection and Avail (car sharing).

Allstate participates in political activities through direct and indirect advocacy, corporate political contributions and Allstate’s political action committee. Allstate contributes less than $1,000,000 annually in corporate funds to political organizations, including federal, state and local candidates and committees, in comparison to total revenues of almost $45 billion. The types of expenditures are consistent from year to year.

The chief risk officer conducts an annual risk and return assessment of Allstate’s political activities for the Board to ensure there is appropriate oversight and management of corporate political engagement. In addition, the Board’s nominating and governance committee provides oversight of Allstate’s political contributions and activities, including in a joint session with the Board.

Chief Risk Officer’s Assessment

The chief risk officer’s assessment approach is based on Principles and Guidance for Responsible Corporate Political Engagement published by Transparency International UK. The political activities and associated risks identified by Transparency International UK were expanded to address Allstate’s specific activities and risk profile. These political activities were grouped for assessment as follows: i) political expenditures, ii) lobbying, iii) trade associations, social welfare groups and research organizations, iv) state based regulatory and legislation management, v) political activities in the workplace and vi) disclosure.

The chief risk officer’s assessment concluded the following:

1.

Allstate’s decisions on how to engage in the political process appropriately balance risk and return

Allstate’s first risk and return principle, Maintain Strong Foundation, includes ensuring the political and regulatory environment supports the operating model. Engaging in political activity helps the company adhere to this principle. While engaging in political activity exposes Allstate to legal and reputational risks, controls are in place to manage these risks and consider the return implications of engaging in political activity.

2.

Allstate’s control framework appropriately manages the risks and sufficient governance and oversight exists to ensure activities are aligned with Allstate’s risk and return principles

The control framework includes robust governance and processes that are designed to identify, monitor and evaluate the risks resulting from Allstate’s political activities.

Senior leaders meet quarterly to designate priorities and receive updates on public policy initiatives and focus areas.
The legal department ensures that corporate political expenditures are compliant with state regulations, and leadership reviews activity to confirm regulations are followed and corruption or conflicts of interest do not influence Allstate’s actions.
The nominating and governance committee semi-annually (including in one joint session with the Board) reviews the company’s involvement in public policy and candidate contributions.
The Allstate Global Code of Business Conduct contains the values and principles of The Allstate Corporation and subsidiaries.
Employees are required to affirm understanding and compliance with the Code, including political activities and officers are required to identify political activity semi-annually.
Employees in high risk areas of political corruption receive specialized training.

2020 Proxy Statement       25


Table of Contents

Corporate Governance  >  Board Oversight

The human resources and legal departments establish policies and oversee political activities in the workplace to confirm they are aligned with Allstate’s principles for responsible corporate political engagement; policies include notification if seeking public office.
The public policy program is disclosed to stockholders annually in the Allstate Sustainability Report.
3.Failure to engage in the political process could result in unfavorable policies, legislation or adverse business outcomes, negatively impacting Allstate’s strategic position
Political activity is aligned with important business initiatives and advance strategic objectives. The risk of not engaging to influence these issues is more significant than the risks presented by engaging. Examples of focus areas include fighting for customers (assignment of benefit and no-fault auto reform), promoting safety and security (driver safety, storm-chaser legislation, California wildfire liability laws, and privacy regulations) and ensuring a healthy regulatory environment (building codes, National Flood Insurance Program and capital standards).

Risk Management and Cybersecurity

2019 CYBERSECURITY
GOVERNANCE HIGHLIGHTS
Simulated a crisis to prepare senior leaders to respond to a cyber attack
Amended the audit committee charter to highlight the importance of the Board’s data privacy oversight efforts
Retained a cybersecurity advisor for 4th year in a row to provide objective assessments of Allstate’s capabilities and to conduct advanced attack simulations
Cross-functional approach to overseeing and addressing cybersecurity risk, with input from technology, risk, legal, and audit functions

The Board recognizes that the quality of Allstate’s security program affects our reputation and customers’ trust in us. Allstate’s strategy revolves around protecting our customers, and customers must feel that their most personal data is safe in our hands.

Accordingly, the Board prioritizes its responsibility to oversee our data protection efforts, including our policies and systems designed to prevent and, if necessary, respond to cyber threats. We are continually enhancing our information security capabilities in order to protect against emerging threats, while increasing our ability to detect system compromise and recovery should a cyber-attack or unauthorized access occur.

The Board dedicates significant time to the oversight of cybersecurity risk management. The audit committee regularly receives reports from its independent advisor regarding our program. Our cybersecurity program is regularly reviewed and tested by Allstate’s internal audit function with status reports provided to the Audit Committee and the full Board.

   

Risk Management and Compensation

Compensation policies and practices are structured to provide incentives for employees to successfully execute the company’s strategies and achieve annual operating goals while adhering to our risk and return principles.

Analysis provided by an external consultant and the chief risk officer for the compensation and succession committee concluded the compensation plans are also structured to ensure management does not take unnecessary or excessive risk. Based on this analysis, Allstate’s compensation policies ensure appropriate levels of risk-taking, while avoiding unnecessary risks that could have a material adverse effect on Allstate. Compensation plans provide a balanced 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. Multiple performance measures are utilized 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 executives to earn awards above target. Equity awards granted in 2019 and annual cash incentive awards for the 2019 performance year for executive officers whose fraud or intentional misconduct resulted in a restatement to correct a material error or inaccuracy are subject to clawback. The clawback policy was expanded by the compensation and succession committee to provide for the recovery of equity awards granted after February 18, 2020, and annual cash incentive awards paid after March 15, 2020, to executive officers and other executive vice presidents. If the

26       www.allstateproxy.com


Table of Contents

Board Oversight  <  Corporate Governance

performance results leading to an award or payment are later subject to a downward adjustment as result of a material financial restatement, prior compensation is clawed back. It also provides for recovery of equity and annual cash incentive awards in certain circumstances if an executive is terminated for improper conduct that leads to a material adverse impact on the reputation of, or a material adverse economic consequence for, the company.

Risk Management and Culture

In 2019, culture was upgraded to a key risk category to be monitored and measured by management’s ERRM framework and overseen by the risk and return committee and Board. The Board oversees culture, setting the “tone at the top” and holding management accountable for its maintenance of high ethical standards and protecting our reputation, assets, and business. By adding culture as a key risk category, it expands the Board’s involvement at a more granular level. Accordingly, the Board reviewed culture over multiple meetings in 2019.

2019 Board Review of Culture


Allstate defines culture as a “Self-sustaining system of shared values, principles and priorities that shapes beliefs, drives behavior and influences decision making within an organization.”


 
              
CULTURE

Establishing core elements of culture provides a basis for assessment and measurement and ensures alignment with Our Shared Purpose. The core cultural elements at Allstate are:

Honesty
Integrity and ethics
Customer focus
People (how Allstate meets the needs and expectations of employees)
Empowerment and responsibility
Performance expectations and rewards
Engagement
Transparency and personal interactions
Adaptability and innovation
Decision-making processes
Core cultural elements will be measured using various sources and modified as this process matures

Defined culture and identified core cultural elements (including specific measures for each core cultural element to support measurements and dialogue)
Completed a baseline assessment of Allstate’s culture
Reviewed internal surveys, internal data (exit interviews), external data (social media activity), regulatory reviews, and operating performance measures (market share growth and number of customer complaints)
Established measures and governance reviews
Evaluated potential focus areas for cultural improvement
Management initiatives focused on culture





OUTCOME Allstate is prioritizing three core cultural elements in the near-term: customer focus, empowerment and responsibility, and decision-making processes

2020 Proxy Statement       27


Table of Contents

Corporate Governance  >  Board Oversight

Human Capital Management and Management Succession

The Board engages in ongoing reviews of human capital management practices since they are vital to Allstate’s continued success. The wellbeing of employees is a key priority and includes a dynamic and welcoming workplace that promotes inclusive diversity, fosters collaboration and encourages employees to bring their best ideas to work every day. Allstate retains talent by providing employees with training, mentoring and career development; emphasizing inclusive diversity; attracting new employees; encouraging work-life balance; and monitoring engagement through annual employee surveys.

Our human capital management focuses on the following priorities:

Career & Leadership Development

Allstate’s Shared Purpose is based on the premise that all employees must exercise leadership.

Talent Attraction & Retention

Providing employees with rewarding work, professional growth and educational opportunities improves morale and engagement.

Inclusive Diversity

We strive for a workforce where the breadth of our diversity makes us a better company. We’re committed to being a force for positive change.

Employee Well-Being & Safety

As part of our ongoing mission to be an employer of choice, we take seriously our responsibility to care for their well-being, devoting resources to employee health and safety.

          


84%
of employees are proud to work at Allstate


As part of Allstate’s commitment to fair and equitable compensation practices, an internal pay equity analysis has been completed on an annual basis. This past year Allstate engaged an outside firm to provide a more detailed pay equity analysis to identify potential pay gaps across substantially similar employee groups as well as identify policies, practices and/or systematic issues that may contribute to pay gaps now or over time. The external analysis found that Allstate’s results compare well to benchmarks for companies of similar size and scope. In the few employee groups where pay gaps were identified, these were remediated and we have established policies to ensure pay equity continues in the future.

The Board’s involvement in leadership development and succession planning is systematic and ongoing. 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. The Board also has regular and direct exposure to senior leadership and high-potential officers in meetings held throughout the year.

28       www.allstateproxy.com


Table of Contents

Board Oversight  <  Corporate Governance

Board Review of Succession Planning and Talent Development Practices

 
LEADERSHIP SUCCESSION IS REVIEWED CONTINUOUSLY THROUGHOUT THE YEAR    
       
APRIL
CEO Succession
 
JULY
Talent Development
 
SEPTEMBER
Key Leader Succession
 
NOVEMBER
Scenario Planning
 
Topic:
CEO succession planning
Primary Focus:
Internal succession alternatives across multiple time periods – immediate, less than 2 years, and 3-5 years

Alternatives are evaluated under different strategic and operating scenarios
   
Topic:
Organizational health and pay fairness analyses – how the organization recruits, develops and retains people, including its inclusive diversity commitments
Primary Focus:
Systematic approach to talent acquisition, development, and retention

   
Topic:
Senior leadership succession alternatives, including CEO
Primary Focus:
Key leader development and retention

   
Topic:
CEO and senior leadership succession – “what if” scenario planning
Primary Focus:
Board dialogue in advance of unexpected succession issues



OUTCOME In 2019, the Board concluded that Allstate has a strong CEO succession profile with succession options across the full timescale. The Board also reviewed enhanced senior leadership development programs and formalized an emergency succession plan for the CEO, which provides for an orderly communication and succession process in the event of an unplanned departure.

Board Role in Setting Compensation

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 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 2019. The compensation and succession committee annually evaluates the compensation consultant’s performance and independence.

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 2019 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.

Corporate Sustainability

The Board believes sustainability benefits Allstate’s stakeholders and drives long-term value creation. While the Board of Directors is responsible for the overall performance of Allstate, the nominating and governance committee has oversight responsibility for Allstate’s sustainability initiatives. Leadership from across the company guides Allstate’s corporate responsibility and sustainability efforts.


“In 2019, Board discussions increased around sustainability and its importance to the long-term prosperity of Allstate. The nominating and governance committee formalized its oversight responsibility of this important area and reviewed sustainability initiatives and disclosures at two meetings. Allstate’s internal governance over sustainability is also robust and involves senior leaders and several cross-functional teams to ensure appropriate focus on the issues most important to Allstate’s long-term success.”

— ANDREA REDMOND, NOMINATING AND GOVERNANCE
COMMITTEE CHAIR

2020 Proxy Statement       29


Table of Contents

Corporate Governance > Board Oversight

Governance of Sustainability

Board of Directors
Nominating and Governance Committee
In 2019, the nominating and governance committee reviewed sustainability matters at two meetings, including in one joint session with the Board.
       
       
 
Our CEO and Senior Executive Leaders
 
 
      
      
 
The Corporate Responsibility and Sustainability Team
The Corporate Responsibility and Sustainability team develops the annual sustainability report, responds to ratings and rankings questionnaires, drives employee awareness and engagement with corporate sustainability initiatives and supports the Allstate Sustainability Council.
They report to our senior executives on the status of Allstate’s environmental, social and governance progress.
The Allstate Sustainability Council
Allstate has maintained a Sustainability Council since 2007. This cross-functional council reviews opportunities regarding operational efficiency, climate change and employee-focused sustainability initiatives.
The council is comprised of individuals from operations, accounting, administration and real estate, technology, claims, corporate relations, enterprise risk and return management, human resources, legal, investments, marketing, product and sourcing and procurement.
Allstate’s vice president of corporate relations leads the council, which meets periodically, and updates senior executives on its activities annually.
Enterprise Diversity Leadership Council (EDLC)
The EDLC is made up of senior leaders throughout the enterprise focused on advancing inclusive diversity at Allstate. The EDLC helps drive targeted results for inclusive diversity across the company by:
Identifying and prioritizing actions
Taking accountability for achieving target results
Ensuring clarity and understanding of the business relevance of inclusive diversity
The EDLC provides updates to the CEO.

Recognitions

Allstate is recognized as an employer of choice and as a corporate champion for leadership in ethics, diversity, innovation and corporate responsibility. We are proud to be recognized as a great place to work by several independent organizations, and we will continue to make investments in our people to make Allstate a world-class workplace.

 
       
DIVERSITYINC.
Top 50
Companies
for Diversity
(2019, 16-time
award winner)
ETHISPHERE
World’s Most
Ethical Companies
(2015-2019)
THE CIVIC 50
(2017-2019)
HUMAN RIGHTS
CAMPAIGN
Corporate
Equality Index
rating (2009-2019)
NEWSWEEK
Most Responsible
Companies (2020)
DRUCKER INSTITUTE
250 Best-Managed
Companies (2019)
 

To learn more about our corporate sustainability efforts, please view Allstate’s Sustainability Report at http://allstatesustainability.com.

30     www.allstateproxy.com


Table of Contents

Board Accountability < Corporate Governance

Board Accountability

Stakeholder Input and Responsiveness

Allstate continually seeks stakeholder input to make sure focus is on what matters most and to gauge progress against our purpose. We regularly engage our stockholders, as well as the following groups: customers and consumers, employees, Allstate agents, nongovernmental organizations, opinion leaders, policymakers and suppliers. Allstate partners with Reputation Institute, a global research firm, to study how stakeholders perceive the company. We survey customers, consumers, agency owners and employees every quarter, as well as investors, policymakers and opinion leaders each year. Feedback is collected across these stakeholder groups, key topics are identified, and strategies are developed to address gaps. There are also stakeholder-specific avenues for engagement.

Stockholder Engagement

Allstate proactively engages with significant stockholders throughout the year. Dialogue, transparency, and responsiveness are the cornerstones of our stockholder engagement program.

How We Engage

Direct engagement involves reaching out to our largest stockholders representing over one-third of our total outstanding shares. We also engage with proxy and other investor advisory firms that represent the interests of various stockholders.

Discussions with stockholders include our Lead Director, chair of the nominating and governance committee, Board Chair, and other committee chairs or directors as necessary.

STOCKHOLDER ENGAGEMENT CYCLE

 
BALANCED-TRANSPARENT-RESPONSIVE-THOUGHTFUL    
       
JANUARY-MARCH
Before Annual Meeting
    APRIL-MAY
During Stockholder Voting
    MAY
Annual Meeting of Stockholders
    JUNE-DECEMBER
After Annual Meeting
Discuss with investors governance and compensation issues and potential responses.
Discuss stockholder proposals with proponents, on case-by-case basis.
Discuss governance trends.
   
Follow up on previous conversations and discuss final Board decisions and reasoning.
Review vote proposals and solicit support for Board recommendations.

   
Stockholders vote on issues such as directors, say-on-pay, auditor ratification and stockholder proposals.
Provides forum for direct engagement among Board members, senior management, and stockholders.
   
Discuss with investors responses to vote results and new topics of interest for the upcoming year.
Discuss stockholder proposals with proponents, on case-by-case basis.

 

During 2019, Allstate reached out to stockholders representing 40% of outstanding shares and spent a significant amount of time discussing Allstate’s Board leadership structure, executive compensation practices, political contribution disclosures, and the company’s sustainability initiatives, including human capital management strategy. Stockholder feedback was integrated into Board discussions and decisions.

OUTCOME
 
 
 

2020 Proxy Statement     31


Table of Contents

Corporate Governance > Board Accountability

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. As part of our commitment to constructive engagement with investors, we evaluate and respond to the views voiced by our stockholders, including vote results at our annual meetings of stockholders. Our dialogue has led to enhancements in our environmental, social, governance and executive compensation practices, which our Board believes are in the best interest of our company and our stockholders.

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, IL 60062-6127.

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 and chief legal officer 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. Activity on social media is also monitored and reported to the nominating and governance committee.

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

 

32     www.allstateproxy.com


Table of Contents

Board Structure < Corporate Governance

Board Structure

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 nine 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 expected that the Lead Director serve more than one year.

   
Judith A. Sprieser
Lead Director

Lead Director since 2015
Member of the nominating and governance, risk and return and executive committees
Prior chair of audit committee for seven years
Allstate Board experience in multiple operating environments and under two CEOs
Considerations in Selecting the 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 Lead Director qualifications. She has devoted significant time fulfilling her duties as Lead Director since May 2015. During her tenure on Allstate’s Board, she has cultivated an expansive knowledge of Allstate in multiple operating environments and has experienced various financial market cycles. Her long-term perspective complements the perspectives of newer Board members, four 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.

Independent Lead 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
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
Succession Plans
Facilitates the development of a succession plan for the Chair and CEO
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
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
   

2020 Proxy Statement     33


Table of Contents

Corporate Governance  >  Board Meetings and Committees

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 experience 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 25 years of insurance industry experience. Given his extensive company knowledge and successful leadership of many external boards, he is highly qualified to fulfill both roles simultaneously.

Board Meetings and Committees

Board Attendance

Each 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 2019 annual meeting of stockholders attended the annual meeting.

                  
99%
Average attendance of directors as a group at Board and committee meetings during 2019.
 

34       www.allstateproxy.com


Table of Contents

Board Meetings and Committees   Corporate Governance

Management Participation in Committee Meetings

Key members of management regularly attend and participate in Board meetings. Regular attendees include the CEO, vice chair, CFO, general counsel and chief legal officer, president of Personal Property-Liability, president of Allstate Financial Businesses, president of Investments and Financial Products, 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 chief legal officer, and controller all actively participate in meetings. Senior business unit and technology executives, including the chief information security officer, are present when appropriate. Executive sessions of the committee are held at all in-person meetings, in which the committee meets privately with the independent registered public accountant, independent cybersecurity advisor, chief audit executive, and chief compliance executive.

Compensation and Succession Committee

The executive vice president and chief human resources officer, general counsel and chief legal officer, CFO and CEO participate in meetings. The committee regularly meets in executive sessions that include just the independent compensation consultant or chief human resources officer.

The chief human resources officer 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 and chief legal officer provides input on the legal and regulatory environment and corporate governance best practices and ensures 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, and whether compensation outcomes were achieved within those principles.

Nominating and Governance Committee

The CEO and general counsel and chief legal officer participate in meetings. The committee regularly meets in executive session without management present. The chief risk officer provides risk assessments on political contributions and activities.

Risk and Return Committee

The chief risk officer, CFO, general counsel and chief legal officer, CEO, vice chair, and chief audit executive participate in meetings. The committee regularly meets in executive session, including sessions with the chief risk officer.

 

2020 Proxy Statement       35


Table of Contents

Corporate Governance  >  Board Meetings and Committees

           
The Allstate Corporation Board of Directors

Highly Independent Board
Nine out of ten directors on the Board are independent. Each director has input into Board and committee meeting schedules, agendas and materials. In addition, directors are provided opportunities throughout the year for independent discussion and reflection. The directors hold executive sessions without management present at every in-person Board and committee meeting.

Judith A. Sprieser,
Independent
Lead Director
      Thomas J. Wilson,
Chair
     

Meetings in 2019: 6

 
Succession planning discussed at four meetings annually
The Board met for 2½ days in September to focus solely on strategy.
   

Audit
Committee
(1)
Report, pg. 81         Compensation and
Succession Committee
Report, pg. 61
 
Chair: Kermit R. Crawford     Meetings in 2019: 10 Chair: Michael L. Eskew     Meetings in 2019: 7
Other Members: Other Members:
Michael L. Eskew Gregg M. Sherrill Margaret M. Keane Perry M. Traquina
Siddharth N. Mehta Andrea Redmond

“Data privacy oversight became an area of focus, in addition to the frequent cybersecurity updates received by the committee. We continued an industry leading practice of engaging an independent cybersecurity advisor for the fourth year in a row and reviewed a cyber crisis simulation exercise that was used by our senior leaders to prepare for a possible cyber crisis.”

— KERMIT R. CRAWFORD, CHAIR


“We considered the views of significant stockholders when we determined our compensation priorities during the year, which resulted in adding a Relative TSR performance measure to the performance stock award program and revising the company’s clawback policy. We also spent considerable time discussing management development and succession. We engaged in ongoing reviews of our human capital management practices and received an independent assessment of pay equity practices. We also formalized an emergency succession plan for the CEO, in the event of an unplanned departure.”

— MICHAEL L. ESKEW, 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 and data privacy risk and the major financial risk exposures and management’s 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 an independent cybersecurity advisor
Oversees Allstate’s internal audit function

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
Oversees Allstate’s data privacy programs
Has authority to engage independent counsel and other advisors to carry out its duties
(1)  The Board determined that all members of the audit committee are independent under the New York Stock Exchange (“NYSE”) and Securities and Exchange Commission (“SEC”) requirements, and that Messrs. Eskew, Mehta, and Sherrill are each an audit committee financial expert as defined under SEC rules.

36       www.allstateproxy.com


Table of Contents

Board Meetings and Committees   Corporate Governance

             

Robust Role for Independent Committee Chairs
Each of the committee chairs approves meeting agendas and reviews committee materials. Prior to each meeting, each committee chair has a conversation with the Board Chair and 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 standing committees regularly use independent external consultants.

In 2019, an outside firm was engaged to provide an independent assessment of Allstate’s pay equity practices.

     

“Over the past year, we engaged with management on strategic topics at every Board meeting. We considered the long-term trends in the property-liability insurance industry, including greater customer connectivity and use of technology. Management also initiated a Transformative Growth Plan, a multi-year effort to increase property-liability market share. The Board is actively engaged in this initiative.”

— JUDITH A. SPRIESER
INDEPENDENT LEAD DIRECTOR

     

Nominating and
Governance Committee
              Risk and Return
Committee
     
 
Chair: Andrea Redmond     Meetings in 2019: 5 Chair: Siddharth N. Mehta     Meetings in 2019: 6
Other Members: Other Members:
Margaret M. Keane Gregg M. Sherrill Kermit R. Crawford Judith A. Sprieser
Jacques P. Perold Judith A. Sprieser Jacques P. Perold Perry M. Traquina

“We focused on the company’s significant sustainability initiatives and disclosures, including Allstate’s approach to political contribution activity. We reviewed Allstate’s political contributions at two meetings, including in one joint meeting with the Board. Board composition and skills also continue to be areas of focus.”

— ANDREA REDMOND, CHAIR

“We elevated culture to a key risk category in the enterprise risk and return management framework. New risk and performance measures are also being used for the Transformative Growth Plan. Allstate’s risk and return management program continued to be refined as management advanced the maturity of Allstate’s operational risk-return management framework.”

— SIDDHARTH N. MEHTA, 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

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
Enhanced oversight around culture as a key risk category
Reviews Allstate’s political contributions and sustainability initiatives

 

EXECUTIVE COMMITTEE

The Board has an Executive Committee made up of the Lead Director, committee chairs and Board Chair. The Executive Committee is chaired by Mr. Wilson and 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. In addition, the Executive Committee provides Board oversight if outside the scope of established committees or if an accelerated process is necessary. No meetings of the Executive Committee were necessary in 2019.

 

2020 Proxy Statement       37


Table of Contents

Corporate Governance > Board Independence and Related Person Transactions

Board Independence and Related Person Transactions

Nominee Independence Determinations

The Board has determined that all directors who served during 2019, 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, management teams and financial market cycles, 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.

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 www.allstateinvestors.com.

There were no related person transactions identified for 2019.

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.

38       www.allstateproxy.com


Table of Contents

Director Compensation  <  Corporate Governance

Director Compensation

Director Compensation Program

The director compensation program is designed to appropriately compensate non-employee directors for serving on the board of a large, complex, and highly regulated company and to align their interests with stockholders. The nominating and governance committee reviews non-employee director compensation annually including benchmark information from peer companies, advice from an independent compensation consultant, and relevant compensation surveys. The following charts describe each component of our non-employee director compensation program for 2019. No changes were recommended after the 2019 annual review as director total compensation continues to be aligned with the insurance peer group and survey median.

NON-EMPLOYEE DIRECTOR ADDITIONAL ANNUAL CASH RETAINERS(1)

(1) Paid quarterly 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.
(2) 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.

         

Director Equity Compensation

Equity makes up a meaningful portion of the directors’ overall compensation mix to align interests with stockholders.
A robust stock ownership guideline of five times the annual Board membership cash retainer supports alignment with stockholders’ interests.
Annual restricted stock units are granted under a fixed-value formula and in accordance with the stockholder approved 2017 Equity Compensation Plan for Non-Employee Directors. The aggregate grant date fair value of any award during a calendar year may not exceed $800,000.

Further Director Compensation Highlights

Director total compensation, Lead Director and committee chair retainers, and equity grant practices are all benchmarked against insurance industry peer group and relevant compensation surveys to target total compensation at the median.
No additional fees are paid for Board meeting attendance.
 

2020 Proxy Statement       39


Table of Contents

Corporate Governance > Director Compensation

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 cash retainer. Allstate’s stock ownership guidelines specify that Allstate shares owned personally and beneficially, as well as unvested restricted stock units, count toward meeting the requirement.

Each director has met the ownership guideline, except for Mr. Sherrill, who joined the Board in the last five years.

2019 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 2019.

Name       Leadership Roles Held During 2019       Fees Earned or
Paid in Cash
($)(1)
      Stock
Awards
($)(2)(3)
      All Other
Compensation
($)
      Total
($)
Kermit R. Crawford Audit Committee Chair 160,000 155,013 315,013
Michael L. Eskew Compensation and Succession Committee Chair 155,000 155,013 310,013
Margaret M. Keane 125,000 155,013 280,013
Siddharth N. Mehta Risk and Return Committee Chair 160,000 155,013 315,013
Jacques P. Perold 125,000 155,013 280,013
Andrea Redmond Nominating and Governance Committee Chair 145,000 155,013 300,013
Gregg M. Sherrill 125,000 155,013 280,013
Judith A. Sprieser Lead Director 175,000 155,013 330,013
Perry M. Traquina 125,000 155,013 280,013
(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 2019, Margaret Keane elected to receive 100% of her retainer in stock. Also, under Allstate’s Deferred Compensation Plan for Non-Employee Directors, directors may elect to defer their retainers to an account that is credited or debited, as applicable, based on (a) the fair market value of, and dividends paid on, Allstate common shares (common share units); (b) an average interest rate calculated on 90-day dealer commercial paper; (c) 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 2019, Messrs. Eskew and Traquina elected to defer their cash retainer into common share units. The accumulated amount of Allstate common share units as of December 31, 2019, for directors previously electing to defer their cash retainer, is reflected in the table below.

      Amounts Deferred under Deferred Compensation Plan for Non-Employee Directors       Allstate
Common
Share Units
(#)
Mr. Eskew 8,827
Mr. Traquina 4,218
(2) Grant date fair value for restricted stock units granted in 2019 is based on the final closing price of Allstate common stock on the grant date, which in part also reflects the payment of expected future dividend equivalent rights. (See note 18 to our audited financial statements for 2019.) The final grant date closing price was $95.51. 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).

40     www.allstateproxy.com


Table of Contents

Director Compensation  <  Corporate Governance

(3) The following table provides outstanding restricted stock units as of December 31, 2019, for each director. The value of the restricted stock units is based on the closing price of our common stock of $112.45 on December 31, 2019.

Name       Restricted
Stock Units
(#)
      Value of
Restricted
Stock Units
as of 12/31/19
($)
      Multiple of
Annual Cash
Retainer
Mr. Crawford 16,341 1,837,545 14.7
Mr. Eskew 11,680 1,313,416 10.5
Ms. Keane 3,892 437,655 3.5 (1) 
Mr. Mehta 12,819 1,441,497 11.5
Mr. Perold 8,465 951,889 7.6
Ms. Redmond 31,813 3,577,372 28.6
Mr. Sherrill 4,400 494,780 4.0
Ms. Sprieser 43,246 4,863,013 38.9
Mr. Traquina 7,024 789,849 6.3
(1) Ms. Keane has met the stock ownership guideline through her direct ownership of common stock.

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.

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. There were no outstanding stock options as of year-end 2019.

2020 Proxy Statement     41


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 2019 was 117.5% of target, reflecting above target performance on Performance Net Income and below target performance on Total Premiums and Net Investment Income.
   
        

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 SEC, including the Compensation Discussion and Analysis and accompanying tables and narrative on pages 42-77 of the Notice of 2020 Annual Meeting and Proxy Statement.
     

Compensation Discussion and Analysis

Executive Overview

Our Compensation Discussion and Analysis describes Allstate’s executive compensation program, including total 2019 compensation for our named executives listed below(1):

THOMAS J. WILSON
Chair, President, and Chief Executive Officer (CEO)
      MARIO RIZZO
Executive Vice President and Chief Financial Officer (CFO)
     DON CIVGIN
President, Service Businesses
      GLENN T. SHAPIRO
President, Allstate Personal Lines
      STEVEN E. SHEBIK
Vice Chair
  
 
   
(1) The titles and responsibilities changed for certain of these officers in 2020. See Appendix C for a full list of Allstate’s executive officers and current titles.

42       www.allstateproxy.com


Table of Contents

Compensation Discussion and Analysis  <  Executive Compensation

Business Highlights

In 2019, Allstate delivered strong results and implemented multiple initiatives to drive long-term profitable growth. Our management team continued to advance all five Operating Priorities:

                                                             
$2.5 billion
Distributed to stockholders in cash through stock repurchases and common stock dividends
 


Operating Priorities       Results
Better serve customers
Enterprise net promoter score increased with improvement at most businesses
Grow customer base
Total policies in force reached 145.9 million, a 27.7% increase from prior year
Property-Liability policies increased 1.3% from prior year to 33.7 million
Achieve target returns on capital
Adjusted net income return on common shareholders’ equity* of 16.9% in 2019
Proactively manage investments
Net investment income of $3.2 billion in 2019 reflects higher market-based yields
Performance-based results were below expectations, but long-term results have been strong
Total return of 9.2% on $88.4 billion investment portfolio in 2019
Build long-term growth platforms
Accelerating Transformative Growth Plan
Arity continued to expand telematics usage and capabilities
Expanding Allstate Identity Protection
Avail, a car sharing business, initiated operations
* This measure is defined and reconciled to the most directly comparable GAAP measure in Appendix A.

Allstate’s one, three, and five-year total shareholder return was 38.8%, 60.4%, and 75.8%, respectively. 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 2019 compensation benchmarking (identified on page 58).

COMPARISON OF TOTAL SHAREHOLDER RETURN (%)

2020 Proxy Statement       43


Table of Contents

Executive Compensation  >  Compensation Discussion and Analysis

Compensation Highlights

The committee actively solicits the views of our significant stockholders on executive compensation matters. In determining the structure and amount of executive pay, the committee carefully considered this feedback. At our last stockholder meeting, 89% of votes cast supported our executive compensation program. Investors generally believed that Allstate utilized many best practices and focused on pay for performance, but some questioned certain elements of the performance measures and targets established by the committee.

The committee considered the vote results, investor input and current market practices and made changes to respond to that feedback, as described below.

     
      What We Heard       What We Do      
As a general rule, incentive targets for the annual incentive plan should not be set below prior year actual results. If in the committee’s discretion that is deemed warranted, the committee should ensure full and transparent disclosure of the process used and rationale for setting targets below prior year results.
The committee assesses highly variable components of the performance measures, such as catastrophe losses, to establish targets using probability and scenario analysis.
Total Premiums target was set above the prior year as it has been for over ten years.
Performance Net Income target for 2019 was above 2018 reflecting top-line growth and consistent margins. Catastrophe losses were assumed to be higher than the prior year, reflecting long-term weather patterns.
Net Investment Income target was set above 2018 based on higher market-based income.
A detailed summary of the goal setting process and the 2019 ranges for each performance measure are included on page 53.
Investors generally like to see little to no discretion applied in the annual incentive program, particularly annual incentive awards paid to the CEO.
The annual incentive compensation pool is calculated based on three numerical measures and no positive discretion has been applied to the pool in the last five years. Individual discretion is utilized to reward high performers, but this is funded by reducing amounts paid to other executives.
The annual cash incentive awards for the CEO and three other NEOs were equal to the calculated funding level, with no discretion applied.
A detailed description of how the annual incentive corporate pool is funded and distributed to individual participants is included on pages 54-55.
Performance awards should be aligned with stockholder value, and the committee should consider whether total shareholder return would be an appropriate performance measure for the incentive program.
For the 2020-2022 performance stock awards, the committee replaced the Earned Book Value measure with a Relative TSR measure.
For additional detail on the 2020 performance stock award design, see page 56.
     

44       www.allstateproxy.com


Table of Contents

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 75-77
^ Reflects 2018 actual results of Total Premiums of $37,451, Performance Net Income of $3,095, and Net Investment Income of $3,240

ANNUAL INCENTIVE PLAN % OF TARGET

2017-2019 PERFORMANCE STOCK AWARDS

PSA % PAYOUT FOR ALL NEOs


(1) For a description of how these measures are determined, see pages 75-77

2020 Proxy Statement       45


Table of Contents

Executive Compensation  >  Compensation Discussion and Analysis

2019 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 2019 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 stockholders:

We Pay for Performance

We Establish a Strong Link Between Performance Measures and Strategic Objectives

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

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

46       www.allstateproxy.com


Table of Contents

Compensation Discussion and Analysis  <  Executive Compensation

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

          
   
  What We Do
  What We Do Not Do
Benchmark to Peers of Similar Industry, Size and Business Complexity.
Target Pay at 50th Percentile of Peers.
Independent Compensation Consultant.
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 or Cancellation of Certain Compensation.
One-Year Minimum Equity Vesting Provision in the Equity Plan.
Use Clear, Quantitative Measures to Fund the Annual Incentive Plan.
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 Excessive Perks.
   

2020 Proxy Statement       47


Table of Contents

Executive Compensation  >  Compensation Discussion and Analysis

Compensation Elements

The following table lists the elements of target direct compensation for our 2019 executive compensation program.

Short-Term Mid-Term Long-Term
FIXED VARIABLE
Base Salary       Annual Cash Incentive Awards       Performance Stock Awards       Stock Options
Cash Cash Equity Equity

 

Why We Pay This Element

Attract and retain executives with competitive level of cash compensation.

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

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

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

Retain executive talent.

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

Retain executive talent.

Key Characteristics

Reviewed annually and adjusted when appropriate.

A corporate-wide funding pool based on performance on three measures:

Total Premiums(2)
Performance Net Income(2)
Net Investment Income(2)

Pool is then allocated based on business unit and individual performance; positive net income required for any payout above target.

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

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.

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.

(1) Represents the average of the target direct compensation elements for all of the named executives in 2019.
(2) For a description of how these measures are determined, see pages 75-77. For 2020 awards, Earned Book Value was replaced with Relative Total Shareholder Return.

48       www.allstateproxy.com


Table of Contents

Compensation Discussion and Analysis  <  Executive Compensation

Compensation Decisions for 2019

Thomas J. Wilson
Chair, President, and Chief Executive Officer

Key Responsibilities
Our Chair, President, and CEO is responsible for managing the company’s strategic direction, operating results, organizational health, ethics and compliance, and corporate responsibility.

     

2019 COMPENSATION
(in millions)

2019 Performance
Mr. Wilson’s total compensation and the amount of each compensation element are driven by the design of our compensation program, his responsibilities, experience and performance, and peer company CEO compensation. The committee’s independent compensation consultant annually reviews Mr. Wilson’s compensation payments to advise the committee if any changes are warranted.

Mr. Wilson’s performance as Chair, President, and CEO is evaluated under five categories: operating results, 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. Excellent results on all five 2019 Operating Priorities.
Insurance premiums and contract charges increased by $2.1 billion (5.7%), and policies in force grew by 27.7% to 145.9 million.
Adjusted net income* rose to $3.48 billion in 2019 from $3.13 billion in the prior year.
Allstate’s annual total shareholder return in 2019 was 38.8%. Allstate’s three-year period total return was 60.4%, which exceeds both the three-year return of peers (34.4%), and the three-year return of the S&P 500 index (53.1%).

      

Long-term Strategy. Improved competitive position of existing businesses while continuing to build long-term growth platforms.
Initiated Transformative Growth Plan to grow personal property-liability market share
Strategy to grow other protection offerings being driven by rapid growth of Allstate Protection Products and Allstate Identity Protection
High-Performance Team. Talented, experienced and highly engaged team with excellent collaboration to achieve strategic vision.
     
Corporate Stewardship. Corporate reputation is at an all-time high. Allstate is a leader in supporting youth empowerment and ending domestic violence.
Board Effectiveness. Excellent governance processes, Board diversity, and stockholder engagement.

2019 Compensation Decisions
Mr. Wilson’s annual cash incentive target of 300% of salary and long-term equity incentive target of 775% of salary remained unchanged.

Salary. The committee approved an increase from $1,300,000 to $1,350,000 during 2019 based on evaluation of his performance, level of responsibility, experience and target compensation as compared to the peer group.
     
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 2019. The committee approved an annual cash incentive award of $4,730,100, which was equal to the funding level as determined by the actual results for the three performance measures of 117.5% of target.
      
Equity Incentive Awards. In February 2019, based on its assessment of Mr. Wilson’s performance in delivering strong business results in 2018, his job scope, and market data, the committee granted him equity awards with a grant date fair value of $10,075,000, which was Mr. Wilson’s target equity incentive award opportunity of 775% of salary.

2020 Proxy Statement       49


Table of Contents

Executive Compensation  >  Compensation Discussion and Analysis

Mario Rizzo
Executive Vice President and Chief Financial Officer

Key Responsibilities
Our CFO has primary responsibility for the management of the company’s overall financial condition, system of internal controls, capital allocation, financial reporting, investor relations, acquisitions and divestitures, and capital market transactions.

     

2019 COMPENSATION
(in millions)

 

2019 Performance
Mr. Rizzo’s annual performance is evaluated on four criteria: overall corporate results, area of responsibility results, developing and implementing long-term strategy and corporate leadership. In 2019, Mr. Rizzo’s compensation was at target funding with no discretion applied based on the following accomplishments:

The Annual Incentive Plan funded at 117.5% based on a $2.0 billion (5.4%) Total Premium increase over the prior year being below an aggressive target, Performance Net Income of $3.57 billion being $421 million above target and Net Investment Income being $55 million below target despite having a total portfolio return of 9.2%.
Enhanced operational performance by coordinating expense reductions, providing strong operational oversight and measurement and maintaining strong internal controls.
Created shareholder value by increasing use of preferred stock, optimizing capital allocation and overseeing the share repurchase program.

2019 Compensation Decisions

Salary. The committee approved an increase from $700,000 to $720,000 during 2019 based on evaluation of his performance, level of responsibility, experience and target compensation as compared to the peer group.
     
Incentive Targets. Mr. Rizzo’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 $1,053,000 for Mr. Rizzo, which was equal to the funding level as determined by the actual results for the three performance measures of 117.5% of target.
      
Equity Incentive Awards. In February 2019, based on its assessment of Mr. Rizzo’s performance in delivering strong business results in 2018, his job scope, and market data, the committee granted him equity awards with a grant date fair value of $2,100,000, which was Mr. Rizzo’s target equity incentive award opportunity.

Don Civgin
President, Service Businesses(1)

Key Responsibilities
Mr. Civgin was President, Service Businesses, and is a member of Allstate’s Operating Committee. In this role, he oversees the leadership of Allstate Dealer Services, Allstate Roadside Services, Answer Financial, Arity, Allstate Protection Plans and Avail.

     

2019 COMPENSATION
(in millions)

 

2019 Performance
Mr. Civgin’s annual performance is evaluated on four criteria: overall corporate results, area of responsibility results, developing and implementing long-term strategy and corporate leadership. In 2019, Mr. Civgin’s compensation was above target funding with positive discretion applied based on the following accomplishments:

The Annual Incentive Plan funded at 117.5% based on a $2.0 billion (5.4%) Total Premium increase over the prior year being below an aggressive target, Performance Net Income of $3.57 billion being $421 million above target and Net Investment Income being $55 million below target despite having a total portfolio return of 9.2%.
Allstate Protection Plans policy growth of 45% reaching 99 million with increased Adjusted Net Income. Continued progress in building Arity and Avail businesses.

(1) The titles and responsibilities changed for certain of these officers in 2020. See Appendix C for a full list of Allstate’s executive officers and current titles.

50       www.allstateproxy.com


Table of Contents

Compensation Discussion and Analysis   Executive Compensation

2019 Compensation Decisions

Salary. The committee approved an increase from $820,000 to $840,000 during 2019, based on evaluation of his performance, level of responsibility, experience and target compensation as compared to the peer group.
Incentive Targets. 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 $1,400,000 for Mr. Civgin, which was 133.9% of target and above the funding level as determined by the actual results for the three performance measures.
Equity Incentive Awards. In February 2019, based on its assessment of Mr. Civgin’s performance in delivering strong business results in 2018, his job scope, and market data, the committee granted him equity awards with a grant date fair value of $2,460,000, which was Mr. Civgin’s target equity incentive award opportunity.

Glenn T. Shapiro
President, Allstate Personal Lines(1)

Key Responsibilities
Mr. Shapiro was President of Allstate Personal Lines and led the product, claims, operations, risk, finance and distribution for this business, which comprises approximately 80% of Allstate’s total insurance premiums and contract charges.

     

2019 COMPENSATION
(in millions)

2019 Performance
Mr. Shapiro’s annual performance is evaluated on four criteria: overall corporate results, area of responsibility results, developing and implementing long-term strategy and corporate leadership. In 2019, Mr. Shapiro’s compensation was at target funding with no discretion applied based on the following accomplishments:

The Annual Incentive Plan funded at 117.5% based on a $2.0 billion (5.4%) Total Premium increase over the prior year being below an aggressive target, Performance Net Income of $3.57 billion being $421 million above target and Net Investment Income being $55 million below target despite having a total portfolio return of 9.2%.
Enhanced Allstate brand personal lines competitive position by improving customer service, reducing expenses and enhancing analytics.

2019 Compensation Decisions

Salary. The committee approved an increase from $750,000 to $780,000 during 2019 based on evaluation of his performance, level of responsibility, experience and target compensation as compared to the peer group.
     
Incentive Targets. Mr. Shapiro’s annual incentive target was 150% of salary and his target equity incentive opportunity was 325% of salary.
Annual Cash Incentive Award. The committee approved an annual cash incentive award of $1,366,000 for Mr. Shapiro, which was equal to the funding level as determined by the actual results for the three performance measures of 117.5% of target.
      
Equity Incentive Awards. In February 2019, based on its assessment of Mr. Shapiro’s performance in delivering strong business results in 2018, his job scope, and market data, the committee granted him equity awards with a grant date fair value of $2,437,500, which was Mr. Shapiro’s target equity incentive award opportunity.

(1) The titles and responsibilities changed for certain of these officers in 2020. See Appendix C for a full list of Allstate’s executive officers and current titles.

2020 Proxy Statement       51


Table of Contents

Executive Compensation  >  Compensation Discussion and Analysis

Steven E. Shebik
Vice Chair(1)

Key Responsibilities
As Vice Chair, Mr. Shebik had primary responsibility for oversight of Allstate Life and Retirement, Allstate Benefits, Allstate Identity Protection, Encompass, Esurance, Allstate Business Insurance, Corporate Business Transformation, Discontinued Lines, and D3, a corporate analytics team.

     

2019 COMPENSATION
(in millions)


2019 Performance
Mr. Shebik’s annual performance is evaluated on four criteria: overall corporate results, area of responsibility results, developing and implementing long-term strategy and corporate leadership. In 2019, Mr. Shebik’s compensation was at target funding with no discretion applied based on the following accomplishments:

The Annual Incentive Plan funded at 117.5% based on a $2.0 billion (5.4%) Total Premium increase over the prior year being below an aggressive target, Performance Net Income of $3.57 billion being $421 million above target and Net Investment Income being $55 million below target despite having a total portfolio return of 9.2%.
Strong operating results including expansion of shared economy insurance, life profitability and improved returns for the Esurance and Encompass brands.

2019 Compensation Decisions

Salary. The committee approved an increase from $850,000 to $870,000 during 2019 based on evaluation of his performance, level of responsibility, experience and target compensation as compared to the peer group.
Incentive Targets. Mr. Shebik’s annual incentive target was 200% of salary and his target equity incentive opportunity was 350% of salary.
      
Annual Cash Incentive Award. The committee approved an annual cash incentive award of $2,037,000 for Mr. Shebik, which was equal to the funding level as determined by the actual results for the three performance measures of 117.5% of target.
Equity Incentive Awards. In February 2019, based on its assessment of Mr. Shebik’s performance in delivering strong business results in 2018, his job scope, and market data, the committee granted him equity awards with a grant date fair value of $2,975,000, which was Mr. Shebik’s target equity incentive award opportunity.

(1) The titles and responsibilities changed for certain of these officers in 2020. See Appendix C for a full list of Allstate’s executive officers and current titles.

52       www.allstateproxy.com


Table of Contents

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 uses performance measures 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

ONGOING            
Review compensation philosophy and objectives in light of company performance, goals and strategy, stockholder feedback, and external benchmarking
Monitor compensation estimates in comparison to actual and relative performance
Monitor compliance with management equity ownership requirements
 

APRIL-JULY

Benchmarking

     

NOVEMBER-JANUARY

Establishing Plan Design and Key Metrics

     

FEBRUARY

Calculating Payouts

Evaluate peer group to determine if any changes are required for the next performance cycle
Compare against peers’ actual compensation paid, operating results, and stockholder returns over one, three and five years as provided by the independent compensation consultant’s pay for performance analysis
Review feedback from stockholders and governance firms on compensation
Independent compensation consultant provides advice on incentive design and overall executive compensation program and executive pay levels
The consultant also provides information on current market practices and industry trends
     
Establish plan design and performance measures
Review the annual operating plan to establish target performance and ranges for threshold and maximum for the annual incentive program, and review historical and expected performance, market expectations and industry trends when approving the ranges of performance for the long-term incentive program
Review operating plans and compensation measures for alignment with enterprise risk and return principles
     
Actual performance on goals determines the corporate pool for the annual incentive award
CEO reviews overall company funding for each business area based on its operating performance in relationship to target performance goals
Determine the number of performance stock awards that will vest for the applicable measurement period based on actual performance
Review and approve salary adjustments and annual incentive payments and equity grants for executive officers

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 their performance and external benchmarking as provided by the independent compensation consultant.

2020 Proxy Statement       53


Table of Contents

Executive Compensation  >  Compensation Discussion and Analysis

Annual Cash Incentive Awards

The committee sets annual cash incentive performance goals based on the annual 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 previously approved measures determines the overall funding level of the corporate pool and the aggregate total award budget for eligible employees. In 2019, the pool was funded based on the collective results of three measures: Total Premiums, Performance Net Income, and Net Investment Income. 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, including the named executive officers. 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 multiple large natural catastrophes and/or extreme financial market conditions.
Target annual incentive percentages for each named executive are based on pay levels of peer companies and our benchmark target for total direct compensation at the 50th percentile.
We paid the 2019 cash incentive awards in March 2020. The following description shows how this corporate pool was funded and distributed to individual participants:

STEP
1

  

Determine Calculation of Corporate Funding Pool
Formulaic with calculation based on three performance measures established at beginning of period

           
The total pool available for distribution was calculated based on three performance measures established by the committee at the beginning of the performance period:
Total Premiums (43%)(1) – captures growth and competitive position of the businesses
Performance Net Income (43%)(1) – aligns with stockholders’ expectations of operating profitability
Net Investment Income (14%)(1) – reflects a significant component of profitability
The committee approved the total company funding after the end of the performance period based on the actual results on these performance measures. For the actual results and detail on how each measure was defined and calculated, see pages 75-76.
(1)The numbers reflect the approximate percentage that each performance measure contributed to the total pool.
      The annual incentive compensation plan was funded at 117.5% of target in 2019 for officers.

STEP
2

Determine Annual Incentive Payments to the Named Executives
and other Executive Officers

Minimal discretion was applied to the Named Executives by the committee in 2019

Committee’s compensation recommendations for the CEO are reviewed and approved by the independent directors of our Board in executive session.
Committee reviews and approves CEO recommendations for executive officers based on pool funding, the target annual incentive percentages for each NEO, and individual performance.
The individual performance factors considered by the committee for both CEO and executive officer performance are outlined on pages 49-52.
The payout for the Named Executives ranged from $1.1 million to $4.7 million and the average was 119% of target.

54       www.allstateproxy.com


Table of Contents

Compensation Discussion and Analysis < Executive Compensation

STEP
3

  

Determine Annual Incentive Payment for Other Eligible Participants
The committee was not involved with annual incentive decisions below executive officers

           
The CEO allocated the corporate pool between the market-facing businesses and areas of responsibility based on relative performance against annual operating goals and other key business success metrics
      For 2019, the CEO exercised discretion in allocating pool funding.
Individual awards for eligible employees were determined by senior leaders and were subject to approval by the CEO
Senior leaders were tasked to ensure the highest quartile performing participants earned awards that were at least two times the awards earned by the lower quartile performing participants on a relative basis.
For 2019, actual differentiation for the top quartile was 2.2 times the lowest quartile.

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. For awards prior to 2020, the PSAs vest based on results for Average 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 the target number of PSAs granted.
The committee selected Performance Net Income ROE as one performance measure because it:
Measures performance in a way that is tracked and understood by investors.
Captures both income statement and balance sheet impacts, including capital management actions.
Correlates to changes in long-term stockholder value.
Earned Book Value was selected as the second measure since it includes unrealized changes in the value of the investment portfolio and excludes the impacts in utilization of debt.
In 2020, a Relative TSR measure was selected as the second measure replacing Earned Book Value. This is consistent with market practice. Payouts under this performance measure are defined as 0% for performance less than 25th percentile, 50% for performance at the 25th percentile, 100% for performance at the 55th percentile, and 200% for performance at the 90th percentile, relative to a custom TSR peer group. The TSR peer group consists of The Allstate Corporation, the compensation peers (page 58), S&P 500 Index, and S&P Financial Index.
The measures are further described on page 77. For each measure, the committee considered historical and expected performance, market expectations and industry trends when approving the range of performance.
All PSA awards 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 senior executives to earn PSAs based on Average Performance Net Income ROE above target. If Allstate has a cumulative net loss in a measurement period, the number of PSAs vested would not exceed target, regardless of the Average 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 Average 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 result in a net loss for the period. For a description of the calculation, see page 77.
At the end of each measurement period, the committee certifies the level of achievement on each performance measure.

2020 Proxy Statement       55


Table of Contents

Executive Compensation > Compensation Discussion and Analysis

For the 2020-2022 award, the Average Performance Net Income ROE and Relative TSR measures are calculated, respectively, as follows:

Performance Net Income(1) Catastrophe Losses 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 2019, and at the end of each year in the performance cycle

70% of PSA Performance Measure

             
             
Final Average Adjusted Close Price(3) Initial Average Adjusted Stock Price(4) Total Shareholder Return (TSR)
TSR is ranked relative to 11 peer companies (including Allstate), S&P 500 Index, and S&P Financial Index
30% of PSA Performance Measure
Initial Average Adjusted Stock Price(4)

 
 
 
(1) Performance Net Income for the 2020-2022 PSA award is defined on pages 75-77.
(2) Adjusted Common Shareholders’ Equity for the 2020-2022 PSA award is defined on page 77.
(3) Final Average Adjusted Close Price is the average Adjusted Close Price over the 20 trading days prior to and including the final day of the Performance Period.
(4) Initial Average Adjusted Stock Price is the average Adjusted Stock Price over the 20 trading days prior to the first day of the Performance Period.

2020-2022 PERFORMANCE STOCK AWARD RANGE OF PERFORMANCE

Performance Measures
        Threshold         Target         Maximum
Average Performance Net Income ROE (70%)(1) 7% 14% 17%
Relative Percentile Rank TSR (30%)(2) <25th 55th 90th
Payout 0% 100% 200%
(1) Subject to positive net income hurdle. For a description of how this measure is determined, see page 77.
(2) The 25th percentile would result in a 50% payout. If greater than the 25th percentile, results would be interpolated.

Equity Ownership Requirements

Instituted in 1996, stock ownership requirements oblige 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 requirement and the equity holdings that count toward the requirement.

 
The current stock ownership requirements apply to 105 of our senior executives and other officers as of December 31, 2019, and require these executives to hold 75% of net shares received as a result of equity compensation awards until their salary multiple requirements are met.
 

56       www.allstateproxy.com


Table of Contents

Compensation Discussion and Analysis  <  Executive Compensation

STOCK OWNERSHIP AS MULTIPLE OF BASE SALARY AS OF DECEMBER 31, 2019

Stock Ownership Vested in the
Money Option
Value (after-tax)
Named Executive         Requirement         Actual        
Mr. Wilson 6 58 61.6
Mr. Rizzo 3 2 2.5
Mr. Civgin 3 20 1.2
Mr. Shapiro 3 2 0.3
Mr. Shebik 3 17 12.5
                       

58 times annual salary

The value of shares of Allstate’s common stock held by Mr. Wilson as of December 31, 2019

                    


         
What Counts Toward the Requirement      

What Does Not Count Toward the Requirement

Allstate shares owned personally and beneficially
Shares held in the Allstate 401(k) Savings Plan
Unvested restricted stock units
Unexercised stock options
Unvested performance stock awards
     

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 and engaging in derivative or other transactions designed to hedge or offset any decrease in market value of the securities held by them, such as selling short or buying or selling options, puts or calls, and entering into prepaid variable forward contracts, equity swaps or collars. 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 (or by the Lead Director in the case of a request by the Chair).

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.

For additional information on the committee’s practices, see portions of the Board Oversight and Board Meetings and Committees sections of this proxy statement on pages 29 and 35, respectively.

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, CAP, 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.

The compensation consultant’s recommendation has been to use a peer group that reflects Allstate’s business and operations. Currently, eight out of ten of Allstate’s peer companies also include Allstate in their respective peer company lists. The following table reflects the peer group used for 2019 compensation benchmarking. No changes were made to the peer group for 2020.

2020 Proxy Statement       57


Table of Contents

Executive Compensation  >  Compensation Discussion and Analysis

PEER COMPANIES(1)

Total Shareholder Return (%)
Company Name        Revenue
($ in billions)
       Market Cap
($ in billions)
       Assets
($ in billions)
       Premiums
($ in billions)
       One Year        Three
Years
       Five
Years
AFLAC Inc. 22.3 38.4 152.8 18.8 18.6 62.4 94.5
American International Group Inc. 49.7 44.7 525.1 33.6 33.6 -15.5 2.1
Chubb Limited 34.2 70.4 176.9 31.3 22.9 25.3 50.9
CNA Financial Corporation 10.8 12.2 60.6 7.4 9.5 33.2 69.4
The Hartford Financial Services Group Inc. 20.7 21.9 70.8 17.2 39.7 35.7 61.0
Manulife Financial Corporation 58.6 39.6 623.8 26.8 49.2 27.6 27.6
MetLife Inc. 69.6 46.7 740.5 47.8 28.8 17.7 25.2
The Progressive Corporation 39.0 42.3 54.9 36.2 25.1 121.0 207.1
Prudential Financial Inc. 64.8 37.4 896.6 40.2 20.1 0.3 23.2
The Travelers Companies Inc. 31.6 35.0 110.1 28.3 17.0 19.9 45.1
Allstate 44.7 35.8 120.0 38.6 38.8 60.4 75.8
Allstate Ranking Relative to Peers:
Property and Casualty Insurance Products 3 of 8 5 of 8 4 of 8 2 of 8 2 of 8 2 of 8 2 of 8
Life Insurance and Financial Products 5 of 7 6 of 7 6 of 7 3 of 7 3 of 7 2 of 7 2 of 7
All Peer Companies 5 of 11 8 of 11 7 of 11 3 of 11 3 of 11 3 of 11 3 of 11
(1) Information as of year-end 2019.

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, tenure, and market practices.

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 2019 (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 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. 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.

58        www.allstateproxy.com


Table of Contents

Compensation Discussion and Analysis  <  Executive Compensation

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 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 thereafter, all eligible employees earn 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. Change in control benefits and post-termination benefits are designed to maintain alignment between the interests of our executives and our stockholders in the event of a sale or merger of the company.

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

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.
The change in control severance plan (“CIC Plan”) does not include excise tax gross ups or a lump sum cash pension enhancement.
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 71-73 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

Equity awards granted in 2019 and annual cash incentive awards for the 2019 performance year for executive officers whose fraud or intentional misconduct resulted in a restatement to correct a material error or inaccuracy are subject to clawback. A new clawback policy was approved by the committee that provides for the recovery of certain equity awards granted after February 18, 2020, and annual cash incentive awards paid after March 15, 2020, to executive officers and other executive vice presidents. If performance results are later subject to a downward adjustment as a result of a material financial restatement, irrespective of cause, then the paid awards are recalculated with revised results with the compensation overpayment subject to clawback. It also provides for recovery of equity and annual cash incentive awards in certain circumstances if an executive is terminated for improper conduct that leads to a material adverse impact on the reputation of, or a material adverse economic consequence for, the company.

Impact of Tax Considerations on Compensation

Internal Revenue Code Section 162(m) generally precludes Allstate from taking a tax deduction for compensation paid in excess of $1 million annually to certain current and former executive officers, including our CEO, CFO and the three other most highly compensated executives, unless the compensation is paid pursuant to certain “grandfathered” arrangements entered into prior to November 2, 2017. Prior to the passage of the Tax Cuts and Jobs Act of 2017 (the

2020 Proxy Statement        59


Table of Contents

Executive Compensation  >  Compensation Discussion and Analysis

“Tax Legislation”), we were able to deduct more than $1 million in compensation if the compensation was performance-based, was paid under a plan that met certain performance-based requirements and otherwise met certain requirements under Internal Revenue Code Section 162(m).

In determining compensation for our executive officers, the committee considers the extent to which the compensation is deductible, including the effect of Internal Revenue Code Section 162(m). In prior years, the committee generally sought to structure our executive incentive compensation so that it qualified as performance-based compensation under Section 162(m) where doing so was consistent with Allstate’s compensation objectives, but it reserved the right to award nondeductible compensation and on occasion did so. The committee continues to evaluate the changes to Internal Revenue Code Section 162(m) and their significance to Allstate’s compensation programs, but in any event its primary focus in its compensation decisions will remain on most productively furthering Allstate’s business objectives and not on whether the compensation is deductible.

Earned Annual Cash Incentive Awards

In 2019, the total corporate pool was based on three measures: Total Premiums, Performance Net Income, and Net Investment Income. The 2019 annual incentive plan targets for each of the measures were above 2018 actual results. Total Premiums target was set above the prior year as it has been for at least the last decade. Performance Net Income target for 2019 was above 2018 reflecting top-line growth and margin maintenance. Net Investment Income target was set above 2018 driven by market-based income increases.

The 2020 annual incentive plan targets are not included since those targets do not relate to 2019 pay, and because target performance is set at the 2020 operating plan, which is proprietary information.

2018 2019
Measure        Target        Actual        Payout %        Target        Actual        Payout %
Total Premiums ($ in millions) 36,100 37,451 200.0% 39,800 39,455 75.4%
Performance Net Income ($ in millions) 2,800 3,095 149.2% 3,150 3,571 164.8%
Net Investment Income ($ in millions) 3,100 3,240 162.2% 3,315 3,260 87.5%
Aggregate Payout Percentage for Named Executives 173.4% 117.5%

For a description of how the 2019 measures are determined, see pages 75-76. The ranges of performance and 2019 actual results are shown in the following table.

2019 ANNUAL CASH INCENTIVE AWARD RANGES OF PERFORMANCE

Measure        2018 Actual
Results
       Threshold        Target        Maximum        Actual Results        Increase/(Decrease)
Versus 2018
Actual Results
       % Target
Total Premiums ($ in millions) 37,451 39,100 39,800 40,200 39,455 2,004 75.4%
Performance Net Income ($ in millions) 3,095 2,350 3,150 3,800 3,571 476 164.8%
Net Investment Income ($ in millions) 3,240 3,095 3,315 3,535 3,260 20 87.5%
Payout Percentages
Named Executives(1) 50% (2)  100% 200% 117.5%
(1) Payout percentages reflect contribution to incentive compensation pool.
(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 for completed cycles.

60        www.allstateproxy.com


Table of Contents

Compensation Committee Report  <  Executive Compensation

PERFORMANCE STOCK AWARDS RANGES OF PERFORMANCE

Performance Cycle(1)        Threshold        Target        Maximum        Actual
Results
       Payout
Percentage
       Total Shareholder Return
Allstate         Peers
Vested Awards
2015-2017
- Performance Net Income ROE 6.0% 13.5% 14.5% 12.2% 82.7% 56.8% 40.0%
2016-2018 161.5% 40.7% 25.3%
- Performance Net Income ROE (70%) 6.0% 13.0% 14.0% 13.9% 190%
- Earned Book Value (30%) 6.0% 12.0% 15.0% 11.7% 95%
2017-2019 200% 60.4% 34.4%
- Performance Net Income ROE (70%) 6.0% 11.0% 13.0% 16.2% 200%
- Earned Book Value (30%) 6.0% 9.0% 11.0% 17.2% 200%

Performance Cycle(1)        Threshold        Target        Maximum        Actual
Results
       Payout
Percentage
Outstanding Awards
2018-2020
- Performance Net Income ROE (70%) 7.0% 13.5% 15.0% Two year results are above
- Earned Book Value (30%) 7.0% 12.5% 14.0% target for both measures(2)
2019-2021
- Performance Net Income ROE (70%) 7.0% 14.0% 16.0% One year results are above
- Earned Book Value (30%) 7.0% 12.0% 14.0% target for both measures(2)
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) Payouts under the PSAs are based on performance over the three-year period, and actual results will not be known until the end of the performance period.

The following table shows the target number of PSAs granted to each of our named executives for the 2017-2019, 2018-2020, and 2019-2021 performance cycles.

PERFORMANCE CYCLE(1)

Target Number of PSAs for
Named Executive        2017-2019 Performance Cycle        2018-2020 Performance Cycle        2019-2021 Performance Cycle
Mr. Wilson 68,922 62,635 65,380
Mr. Rizzo 2,929 13,578 13,628
Mr. Civgin 17,920 15,517 15,964
Mr. Shapiro 11,966 15,760 15,818
Mr. Shebik 25,463 19,235 19,306
(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 and Earned Book Value for the measurement period. The number of PSAs that vest will be determined in 2020, 2021, and 2022 respectively.

Compensation Committee Report

The committee has reviewed and discussed with management the Compensation Discussion and Analysis contained on pages 42-61 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 
 

MICHAEL L. ESKEW (CHAIR)       MARGARET M. KEANE       ANDREA REDMOND       PERRY M. TRAQUINA

2020 Proxy Statement        61


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, for Messrs. Rizzo and Shapiro, only the last two fiscal years are shown since this is their second year as a named executive. The titles and responsibilities for certain of the officers listed below changed in 2020. See Appendix C for a complete list of current titles.

Name and
Principal Position
Year Salary
($)
Bonus
($)
Stock
Awards
($)(1)
Option
Awards
($)(2)
Non-Equity
Incentive Plan
Compensation
($)
Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings
($)(3)
All Other
Compensation
($)(4)
Total
($)
Total
Without
Change in
Pension
Value
($)(5)
Thomas J. Wilson
Chair, President,
and Chief
Executive Officer
2019 1,340,385 6,045,035 4,030,005 4,730,100 3,354,557 115,614 19,615,696 16,261,139
2018 1,290,385 5,812,528 3,874,998 6,719,194 873,170 116,971 18,687,246 17,814,076
2017
 
1,241,346 5,400,039 3,599,997 6,759,264 1,688,142 68,541 18,757,329 17,069,187
Mario Rizzo
Executive Vice
President and Chief
Financial Officer
2019 716,154 1,260,045 840,002 1,053,000 531,414 25,530 4,426,145 3,894,731
2018
 
690,577 1,260,038 840,004 1,510,788 25,391 4,326,798 4,326,798
Don Civgin
President, Service
Businesses
2019 836,154 1,476,031 983,993 1,400,000 111,961 33,101 4,841,240 4,729,279
2018 816,154 1,439,978 960,000 1,900,000 80,984 37,580 5,234,696 5,153,712
2017 796,538 1,404,032 935,996 1,806,645 83,779 27,730 5,054,720 4,970,941
Glenn T. Shapiro
President, Allstate
Personal Lines
2019 774,231 1,462,532 974,999 1,366,000 77,506 35,281 4,690,549 4,613,043
2018
 
743,942 1,462,528 974,995 2,050,000 46,564 38,270 5,316,299 5,269,735
Steven E. Shebik
Vice Chair
2019 866,154 1,785,033 1,190,001 2,037,000 1,063,345 37,415 6,978,948 5,915,603
2018 848,654 1,785,008 1,190,005 2,945,289 351,319 37,560 7,157,835 6,806,516
2017 795,673 1,995,026 1,329,994 2,600,000 512,201 38,398 7,271,292 6,759,091
(1) The aggregate grant date fair value of PSAs granted in 2019, 2018, and 2017, is computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 718 (ASC 718). The fair value of PSAs is based on the final closing price of Allstate’s common stock on the grant date, which in part reflects the payment of expected future dividends. (See note 18 to our audited financial statements for 2019.) 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 assumes target-level performance, which is the probable achievement level of the performance conditions. The number of PSAs granted in 2019 to each named executive is provided in the Grants of Plan-Based Awards table on page 64. The value of the PSAs granted in 2019 at grant date fair value share price if maximum corporate performance were to be achieved is as follows: Mr. Wilson $12,090,070, Mr. Rizzo $2,520,090, Mr. Civgin $2,952,062, Mr. Shapiro $2,925,064, and Mr. Shebik $3,570,066.
(2) The aggregate grant date fair value of option awards is computed in accordance with FASB ASC 718. The fair value of each option award is estimated on the grant date using a binomial lattice model and the assumptions (see note 18 to our audited financial statements for 2019) as set forth in the following table:
      2019       2018       2017
Weighted average expected term 5.8 years 5.7 years 6.1 years
Expected volatility 15.6 - 28.9% 15.6-30.7% 15.7-32.7%
Weighted average volatility 18.4% 19.8% 21.0%
Expected dividends 1.9 - 2.2% 1.5-2.2% 1.4-1.9%
Weighted average expected dividends 2.2% 2.0% 1.9%
Risk-free rate 1.3 - 2.7% 1.3-3.2% 0.5-2.5%
      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 2019 to each named executive is provided in the Grants of Plan-Based Awards table on page 64.
(3) Amounts reflect the aggregate increase in actuarial value of the pension benefits as set forth in the Pension Benefits table, accrued during 2019, 2018, and 2017. 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 2019.)

62       www.allstateproxy.com


Table of Contents

Summary Compensation Table  <  Executive Compensation

The following table reflects the respective change in the actuarial value of the benefits provided to the named executives in 2019:

      Name ARP
($)
      SRIP
($)
Mr. Wilson 230,185 3,124,372
Mr. Rizzo 293,521 237,893
Mr. Civgin 11,766 100,195
Mr. Shapiro 7,676 69,830
Mr. Shebik 257,725 805,620
      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. Had these pension benefit changes not been made, the change in actuarial value of benefits provided for each named executive in 2019 would have been as indicated in the following table under the prior formula:
      Name ARP
($)
      SRIP
($)
Mr. Wilson 391,648 8,195,450
Mr. Rizzo 371,831 2,363,968
Mr. Civgin 11,643 99,401
Mr. Shapiro 6,955 63,402
Mr. Shebik 327,557 4,033,369
       
(4) The following table describes the incremental cost of other benefits provided in 2019 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 71,704 11,200 32,710 115,614
  Mr. Rizzo 0 11,200 14,330 25,530
  Mr. Civgin 0 11,200 21,901 33,101
  Mr. Shapiro 0 11,200 24,081 35,281
  Mr. Shebik 0 11,200 26,215 37,415
      (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 2019. The amount shown is the amount allocated to their accounts as employer matching contributions.
(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 2019, and therefore, no incremental cost is reflected in the table.
(5) We have included an additional column to show total compensation minus the change in pension value. The amounts reported in this column may differ substantially from, and are not a substitute for, the amounts reported in the “Total” column required under SEC rules. The change in pension value is subject to several external variables, including interest rates, that are not related to company or individual performance and may differ significantly based on the formula under which the benefits were earned.

2020 Proxy Statement       63


Table of Contents

Executive Compensation  >  Grants of Plan-Based Awards at Fiscal Year-end 2019

Grants of Plan-Based Awards at Fiscal Year-end 2019

The following table provides information about awards granted to our named executives during fiscal year 2019.

     

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

Exercise
or Base
Price of
Option
Awards
($/Sh)(4)


  
Grant Date
Fair Value ($)(5)
Name Grant
Date
Plan
Awards(1)
Threshold
($)
Target
($)
Maximum
($)
   Threshold
(#)
Target
(#)
Maximum
(#)
Stock
Awards
Option
Awards
Mr. Wilson Annual
cash
incentive
2,012,466 4,024,932 16,099,728
02/08/2019 PSAs 0 65,380 130,760 6,045,035
02/08/2019 Stock
options
269,746 92.46 4,030,005
Mr. Rizzo Annual
cash
incentive
447,911 895,822 3,583,288
02/08/2019 PSAs 0 13,628 27,256 1,260,045
02/08/2019 Stock
options
56,225 92.46 840,002
Mr. Civgin Annual
cash
incentive
522,911 1,045,822 4,183,288
02/08/2019 PSAs 0 15,964 31,928 1,476,031
02/08/2019 Stock
options
65,863 92.46 983,993
Mr. Shapiro Annual
cash
incentive
581,240 1,162,480 4,649,918
02/08/2019 PSAs 0 15,818 31,636 1,462,532
02/08/2019 Stock
options
65,261 92.46 974,999
Mr. Shebik Annual
cash
incentive
866,658 1,733,315 6,933,261
02/08/2019 PSAs 0 19,306 38,612 1,785,033
02/08/2019 Stock
options
79,652 92.46 1,190,001
(1) Awards under the Annual Executive Incentive Plan and the 2019 Equity Incentive Plan. An explanation of the amount of salary and bonus in proportion to total compensation can be found under the Compensation Elements and Compensation Decisions for 2019 captions on pages 48-52.
(2) The amounts in these columns consist of the threshold, target, and maximum annual cash incentive awards for the named executives. The threshold amount for each named executive is 50% of target, as the minimum amount payable (subject to individual performance) if threshold performance is achieved. If the threshold is not achieved, the payment to the named executives would be zero. The target amount is based upon achievement of the performance measures listed under the Earned Annual Cash Incentive Awards caption on page 60. The maximum amount is equal to 200% of target plus an additional individual performance factor of 200% of plan funding to recognize extraordinary performance. In 2019, one named executive received positive discretion for a cash incentive award greater than the pool payout percentage as calculated at 117.5%. For a description of the ranges of performance established by the committee for the 2019 annual incentive, see page 60.
(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 pages 60-61.
(4) The exercise price of each option is equal to the closing sale price on the NYSE on the grant date or, if there was no such sale on the grant date, then on the last previous day on which there was a sale.
(5) The aggregate grant date fair value of the PSAs was $92.46 and for stock option awards was $14.94, computed in accordance with FASB ASC 718 based on the probable satisfaction of the performance conditions. The assumptions used in the valuation are discussed in footnotes 1 and 2 to the Summary Compensation Table on page 62.

64       www.allstateproxy.com


Table of Contents

Grants of Plan-Based Awards at Fiscal Year-end 2019  <  Executive Compensation

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 2019, 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 page 77. 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 Allstate common stock at a fixed exercise price at a future date. Stock options align the interests of executives with long-term stockholder value since the stock price must appreciate from the grant date for the executives to earn compensation.

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.

All stock option awards have been made in the form of non-qualified stock options. The options granted to the named executives become exercisable over three years. One-third of the stock options become exercisable on the anniversary of the grant date for each of the three years subject to continued employment through each anniversary date, except in the event of retirement, change in control, death or disability. 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.

2020 Proxy Statement       65


Table of Contents

Executive Compensation  >  Outstanding Equity Awards at Fiscal Year-end 2019

Outstanding Equity Awards at Fiscal Year-end 2019

The following table summarizes the outstanding equity awards of the named executives as of December 31, 2019.

Option Awards(1) Stock Awards
Name    Option
Grant Date
   Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(2)
  

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(2)

  

Option
Exercise
Price
($)

  

Option
Expiration
Date
   Stock Award
Grant Date
   Number
of Shares
or Units
of Stock
That Have
Not Vested
(#)(3)
   Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)(4)
   Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units, or
Other
Rights
that Have
Not Vested
(#)(5)
   Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units,
or Other
Rights that
Have Not
Vested
($)(4)
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 294,494 0 70.71 02/18/2025
02/11/2016 295,324 0 62.32 02/11/2026
02/09/2017 165,631 82,816 78.35 02/09/2027
02/09/2017 137,844 15,500,558
02/22/2018 75,802 151,604 92.80 02/22/2028
02/22/2018 125,270 14,086,612
02/08/2019 0 269,746 92.46 02/08/2029
02/08/2019 130,760 14,703,962
Mr. Rizzo 02/22/2011 10,804 0 31.74 02/22/2021
02/21/2012 12,763 0 31.56 02/21/2022
02/18/2015 5,202 0 70.71 02/18/2025
02/11/2016 9,887 0 62.32 02/11/2026
02/09/2017 7,039 3,520 78.35 02/09/2027
02/09/2017 5,858 658,732
02/22/2018 16,432 32,864 92.80 02/22/2028
02/22/2018 27,156 3,053.692
02/08/2019 0 56,225 92.46 02/08/2029
02/08/2019 27,256 3,064,937
Mr. Civgin 02/09/2017 43,064 21,532 78.35 02/09/2027
02/09/2017 35,840 4,030,208
02/22/2018 18,779 37,559 92.80 02/22/2028
02/22/2018 31,034 3,489,773
02/08/2019 0 65,863 92.46 02/08/2029
02/08/2019 31,928 3,590,304
Mr. Shapiro 02/09/2017 0 14,378 78.35 02/09/2027
02/09/2017 23,932