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

SCHEDULE 14A

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

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

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The Allstate Corporation

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Table of Contents

 

Notice of 2021 Annual Meeting
and Proxy Statement

 

 

We empower customers with protection to help them achieve their hopes and dreams.

 

We provide affordable, simple and connected protection solutions.

 

We create opportunity for our team, economic value for our shareholders and improve communities.

 

     
 

What’s Inside

 

Letter from Independent Directors to Stockholders

 

Information on Four Voting Issues

 

— Election of Directors

— Advisory Vote on Compensation

— Ratification of External Auditor

— Stockholder Proposal to Amend Proxy Access

     
 

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The Allstate
Corporation
2775 Sanders Road
Northbrook, IL 60062

 

Letter from Independent Directors

 

April 12, 2021

 

Fellow Stockholders,

 

As independent directors, we ensure Allstate fulfills its long-term responsibilities to stockholders, customers, employees and society. Amidst the pandemic and changing expectations of business in 2020, Allstate adapted business practices, advanced important strategic initiatives, earned attractive returns and provided significant cash returns to stockholders. The Board also adapted by increasing the breadth and frequency of interactions with management and expanding its oversight. To support transparency and accountability to you, this letter summarizes the Board’s efforts over the last year.

 

Successful Pandemic Response

 

Effective risk management practices prepared Allstate to promptly respond to the pandemic as management had previously assessed pandemic risks as part of its Extremely Low Frequency Scenarios (ELFS) analysis. In March, business continuity plans were executed with over 95% of employees enabled to work from home while maintaining internal controls and productivity throughout 2020. To serve customers, the company led the industry in returning premiums to customers of almost $1 billion, allowed deferred payments, extended additional insurance coverage and provided free identity protection. Technology was leveraged so that claims could be settled virtually in order to keep customers and employees safe. The Board received frequent updates on the investment portfolio, internal controls, compliance risks, operating results, financial statement implications and senior leadership contingency plans. We are expanding the evaluation of ELFS by the risk and return committee based on recent learnings. Additionally, the executive compensation program was reviewed to determine if any changes were needed in light of the pandemic, and it was concluded that no changes were necessary.

     
    Despite challenges posed by the Coronavirus pandemic, Allstate had excellent financial results in 2020 with Adjusted Net Income* of $4.6 billion, reflecting lower frequency of auto accidents, partially offset by increased catastrophe losses.
     
   

Enhancing Strong Human Capital Practices

 

Allstate has strong human capital management practices that create an inclusive and highly ethical culture. Inclusive Diversity results at Allstate have historically been at or above average on most external measures. In 2020, the company expanded Inclusive Diversity to include Equity and committed to further improvements. The Board had multiple conversations regarding this direction, including devoting half a day of a strategic offsite to engage with a diversity thought leader and evaluate the company’s plans. In addition, multiple other actions were taken in 2020:

 

  Expanded Resources – In the summer, management took action to reflect, learn and act. An Anti-Racism Resource Center was launched, over 20,000 employees enrolled in additional diversity training, Juneteenth was made a company holiday, and funding was increased for Employee Resource Groups. A top-to-bottom review of operating practices, pay and promotions for people of color and women was also undertaken.

 

* 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 93-96 of our 2021 Proxy Statement.
 

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2021 Proxy Statement 3
Letter from Independent Directors  
   

 

Inclusive Diversity & Equity (IDE) Strategy – A three-year IDE strategy is being developed with measurable goals that will be reviewed by the Board.
Pay Equity Assessment – An independent firm was engaged to use statistical analysis on actual compensation of employees by group to identify any pay bias. Allstate’s results compared well to peers, and any gaps were remediated.
Supporting External Progress – Allstate helped increase diversity on Wall Street by forming a debt syndicate exclusively of minority-, women-, and veteran- owned banking enterprises that successfully issued $1.2 billion of bonds for the company. Allstate is also a founding member of OneTen, a group of leading corporations and other organizations committed to providing attractive career opportunities for one million Black Americans by 2030.

 

Cultural enhancements to build transformative growth businesses are also being pursued. In 2019, we expanded the Board’s focus on culture by adding it as a key risk category. Allstate’s Our Shared Purpose was refreshed in 2020 in consultation with the Board and will be the basis for driving cultural change.

 

Leadership succession is also a key responsibility that we discuss four times a year. These reviews range from organizational sustainability, to individual leadership development and succession plans, to scenario planning for unexpected events.

 

There is much IDE work underway and we look forward to updating you on our continued progress across a wide spectrum of initiatives, including the inclusion of more diverse businesses in the supplier diversity program.

 

Overseeing a Winning Strategy

 

The company made great progress on executing the strategy of increasing market share in personal property-liability and expanding the protection solutions offered to customers. The property-liability business is being positioned for transformative growth by expanding customer access, improving customer value, increasing marketing sophistication and investment and deploying new technology ecosystems. The acquisition of National General builds a solid growth platform in the independent agent distribution of property-liability solutions and improves overall corporate returns. The Board and management also spent considerable time in 2020 considering the disposition of the life and annuities business, with agreements signed in 2021 to sell most of this business.

 

The Board oversaw the continued execution of the Transformative Growth strategy, a multi-year initiative to increase market share in the personal property-liability business.

 

Balancing Risk and Return

 

Operating Performance – Allstate had excellent operating and financial results in 2020 generating Net Income of $5.5 billion and Adjusted Net Income* of $4.6 billion. Adjusted Net Income Return on Equity* was 19.8%. As a result, we were able to pay stockholder dividends of $668 million, and 5.5% of the outstanding common shares were repurchased for $1.7 billion in 2020.
Compensation – To better align long-term compensation with stockholder interests, a relative total shareholder return performance metric was added to the long-term performance-based stock awards (“PSA”) in 2020. A policy growth metric has been added to the PSA performance measurements for the 2021 awards. In addition, Allstate’s CEO voluntarily decreased his change in control severance multiplier from three times to two times the sum of base salary and target annual incentive.
Cybersecurity – The audit committee continues the industry leading practice of using a third-party advisor to enhance cybersecurity oversight.
 

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  Letter from Independent Directors
   

 

 

Leading Environmental, Social and Governance (“ESG”) Practices

 

Climate Change – Allstate has actively worked to remediate the impacts of climate change for over two decades, mitigating the impact of severe weather on customers and insurance returns. The risk and return committee reviewed the impact of climate change on the company’s short and long-term strategies.
Political Engagement – The company is extensively regulated at the state level and impacted by federal legislation. As a result, it participates in legislative processes to ensure it can effectively and efficiently meet the needs of customers and stockholders. This activity is reviewed semi-annually, and the chief risk officer does an annual review of the risk and return of this activity for the Board.
Scope and Reporting – The Board increased its interaction with management with ten board meetings, 28 committee meetings and two informational sessions to keep abreast of a rapidly changing external environment. Social responsibility oversight was added to the nominating, governance and social responsibility committee’s responsibilities. We are also developing a three-year ESG plan and reporting results using the Global Reporting Initiative, Sustainable Accounting Standards Board and EEO-1 reporting frameworks.
Stockholder Engagement – Proactive engagement with stockholders on governance issues remains a core practice with interactions with investors that hold over 40% of outstanding shares.

 

We welcomed two new members to the Board. Both have strong operational leadership and strategic capabilities to support the execution of Transformative Growth. Richard Hume also brings an extensive technology background and Donald Brown brings financial and accounting expertise. The Board remains 50% diverse, and three out of four committee chairs bring gender or ethnic diversity.

 

We value your continued engagement and support. As independent directors, we pledge to ensure that Allstate fulfills its obligations to you and the broader community.


 

 

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5

 

Notice of 2021 Annual Meeting of Stockholders

 

       

Items of Business

 

  Election of 12 directors.

 

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

 

  Ratification of appointment of Deloitte & Touche LLP as Allstate’s independent registered public accountant for 2021.

 

  Stockholder proposal to amend proxy access.

 

In addition, any other business properly presented may be acted

upon at the meeting.

 

When

Tuesday, May 25, 2021, at 11:00 a.m. Central time. Admittance to the webcast

begins at 10:30 a.m.

 

Where

www.virtualshareholdermeeting.com/ALL2021

 

 
       

 

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. You may also vote during the annual meeting by visiting www. virtualshareholdermeeting.com/ALL2021, entering your control number, and following the instructions.

 

 

By Telephone

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

 

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 Internet
You can vote your shares online at proxyvote.com.

 

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

           
           

Who Can Vote

Holders of Allstate common stock at the close of business on March 26, 2021. Each share of common stock is entitled to one vote for each director candidate and one vote for each of the other proposals.

 

Who Can Attend

Stockholders who wish to participate in the meeting should review pages 90-91.

 

Date of Mailing

On or about April 12, 2021, 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 25, 2021
The Notice of 2021 Annual Meeting, Proxy Statement, and 2020 Annual Report and the means to vote by Internet are available at proxyvote.com.
 

By Order of the Board,

 

 

RHONDA S. FERGUSON
SECRETARY
APRIL 12, 2021

 

Inspection of Stockholder List

Stockholders wishing to inspect the list of registered stockholders of The Allstate Corporation as of the record date for the 2021 Annual Meeting of Stockholders should send an e-mail to invrel@allstate.com. Please include (1) your name and (2) if you hold your shares through a broker, bank or other intermediary, an image of your stock ownership statement. Upon verification of your status as a stockholder, you will be provided access to view and inspect the list of registered stockholders as of the record date. Stockholders will not be able to download or print the list. Stockholders will also have the opportunity to inspect the list of registered stockholders during the virtual annual meeting on May 25, 2021 at www.virtualshareholdermeeting.com/ALL2021.

 

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How Allstate is Building a Better Future

 

Our Shared Purpose UPDATED

 

 

As The Good Hands...

 

We empower customers with protection to help them achieve their hopes and dreams.

 

We provide affordable, simple and connected protection solutions.

 

We create opportunity for our team, economic value for our shareholders and improve communities.

 

     
     
Our Values   Our Behaviors
     

Integrity is non-negotiable.

 

Inclusive Diversity & Equity must value and leverage unique identities with equitable opportunity and rewards.

 

Collective Success is achieved through empathy and prioritizing enterprise outcomes ahead of individuals.

 

 

Collaborate early and often to develop and implement comprehensive solutions and share learnings.

 

Challenge Ideas to leverage collective expertise, evaluate multiple alternatives and create the best path forward.

 

Provide Clarity for expected outcomes, decision authority and accountability.

 

Provide Feedback that is candid, actionable, independent of hierarchy and safe.

 

     
Our Operating Standards    
     

Focus on Customers by anticipating and exceeding service expectations at low costs.

 

Be the Best at protecting customers, developing talent and running our businesses.

 

Be Bold with original ideas using speed and conviction to beat the competition.

 

Earn Attractive Returns by providing customer value, proactively accepting risk and using analytics.

 

 

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2021 Proxy Statement 7
How Allstate is Building a Better Future  > Spotlight on Strategy and Business Results  
   

 

Spotlight on Strategy and Business Results

 

Our Approach

Allstate’s strategy is to drive profitable growth by reinventing protection through the offering of a broad range of affordable, simple and connected solutions. We plan to do this by increasing personal property-liability market share through Transformative Growth and expanding protection businesses with innovative growth platforms and broad distribution channels.

 

 

 

 

2020 Operating Priorities
Better serve customers  

  Allstate acted quickly and led the industry in taking care of customers during the pandemic by providing two Shelter-in-Place Paybacks, financial flexibility through Special Payment Plans and offering free identity protection in 2020.

  The Net Promoter Score, which measures how likely customers are to recommend us, increased for the enterprise.

Grow customer base  

  Consolidated policies in force grew to 175.9 million in 2020, a 20.5% increase from the prior year. Property-Liability policies in force were down slightly compared to the prior year as Allstate brand growth was more than offset by a decline in the Encompass brand.

  Protection Services policies in force grew to 136.3 million, a 28.6% increase to the prior year, driven by continued rapid expansion in Allstate Protection Plans.

Achieve target returns on capital  

  Adjusted net income return on shareholders’ equity* was 19.8% in 2020, primarily driven by strong Property-Liability results.

  Allstate’s return was above the long-term target adjusted net income return on equity** of 14.0% to 17.0%.

Proactively manage investments  

  Total return on the $94.2 billion investment portfolio was 7.1% in 2020 as increased asset valuations offset a decline in net investment income.

  Net investment income of $2.9 billion in 2020 was 9.7% below prior year reflecting lower reinvestment rates and reduced performance-based income.

Build long-term growth platforms  

  Allstate made substantial progress in building higher growth business models to increase personal property-liability market share under the Allstate brand.

  Allstate Protection Plans expanded its total addressable market through new accounts addressing furniture, appliances and entering international markets.

 

* 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 93-96 of our 2021 Proxy Statement.
** A reconciliation of this non-GAAP measure to return on common shareholders’ equity, a GAAP measure, is not possible on a forward-looking basis because it is not possible to provide a reliable forecast for catastrophes or investment income on limited partnership interests, and prior year reserve reestimates are expected to be zero because reserves are determined based on our best estimate of ultimate losses as of the reporting date.

 

 

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  How Allstate is Building a Better Future  > Spotlight on Strategy and Business Results

 

 

 

 

 

 

Transformative Growth

Our Transformative Growth strategy aims to increase market share in personal property-liability. This multi-year strategic initiative enhances our business model with a lower cost structure and more competitive pricing. We made progress on each component of the plan in 2020:

 

  Expanding Customer Access
     
       Combined direct sales operations
  Improved online and call center sales flow in Allstate direct channel
  Enhanced local agent sales model
     
  Improving Customer Value
  Implementing cost reduction plan
  Expanded telematics offerings leveraging Drivewise® and Milewise®
  Improved competitive price position of auto insurance
     
  Increasing Marketing Sophistication and Investment
     
  Introduced new Allstate advertising
  Improved analytical measures
     
  Deploying New Technology Ecosystems
  Designed and implemented Target State Architecture
  Developed new customer interaction applications

National General Acquisition

In 2020, Allstate entered into an agreement to acquire National General, a provider of a wide range of property-liability products through independent agents, and closed on the transaction in January 2021. It is expected that this acquisition will expand independent agent distribution and increase Allstate’s personal lines insurance by 1 percentage point in market share.(1)

 

Financial Highlights

 

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

 

POLICIES IN FORCE   TOTAL SHAREHOLDER RETURN VS. PEER(2) RETURNS

 

    1 Year   3 Year   5 Year  
Allstate     (0.1 )     11.6       95.0  
Life Peers(3)     (10.0 )     (4.5 )     37.0  
P&C Peers(3)     4.8       20.4       81.4  
Peers(3)     1.0       14.2       72.2  

 

    (2)  The peers are listed on page 61.
    (3)  Market Cap Weighted Average

 

* For definitions of these terms, please see the definitions of non-GAAP measures on pages 93-96 of our 2021 Proxy Statement.
(1) Such forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially.

 

  Link to Our Shared Purpose

We generate attractive returns for stockholders

 


 

 

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2021 Proxy Statement 9
How Allstate is Building a Better Future  > Spotlight on Human Capital Management  
   

 

Spotlight on Human Capital Management

 

Our Approach

Human capital management is key to Allstate’s success and focuses on inclusive diversity and equity, employee retention and talent development practices. We believe that purpose-driven companies are powered by purpose-driven people. Allstate strives to motivate its employees and harness their diverse perspectives. Allstate provides employees with training, mentoring and career development and strives to promote from within.

 

 

  Inclusive Diversity and Equity        
           

 

 

An Overview

Inclusive diversity and equity is one of Allstate’s values and a foundation of Our Shared Purpose. In line with this commitment, in 2020, we expanded our inclusive diversity value to also include equity. Additionally, The Allstate Foundation added equity as a third focus area, along with youth empowerment and ending domestic violence.

 

Employee Resource & Advisory Groups

Allstate’s 9,000+ employee resource group members and the Enterprise Diversity Leadership Council help advance inclusive diversity and equity.

 

In 2020, Allstate became one of the founding members of OneTen, an organization that will combine the power of American companies to upskill, hire and promote one million Black Americans over the next 10 years into family-sustaining jobs with opportunities for advancement.

 

 

Training, Resources and Programming

Inclusive diversity and equity training, resources, and programming are offered to employees and integrated into leadership development programs. Diversity education and training programs focus on unconscious bias, gender identity and transitions, generational differences, religion in the workplace, and self-awareness and self-assessments. Allstaters completed more than 30,000 inclusive diversity course hours in 2020.

 

Governance

A robust governance approach reinforces our commitment and accountability for integrating inclusive diversity and equity into day-to-day operations.

 

The Board reviewed inclusive, diversity and equity topics at four meetings in 2020, effectively overseeing this important initiative.

 

    Link to Our Shared Purpose

A diverse workforce means different backgrounds, ideas and perspectives are brought to the table, which leads to innovative solutions for customers.

 

Workforce Demographics

We strive to develop and retain a workforce at all levels that mirrors the diversity of the customers and communities we serve. Allstate’s performance in diversity shows close alignment to, or exceeds, external benchmarks. As of December 31, 2020, women comprised approximately 55% of our workforce, and 39% of our employees were racially or ethnically diverse. Female and minority representation is strong at lower band levels and opportunities have been identified to further increase diversity at the top.

 

Internal Commitments

Inclusive diversity and equity commitments drive accountability for creating and sustaining a diverse pipeline of talent. Internal priorities have been developed to further Allstate’s goal of driving cultural change and advancing diversity within the organization.

 

Equity Pay Analysis

An annual pay equity analysis was again completed by an external third party to ensure equity within compensation practices; results compared favorably to external benchmarks. Any identified pay gaps were remediated.

 

 

 

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  How Allstate is Building a Better Future  > Spotlight on Human Capital Management
   

 

 

Engagement Survey

Engagement survey results show high employee satisfaction (81% favorable) and employees feeling their diverse perspectives are valued (86% favorable). Qualitative employee feedback collected from recent inclusive diversity and equity events provides a deeper understanding of employee sentiment. In 2020, “Inclusive Conversations” (virtual conversations with leaders) saw 10,000 combined employees taking part in intimate, powerful dialogues in the spirit of driving understanding, empathy and systemic change.

 

Advancing Inclusive Diversity and Equity Externally

Allstate’s Supplier Diversity Program ensures inclusion of diverse owned businesses and produces economic impact. We spent $235 million with diverse suppliers in 2020 and we have committed to increasing the percentage of spend with diverse suppliers over the next two years. Additionally, in 2020, Allstate issued $1.2 billion of bonds using minority-, women- and veteran-owned banking enterprises. This was the largest corporate deal ever managed exclusively by diverse firms.

 

Additional Initiatives Launched in 2020

 Juneteenth was made an annual company holiday to celebrate the end of slavery

 

 Committed to conduct a top-to-bottom review of our operating practices, pay and promotions for people of color and women to further promote equity

 Launched an Anti-Racism Resource Center for employees

 Expanded the virtual “Inclusive Conversations” series to monthly hosted enterprise level sessions to build off themes of racial inequity, allyship, privilege and other relevant topics

 Partnered with Employee Resource Groups to offer additional support, including an “employee listening” series, as well as built resiliency plans for those struggling with mental health issues due to racial trauma, post-traumatic stress disorder and effects of the Coronavirus

 Allstate signed the CEO Action for Diversity & Inclusion™, the largest CEO-driven business commitment to advance diversity and inclusion in the workplace

 

Allstate has disclosed workforce demographic data since 2016 and beginning in 2021, also disclosed our consolidated EEO-1 data.

 

 

What’s Next?

 Develop a 3-year inclusive diversity and equity strategy

 Engage an external firm to complete an assessment of Allstate’s inclusive diversity and equity practices

 Integrate inclusive diversity and equity goals on hiring, promotion, retention and representation into performance management

 Establish goals on reskilling and upskilling existing workforce to enhance retention as business needs change

 Begin a semiannual Board review of progress made against diversity goals

 Engage employees and agents in driving cultural changes through a revised Our Shared Purpose, aimed at connecting personal purpose with Allstate’s purpose

 Expand our investment policy to increase the consideration of ESG-related concerns

 

 

 

 

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2021 Proxy Statement 11
How Allstate is Building a Better Future  > Spotlight on Human Capital Management  
   

 

 

 

 

 

 

 

How We Responded to the Coronavirus Pandemic

 

Serving Our Customers

Allstate has worked to ensure our customers continue to receive first-class service in these difficult times.

  Implemented a Shelter-in-Place Payback program in 2020, which delivered nearly $1 billion back to customers.

  Allowed auto and homeowners insurance customers to defer payments with no penalty for two consecutive premium payments, and paused cancellations due to nonpayment during the declared Coronavirus state of emergency.

 

  Offered free access to the Allstate Identity Protection product in 2020 to U.S. residents who signed up by June 30, 2020.

  Expanded insurance coverage for customers who use their personal vehicles to deliver food, medicine and other goods for a commercial purpose.

Protecting Our Employees

Allstate supports employee health and safety with a remote work policy, compensation and well-being services.

  95% of Allstate’s workforce is working remotely and $14 million was invested in a program that provided

 

    employees with the equipment they need to effectively work from home.

  Allstate continued to pay employees who could not work remotely and had shelter-in-place orders in effect during their normal work hours.

  Well-being services like telemedicine, prescription home delivery, and emotional and financial support lines are available to Allstate’s U.S. employees.

  We funded a $3 million COVID Holiday Support Program to provide assistance to more than 5,000 Allstaters experiencing hardships due to the pandemic.

 

 

 

 

 

 

 

        Link to Our Shared Purpose
        Unplanned events should not mean an unplanned response. Allstate was prepared and acted quickly to bring some certainty during a time of much uncertainty.

 

 

 

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  How Allstate is Building a Better Future  > Spotlight on Climate Change
   

 

Spotlight on Climate Change

 

Our Approach

Climate change represents an urgent global concern for all companies, including Allstate. Allstate’s approach is to safeguard our customers while having sustainable business practices and adequate returns.

 

 

 

 

Climate Change and Its Impact on Allstate’s Business

 

Increased severe weather has raised loss costs for auto and homeowners insurance, requiring changes in pricing, product coverages, underwriting practices, and reinsurance utilization. Impacts will continue due to the increasing impact of severe weather driven by climate change. In addition, longer-term risk exists within the investment portfolio.

 

Addressing Climate Risk by Prioritizing Three Major Areas That Impact Our Customers and Business

 

 

 

 Disaster Prevention, Preparedness and Risk Response

We have partnered with the federal and state governments for over two decades to create programs to help provide protection for insureds most exposed to climate change. This has been accomplished through the establishment of entities like Florida Citizens, the Florida Hurricane Catastrophe Fund, the Texas Windpool Insurance Association and the California Earthquake Authority.

 

 

 

 

  Monitoring and Managing Climate Risk

Our business success depends on effectively modeling, pricing and managing climate-related risks, and developing products and services to address the impact of severe weather. We identify, measure, manage and monitor material risks, including climate change, which is reviewed by the Board of Directors.

 

A risk evaluation framework is in place to identify and monitor risks to our business related to climate change.

 

Insurability

Estimate of losses from major catastrophes are modeled to assess risk levels and appropriate pricing.

 

Underwriting

Frequency and severity of events are managed through pricing, underwriting, and reinsurance.

 

 

 

 Reducing Our Carbon Footprint

Across Allstate, we have cut energy use beyond our original targets and reduced our greenhouse gas (GHG) emissions.

 

We also converted half of our fleet of sedans and SUVs in the U.S. and Canada to hybrid vehicles, and 100% of the power used at our Northbrook, Illinois headquarters and our Irving, Texas office qualifies for Renewable Energy Certificates.

 

The investment portfolio is monitored for both short- and long-term potential exposures to environmental risks, including climate change.

  Across the portfolio, we classify sectors’ potential exposure to environmental risks.

  We consider potential environmental risks when we assess the size and maturity profile of our positions. Sectors with higher potential exposure are primarily invested in public markets, providing flexibility to adjust exposures as risk and return trade-offs evolve.

  For commercial real estate, we classify our investments based upon their modeled exposure to certain catastrophe risks and incorporate these risks in our underwriting and insurance practices.

 

 

 

 

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2021 Proxy Statement 13
How Allstate is Building a Better Future   > Spotlight on Climate Change  

 

 

 

Our engagements include the following:

•   Participated in coalition to adopt and expand the Florida Hurricane Catastrophe Fund

•   Led the creation of the California Earthquake Authority and initiated ProtectingAmerica.org to better prepare and protect citizens from large natural disasters

•   Established a separately capitalized Florida-only property subsidiary

•   Led industry in adoption of higher hurricane deductibles along coastal states, including introducing and passing legislation to increase hurricane deductibles, and working with government-sponsored enterprises to accept higher deductibles for mortgages

In California, Allstate is currently working with public utilities and the governor’s office to develop a wildfire catastrophe solution

Allstate also sponsors research to improve resiliency to weather related perils, so customers can prevent damage and have lower insurance costs.

•   The Insurance Institute for Business and Home Safety (IBHS) was formed to provide research and insights that will influence building codes and material standards.

•   The work has resulted in improved building codes, development of impact resistant shingles, and identification of fire resistant materials. Building codes that could mitigate damage from wildfires with no increase in overall construction costs are also being pursued.

In addition, we dramatically reduced hurricane probable maximum loss, our measure of catastrophe exposure during the last 15 years, through a combination of policy changes, underwriting controls, reinsurance, and the utilization of third-party products sold through Ivantage.

 

What’s Next?

 

 

 

Enhance Climate-Related Disclosures

 

Publish report aligned with Task Force on Climate-Related Financial Disclosures’ recommendations to disclose governance, strategy, risk management and metrics/targets pertaining to climate-related risks and opportunities.

 

 

Refine Investment Practices

 

Enhance our investment policy to address climate risk, among other ESG-related concerns.

 

 

 

 

Reduce Greenhouse Gas (GHG) Emissions

 

Adopt science-based target for reducing GHG emissions; build and enact roadmap for carbon neutrality for offices, fleet and business travel.

 

 

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14

 

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 12 Directors

 

The Board recommends a vote FOR each nominee.

 

All candidates are highly successful executives with relevant skills and expertise.
Average tenure of 7.0 years, with 11 of 12 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 19-26 for further information

A Balanced Board

The Board is composed of 12 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

 

 

Nomination Process for Board Election

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

 

CONSIDER CURRENT BOARD SKILL SET AND NEEDS
Ensure Board is strong in strategic oversight, corporate governance, stockholder advocacy, and leadership and has diversity of expertise, perspectives and backgrounds
   
MEET WITH QUALIFIED CANDIDATES
The nominating, governance and social responsibility 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
   
CHECK CONFLICTS OF INTEREST
All candidates are screened for conflicts of interest and independence
   
BOARD DIALOGUE
After deliberations, recommend director candidates; added five highly qualified directors in the past five years


 

Table of Contents

2021 Proxy Statement 15
Proxy Voting Roadmap  > Election of 12 Directors  

 

 

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 26-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, Governance and Social Responsibility 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

DONALD E. BROWN(1)

Executive Vice President and CFO of NiSource, Inc.

Successfully leads the finance, accounting and corporate service organizations of a fully regulated utility company and brings extensive financial and operational expertise  

RICHARD T. HUME(1)

CEO of Tech Data Corporation

Brings extensive technology expertise, operational experience and strategic oversight as the leader of a global IT distribution and solutions company  
 

MARGARET M. KEANE

Current Executive Chair and former CEO and President of Synchrony Financial

Directed 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

Former Chair and CEO of Tenneco Inc.

In May 2021, it is anticipated that Mr. Sherrill will be named the new Independent Lead Director

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, Governance and Social Responsibility Committee Risk and Return Committee

 

(1) Consistent with Allstate’s onboarding practices, committee assignments for Messrs. Brown and Hume will be established during their first year of service. It is expected that Mr. Brown will be assigned to the audit and nominating, governance and social responsibility committees, and Mr. Hume will be assigned to the compensation and succession and risk and return committees after the annual meeting.
 

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16 www.allstateproxy.com
  Proxy Voting Roadmap  > Say-on-Pay: Advisory Vote on the Compensation of the Named Executives

 

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 2020 was 120.7% of target, reflecting above maximum performance on Performance Net Income and below target performance on Total Premiums and Net Investment Income.

 

See pages 48-80 for further information

Executive Compensation Highlights

We compensated our named executive officers (“NEOs”) using the following elements for total target direct compensation in 2020:

 

          Target
Compensation Mix
   
  Element Description CEO Other
NEOs
   
  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

 Beginning in 2021, we added a fourth funding measure, the Strategic Initiatives Scorecard, to measure progress made against Transformative Growth and inclusive diversity and equity strategies throughout the year

     
  Long-term
Equity Incentive

The mix of equity incentives granted in 2020 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 based on results for Average Performance Net Income Return on Equity (“ROE”) (70% weighting) and Relative Total Shareholder Return (“TSR”) (30% weighting) (both measured over a three-year period)

•   For the 2021-2023 PSAs, an Items in Force Growth performance measure was added. The 2021 award will vest based on results of Average Performance Net Income ROE (50% weighting), Relative TSR (30% weighting) and Items in Force Growth (20% weighting).

     

 

Allstate had excellent performance on all five 2020 Operating Priorities, and financial results improved, with adjusted net income* rising to $4.65 billion in 2020 from $3.48 billion in the prior year.
   
Based on company and individual performance, the named executives received the following annual incentive payments during the last three years:

 

Named Executive
Officer
2018 Annual
Incentive ($)
2019 Annual
Incentive ($)
2020 Annual
Incentive ($)
Mr. Wilson 6,719,194 4,730,100 4,889,565
Mr. Rizzo 1,510,788 1,053,000 1,250,000
Mr. Civgin 1,900,000 1,400,000 1,810,861
Mr. Shapiro 2,050,000 1,366,000 1,473,089
Mr. Dugenske 1,616,607 1,132,000 1,410,109

 

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


 

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2021 Proxy Statement 17
Proxy Voting Roadmap  > Ratification of Deloitte & Touche LLP as the Independent Registered Public Accountant for 2021  

 

PROPOSAL 3

 

Ratification of Deloitte & Touche LLP as the Independent Registered Public Accountant for 2021

 

The Board recommends a vote FOR this proposal.

 

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 82-84 for further information

 

PROPOSAL 4

 

Stockholder Proposal to
Amend Proxy Access Terms

 

The Board recommends a vote AGAINST this proposal.

 

Allstate protects stockholder interests and supports stockholder rights.
Allstate’s existing proxy access bylaw is market standard.
Allstate has a proven track record of Board refreshment and diversity.

 

See pages 85-86 for further information
 

Table of Contents

       
  18    
       
  2   Letter from Independent Directors
       
  5   Notice of 2021 Annual Meeting of Stockholders
       
  6   How Allstate is Building a Better Future
       
  14   Proxy Voting Roadmap
       
  19   Corporate Governance
    Proposal 1 Election of 12 Directors
  21   Director Nominees
  27   Effective Board Governance at Allstate
  28   Board Composition
  29   Board Effectiveness
  32   Board Oversight
  37   Board Accountability
  39   Board Structure
  40   Board Meetings and Committees
  44   Board Independence and Related Person Transactions
  45   Director Compensation
       
  48   Executive Compensation
    Proposal 2 Say-on-Pay: Advisory Vote on the Compensation of the Named Executives
  48   Compensation Discussion and Analysis
  65   Compensation Committee Report
  66   Summary Compensation Table
  68   Grants of Plan-Based Awards at Fiscal Year-end 2020
  69   Outstanding Equity Awards at Fiscal Year-end 2020
  71   Option Exercises and Stock Vested During 2020
  71   Retirement Benefits
  74   Non-Qualified Deferred Compensation at Fiscal Year-end 2020
  75   Potential Payments as a Result of Termination or Change in Control (“CIC”)
  77   Estimate of Potential Payments Upon Termination
  78   Performance Measures for 2020
  81   CEO Pay Ratio
       
  82   Audit Committee Matters
    Proposal 3 Ratification of Deloitte & Touche LLP as the Independent Registered Public Accountant for 2021
  84   Audit Committee Report
       
  85   Stockholder Proposal
    Proposal 4 Amend Proxy Access Terms
       
  87   Stock Ownership Information
  87   Security Ownership of Directors and Executive Officers
  88   Security Ownership of Certain Beneficial Owners
       
  89   Other Information
  89   Proxy and Voting Information
  93   Appendix A – Definitions of Non-GAAP Measures
  97   Appendix B – Categorical Standards of Independence
  98   Appendix C – Executive Officers
       

 

 

About Allstate

 

Allstate is one of the nation’s largest insurers with 175.9 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 87,000 Allstaters (which includes employees, agents and agent support staff). It recently was included in the Drucker Institute list of the nation’s 250 best managed companies.

 

New in this Proxy Statement

 

Discussion of Allstate’s revised Our Shared Purpose on page 6
   
Discussion of Allstate’s inclusive diversity and equity initiatives on pages 9-10
   
Allstate’s response to the Coronavirus pandemic on page 11
   
Discussion of Allstate’s focus on climate-risk on pages 12-13

 

Explore Allstate

 

 

Get a quote in the blink of an eye

https://www.allstate.com

     
   

Review our Sustainability Report online

https://www.allstatesustainability.com


 

Table of Contents

19

 

Corporate Governance

 

 

 

PROPOSAL

1

 

Election of 12 Directors

 

 

The Board recommends a vote FOR each nominee.

 

   All candidates are highly successful executives with relevant skills and expertise.

 

   Average tenure of 7.0 years, with 11 of 12 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 12 nominees for election to the Allstate Board for one-year terms beginning in May 2021 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 19, 2020, for a one-year term, with the exception of Messrs. Brown and Hume who joined the Board following the 2020 Annual Meeting. 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 have served 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, robust development and retention practices and supporting our commitment to further inclusive diversity and equity.

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.


 

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20 www.allstateproxy.com
  Corporate Governance > Proposal 1
   

 

Summary of Director Nominees’ Skills and Experience

 

  Brown Crawford Eskew Hume Keane Mehta Perold Redmond Sherrill Sprieser Traquina Wilson
Skills and Experience                        
Financial Services        
Risk Management
Accounting and Finance  
Technology and/or Cybersecurity  
Global Perspective      
Complex, Highly Regulated Businesses  
Sustainability
Succession Planning and Human Capital Management
Innovation and Customer Focus
Government, Public Policy and Regulatory Affairs    
Demographic Information                        
Tenure (years)* 1 8 6 1 3 7 5 11 3 21 4 14
Age* 49 61 71 61 61 62 62 65 68 67 64 63
Gender M M M M F M M F M F M M
Race/Ethnicity                        
Black/African American                    
Asian/Other Pacific Islander                      
White/Caucasian      

 

* Tenure and age calculated as of 2021 Annual Meeting
 

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2021 Proxy Statement 21
Corporate Governance > Director Nominees  
   

 

Director Nominees

     
       

Donald E. Brown

Independent    Age 49

 

Donald is successfully leading the financial operations of one of the largest regulated utility companies in the country with extensive financial and accounting expertise.

 

Professional Experience

•   Current Executive Vice President and CFO of NiSource, Inc., a highly regulated natural gas and electric utilities company serving customers across multiple states, and President of NiSource Corporate Services.

•   Former CFO of UGI Utilities, a natural gas and utilities company.

 

Relevant Skills

•   Extensive financial, accounting and regulatory expertise within the heavily regulated utilities industry, focused on delivering safe, reliable and efficient services to customers and communities.

•   Valuable insights into strategic leadership, business operations and supply chain management.

•   Effectively leads the financial and accounting operations of a shared services organization with nearly 4 million customers.

 

Other Public Board Service

•   None

   

Kermit R. Crawford

Independent    Age 61

 

Kermit effectively transformed the pharmacy experience from a model focused primarily on drug delivery to a pharmacist-patient centric model.

 

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)

•   C.H. Robinson (2020-present)

       
       

 

Allstate Board Service

Director since 2020 (<1 year of tenure)

 

Committee Assignments and Rationale

Mr. Brown meets all of the Board’s qualifications for Board service. In addition, his extensive financial expertise and leadership experience at a heavily regulated utilities company complements the Board’s diverse skill sets and strengthens the strategic and operational dialogue. For more information about the Board’s nomination considerations, please refer to page 28.

 

Committee Assignments and Rationale

Consistent with past practice, committee assignments will be established during first year of service. It is expected that Mr. Brown will be assigned to the audit and nominating, governance and social responsibility committees after the annual meeting.

   

 

Allstate Board Service

Director since 2013 (8 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 eight 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.

       
 

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22 www.allstateproxy.com
  Corporate Governance > Director Nominees
   

 

Michael L. Eskew

Independent    Age 71

 

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 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)

   

Richard T. Hume

Independent    Age 61

 

Richard is an active CEO and brings a unique skill set with his extensive technology background and experience overseeing innovative strategy of a global distribution company.

 

Professional Experience

•  Current CEO and director of Tech Data Corporation, a global IT distribution and solutions company

•   Former COO of Tech Data Corporation

•   Former General Manager and COO, Global Technology Services at IBM

 

Relevant Skills

•   Deep technological expertise within global business services.

•   Extensive operational and strategic oversight experience as CEO of Tech Data.

•   Valuable insights in leading innovative change, technological advancements and strategic growth.

 

Other Public Board Service

•   None

       
       

 

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 former member of the Eli Lilly compensation committee.

•   In May 2021, it is anticipated that Mr. Eskew will step down as chair of the compensation and succession committee and be appointed to the audit committee.

 

 Nominating, Governance and Social Responsibility Committee

•   Significant governance and leadership experience during his time as the Chairman and CEO of UPS and as former chair of the Eli Lilly directors and corporate governance committee.

•   Board leadership and six years tenure on Allstate’s Board.

   

 

Allstate Board Service

Director since 2020 (<1 year of tenure)

 

Committee Assignments and Rationale

Mr. Hume meets all of the Board’s qualifications for Board service. In addition, his extensive technology expertise and experience leading a global distribution company adds to the Board’s skill sets and strengthens the strategic growth dialogue. For more information about the Board’s nomination considerations, please refer to page 28.

 

Committee Assignments and Rationale

Consistent with past practice, committee assignments will be established during first year of service. It is expected that Mr. Hume will be assigned to the compensation and succession and risk and return committees after the annual meeting.

 

       
 

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2021 Proxy Statement 23
Corporate Governance > Director Nominees  
   

 

Margaret M. Keane

Independent    Age 61

 

As the CEO of a large financial institution, Margaret led strategic, operational, and technology transformation in the rapidly changing consumer payments industry.

 

Professional Experience

•   Current Executive Chair and former CEO and 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)

   

Siddharth N. (Bobby) Mehta

Independent    Age 62

 

As a CEO, Bobby demonstrated successful leadership that increased revenues and global reach through the use of technology and advanced analytics.

 

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 (3 years of tenure)

 

Committee Assignments and Rationale

 Compensation and Succession Committee

•   Substantial experience in establishing management performance objectives and specific goals.

•   Significant market knowledge of executive compensation as the former CEO of Synchrony Financial.

 

 Nominating, Governance and Social Responsibility Committee

•   Significant management experience as the former CEO of Synchrony Financial.

•   Thought leader and driver of inclusion and diversity initiatives.

   

 

Allstate Board Service

Director since 2014 (7 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 CEO.

 

 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.

       
 

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24 www.allstateproxy.com
  Corporate Governance > Director Nominees
   

 

Jacques P. Perold

Independent    Age 62

 

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

 

Professional Experience

•   Chair, CEO and founder of CapShift, an investment advisory firm.

•   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)

   

Andrea Redmond

Independent    Age 65

 

Andrea’s insights and judgment on leadership helped companies and high-performance organizations execute their corporate strategies.

 

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 (5 years of tenure)

 

Committee Assignments and Rationale

 Audit Committee

•   Multiple leadership positions with financial and operational oversight responsibilities, including as President of Fidelity Management & Research Company.

 

 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 (11 years of tenure)

 

Committee Assignments and Rationale

 Nominating, Governance and
Social Responsibility 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.

       
 

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2021 Proxy Statement 25
Corporate Governance > Director Nominees  
   

 

Gregg M. Sherrill

Independent Age 68

 

Gregg created the strategies and implemented operating plans to increase revenues and profitability during his tenure at Tenneco.

 

Professional Experience

•   Former Executive Chair, CEO and director 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)

   

Judith A. Sprieser

Independent Lead Director Age 67

 

Judith has extensive service on boards of publicly traded and international companies, and significant operating experience.

 

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 (3 years of tenure)

 

In May 2021, it is anticipated that Mr. Sherrill will be named the new Independent Lead Director.

 

Committee Assignments and Rationale

 Audit Committee

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

 

 Nominating, Governance and Social Responsibility Committee

•   Significant board leadership experience as the former Chair and 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.

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

•   After more than five years of service, it is anticipated that Ms. Sprieser will step down as Independent Lead Director in May 2021.

 

 Compensation and Succession Committee

•   Extensive experience leading other large companies as CEO and CFO.

•   Experience serving on boards of other publicly traded and international companies.

 

 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.

       
 

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  Corporate Governance > Director Nominees
   

 

 

Perry M. Traquina

Independent    Age 64

 

Perry had significant success as an investor, building a world-class investment organization and overseeing the strategies and operating performance of public companies.

 

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)

   

Thomas J. Wilson

Board Chair, President, and Chief Executive Officer    Age 63

 

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

 

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 26 years.

•   Developed Allstate’s Shared Purpose and corporate strategy.

•   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, and co-chair of a public-private partnership to reduce violence in Chicago.

 

Other Public Board Service

•   None

       
       

 

Allstate Board Service

Director since 2016 (4 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.

•   In May 2021, it is anticipated that Mr. Traquina will be appointed chair of the compensation and succession committee.

 

 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 26 years of leadership experience at the company.

       
 

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2021 Proxy Statement 27
Corporate Governance  >  Effective Board Governance at Allstate

 

 

Effective Board
Governance at Allstate

 

 

Board Composition
   
  Regularly consider candidates in light of current skill sets and needs
  All candidates evaluated and considered for their diversity, including gender, ethnicity, background, expertise and perspective
    Page 28
   
Board Effectiveness
   
  Board evaluation process includes multiple assessments and reviews of the Board, committees, meetings and individual directors
  Robust director orientation and continuing director education program
  Adheres to high standards of corporate governance
    Page 29
   
Engaged Oversight
   
  Frequent reviews of Allstate’s significant risks, including climate, culture and cybersecurity risk
Enhanced oversight of ESG-related matters, including inclusive diversity and equity
  Ongoing reviews of human capital management and organizational health
    Page 32
   
Accountability
   
  Transparent lines of accountability to our stakeholders
  A stockholder engagement program based on dialogue, transparency, and responsiveness
  Interactive investor dialogue provides perspective on investor concerns
    Page 37
   
Board Structure
   
  Clearly defined roles for Board Leadership
  Strong Board independence
Instituted written policy to rotate Lead Director every three to five years
  Independent Board Committees with frequent executive sessions
  Appropriate director compensation structured in a manner that is aligned with stockholder interests
    Page 39

 

 

 

 

 

 

 


 

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Corporate Governance  >  Board Composition
   
   
Board Composition  
 
   
   
     

In addition to fulfilling the core competencies and additional capabilities listed on page 19, the Board and nominating, governance and social responsibility committee expect non-employee directors to be free of interests or affiliations that could give rise to a biased approach to directorship responsibilities or a conflict of interest and to be free of any significant relationship with Allstate that would interfere with the director’s exercise of independent judgment. The Board and committee also expect each director to devote the time and effort necessary to serve as an effective director and act in a manner consistent with a director’s fiduciary duties of loyalty and care. Allstate executive officers may not serve on boards of other corporations whose executive officers serve on Allstate’s Board.

 

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

 

The Board has limits on the number of other public boards on which our directors may sit. Directors who are active executives may serve on the board of no more than two other public companies, and other directors may serve on the board of no more than four other public companies (in addition to Allstate’s Board in each case).

 

Board nominees are identified through a retained search firm, suggestions from current directors and stockholders, and through other methods, including self-nominations. Our newest directors, Messrs. Brown and Hume, were identified by a search firm.

 

 

Nomination Process for Board Election

 

The Board continually considers potential director candidates in anticipation of retirements, resignations, or the need for additional capabilities. Below is a description of the ongoing process to identify highly qualified candidates for Board service.

 

   Consider Current Board Skill Sets and Needs

 

Ensure Board is strong in core competencies of strategic oversight, corporate governance, stockholder advocacy and leadership and has diversity of expertise and perspectives to meet existing and future business needs

 

   Check Conflicts of Interest and References

 

All candidates are screened for conflicts of interest and independence

 

   Nominating, Governance and Social Responsibility Committee Dialogue

 

Considered 269 candidates since 2011

 

   Meet with Qualified Candidates

 

To ensure appropriate personal qualities, such as independence of mind, tenacity, and skill set to meet existing or future business needs

 

   Nominating, Governance and Social Responsibility Committee Dialogue

 

To consider shortlisted candidates, and after deliberations, recommend candidates for election to the Board

 

   Board Dialogue and Decision

 

Added five highly qualified directors in the past five years, including two new directors this past year

 

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

 

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

 

 
   
   
   
   
   
   
   
   
   
   
 

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2021 Proxy Statement 29
Corporate Governance  >  Board Effectiveness
   

 

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, annual committee assessments and individual director evaluations.

 

Steps to Achieve Board Effectiveness

 

    Board   Individual Directors
FREQUENCY   Evaluation at every in-person meeting   Annual Evaluation   Biennial review of responsibilities and time allocation   Annual evaluation   Change in circumstances
PERFORMED BY   Independent Directors   Board and Committee Chairs   Board and Committees   Lead Director, nominating, governance and social responsibility committee chair, and Board Chair   Board
DESCRIPTION  

Measures effectiveness of Board 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, governance and social responsibility 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

 

 

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, governance and social responsibility 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

 

                     
2020 OUTCOME   Based on the Board’s annual evaluation process, the nominating, governance and social responsibility committee reviewed feedback and established action items for the upcoming year. Results of individual director evaluations were used by the nominating, governance and social responsibility committee in connection with the annual nomination process. Specific action plans were discussed with each director.
 

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Corporate Governance  >  Board Effectiveness
   
   

2020 Annual Evaluation Feedback and Action Items

 

Feedback on evaluations is provided to the nominating, governance and social responsibility committee and action items are developed for the upcoming year.
         
   
Strategy and Operational
Oversight
  Board Structure and
Governance
  Information and Resources
Directors appreciate reviews on strategic imperatives and financial performance and found the 3-day strategy session to be effective.   Directors are pleased with the current mix of skills and competencies on the Board and believe the process of rotating committee assignments for new directors is effective.   Directors find the meeting materials to be detailed, thoughtful and well prepared and appreciate resources and support they receive from management.
         
Action Item   Action Item   Action Item
Management will provide regular updates to the Board on the execution of the Transformative Growth strategy.   The nominating, governance and social responsibility committee will continue to prioritize diversity when seeking new Board candidates and will develop a list of preferred qualifications that will assist in identifying new candidates.   Management will streamline the materials and include additional background information in appendices.

 

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.
 

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2021 Proxy Statement 31
Corporate Governance  >  Board Effectiveness
   

 

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   Independent Oversight

   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

 

 

   Strong independent Lead Director and committee chair roles with clearly articulated responsibilities

 

   Independent Board committees

 

   Eleven out of twelve 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 34-36 for information on expanded Board oversight of ESG priorities, including inclusive diversity and equity

 

   Use of outside experts such as independent auditors, compensation consultants, governance specialists, cybersecurity experts, board search firm representatives, and financial advisors

 

   

See page 35 for information about the external pay equity analysis completed in 2020

 

Good Governance

 

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

 

   Annual letter to stockholders from the independent directors on Board accomplishments

 

   Requests for stockholder engagement with holders of about 40% of outstanding shares

 

   Robust Board and committee self-evaluation process

 

   Comprehensive Sustainability Report with information on climate change, information security, ESG priorities and performance, inclusive diversity and equity and public policy (including political contributions)

 

   

Beginning in 2021, Allstate disclosed consolidated EEO-1 data and reported information under the Sustainability Accounting Standard Board standards for insurance companies

 

   Robust Global Code of Business Conduct and ethics training for all directors

 

   Effective director education program

 

   Strong equity ownership requirements for executives and directors

 

   Comprehensive CEO emergency succession plan

 

 
 

 

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.

 

 

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

 

 

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2021 Proxy Statement 33
Corporate Governance  >  Board Oversight
   

 

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 $44.8 billion (less than 0.002% of total revenue). 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, governance and social responsibility 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
2. Allstate’s control framework appropriately manages the risks and governance and oversight exists to ensure activities are aligned with Allstate’s risk and return principles
3. Failure to engage in the political process could result in unfavorable policies, legislation or adverse business outcomes, negatively impacting Allstate’s strategic position
4. The risk of not engaging is higher than the risk of engaging with effective controls and governance
   

Risk Management and Cybersecurity

   

The Board focuses on Allstate’s security and data privacy programs, recognizing that the quality and functionality of these programs 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 data protection efforts, including policies and systems designed to prevent and, if necessary, respond to cyber threats. We are continually enhancing information security capabilities in order to protect against emerging threats, while increasing the ability to detect system compromise and recovery should a cyber-attack or unauthorized access occur.

 

The cybersecurity program is regularly reviewed and tested by Allstate’s internal audit function with quarterly status reports provided to the audit committee and the full Board. The audit committee receives semi-annual reports from its independent cybersecurity advisor.

 

 

CYBERSECURITY GOVERNANCE BEST PRACTICES

 

   Crisis simulations to prepare senior leaders to respond to a cyber attack

 

   Audit committee charter clearly highlights the importance of the Board’s data privacy oversight efforts

 

   Utilizes a cybersecurity advisor 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

 

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Risk Management and Compensation

Compensation policies and practices are structured to reward employees for successfully executing the company’s strategies and 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 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 compensation and succession committee requires positive net income in order for our executives to earn PSAs for Average Performance Net Income ROE above target.
   
Equity awards granted in 2020 and annual cash incentive awards for the 2020 performance year, and thereafter, are subject to clawback in accordance with the clawback policy approved by the compensation and succession committee. The clawback policy provides for the recovery of certain equity awards and annual cash incentive awards 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. The clawback policy 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 Human Capital Management

The Board engages in an ongoing review of human capital management practices since they are vital to Allstate’s continued success. This includes overall organizational health and practices, such as recruitment, development, and retention. This also covers the company’s inclusive diversity and equity results.

 

Our human capital management strategy focuses on the following priorities:

 

Organizational Culture Talent Recruitment and
Management
  We raised the minimum wage from $15 to $16 or $18 an hour, depending on the costs of labor across our locations. This is the second increase in five years.
  At Allstate, we define culture as a self-sustaining system of shared values, priorities and principles that shape beliefs, drive behaviors and influence decision making within an organization. We believe that a purpose driven company must be powered by purpose driven people.   We recognize that providing employees with rewarding work, professional growth and educational opportunities improves morale and engagement.  
         

Inclusive Diversity and Equity

 

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

Employee Well-Being & Safety

 

To be an employer of choice, we prioritize employee well-being, devoting resources to health and safety.

 
 

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2021 Proxy Statement 35
Corporate Governance  >  Board Oversight
   

 

As part of Allstate’s commitment to fair and equitable compensation practices, an internal pay equity analysis is completed on an annual basis. For the second year in a row, 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 policies were established 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.

 

Board Review of Succession Planning and Talent Development Practices

 

Leadership Succession is Reviewed Continuously throughout the Year

 

 

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 relative 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 seven out of eight compensation and succession committee meetings in 2020. 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, governance and social responsibility committee with competitive information on director compensation, including updates on practices and emerging trends.

 

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Corporate Governance  >  Board Oversight
   
   

Governance of Sustainability

 

 

Board of Directors

 

The Board believes sustainability benefits Allstate’s stakeholders and drives long-term value creation. The
Board has responsibility for ESG oversight with semi-annual reviews.

 

 

 

Nominating, Governance and Social Responsibility Committee

 

The nominating, governance and social responsibility committee supplements the Board’s semi-annual review
of ESG matters.

 

Additionally, other Board committees focus on specific components of the ESG strategy. The risk and return
committee reviews climate change risk, the compensation and succession committee reviews human capital
management and organizational health, and the audit committee reviews data privacy and cybersecurity.

 

Our CEO and Other Members of Senior Management

 

Leadership from across the company guides Allstate’s corporate responsibility and sustainability efforts.

 

   
The Corporate Responsibility
and Sustainability Team
  The Allstate Sustainability Council   Enterprise Diversity Leadership
Council (EDLC)

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 ESG progress.

 

 

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.

 

The EDLC is made up of senior leaders throughout the enterprise focused on advancing inclusive diversity and equity at Allstate. The EDLC helps drive targeted results for inclusive diversity and equity 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 and equity

 

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.   ETHISPHERE   THE CIVIC
50
  HUMAN RIGHTS
CAMPAIGN
  NEWSWEEK   DRUCKER
INSTITUTE
Top 50
Companies for
Diversity
(2020, 17-time
award winner)
  World’s
Most Ethical
Companies
(2015-2020)
  (2017-2020)   Corporate Equality
Index rating (2009-
2020)
  Most Responsible
Companies (2021)
  250 Best-Managed
Companies (2017-
2020)

 

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

 

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2021 Proxy Statement 37
Corporate Governance  >  Board Accountability
   

 

Board Accountability  
 
   
   

Stakeholder Input and Responsiveness

Allstate continually seeks stakeholder input to meet its obligations as a corporate citizen. 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, agents 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 about 40% of our total outstanding shares multiple times throughout the year. 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, governance and social responsibility committee, Board Chair, and other committee chairs or directors as necessary.

 

Four-Phase Stockholder Governance Engagement Cycle

 

Balanced-Transparent-Responsive

 

 

 

Outcome

 

During 2020, Allstate reached out to stockholders on governance representing 43% of outstanding shares and spent a significant amount of time discussing Allstate’s sustainability initiatives, human capital management practices, including inclusive diversity and equity priorities, climate change risk, and response to the Coronavirus pandemic. Stockholder feedback was integrated into Board discussions and decisions.

 

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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, governance and social responsibility 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 ESG 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, governance and social responsibility 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. Items that are unrelated to the duties and responsibilities of the Board will not be forwarded, such as: business solicitations or advertisements; product related inquiries; junk mail or mass mailings; resumes or other job-related inquiries; or spam and overtly hostile, threatening, potentially illegal or similarly unsuitable communications. Activity on social media is also monitored and reported to the nominating, governance and social responsibility committee.  

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

 

   directors@allstate.com

 

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

 

 

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. To report any issue relating to The Allstate Corporation (including Allstate Insurance Company and its affiliates) accounting, accounting controls, financial reporting or auditing practices, you may contact the company by mail, telephone or email. Telephone contacts may be kept confidential at your request.

 

By mail:
The Allstate Corporation,
Audit Committee
2775 Sanders Road, Suite F7
Northbrook, IL 60062-6127
c/o General Counsel
  By phone:
Allstate i-Report Line: 1-800-706-9855
  By email:
auditcommittee2@allstate.com

 

The communication process and the methods to communicate with directors are posted on the “Governance Overview” section of www.allstateinvestors.com.

 

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2021 Proxy Statement 39
Corporate Governance  >  Board Structure
   

 

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 ten 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 three to five years.

 

Judith A. Sprieser
Current Lead Director

 

Ms. Sprieser 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, five of whom have joined in the last five years.

 

Considerations in Selecting
the Next Lead Director

 

Given Ms. Sprieser’s tenure as Lead Director, the nominating, governance and social responsibility committee will make a recommendation for a new Lead Director beginning in May 2021. 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. It is expected that Gregg Sherrill will assume this role in May 2021. As a director at Allstate since 2017, he has served on the audit and nominating, governance and social responsibility committees. He has significant board leadership experience, including as former chairman of Tenneco, and also has experience serving on boards of other publicly traded companies.

 

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, governance and social responsibility committee and the Chair

 

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40 www.allstateproxy.com
Corporate Governance  >  Board Meetings and Committees
   
   

Board Chair

 

The independent directors have the ability to separate the roles of Chair and CEO if it is in the best interests of Allstate and its stockholders. When making this determination, the independent directors consider the recommendation of the nominating, governance and social responsibility 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.
   
A strong Lead Director role provides an effective independent counterbalance if the independent directors choose to combine the Chair and CEO roles.
   
The independent directors have currently determined Allstate is well served by having Mr. Wilson hold the roles of Chair and CEO given his leadership and experience. Mr. Wilson has more than 26 years of insurance industry experience and has demonstrated successful leadership of external boards.

 

Board Meetings and Committees

 

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 Investments and financial products, chief risk officer and president of financial products. 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 regular meetings, in which the committee meets privately with the independent registered public accountant, independent cybersecurity advisor, chief audit executive, and chief compliance executive.  
 

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2021 Proxy Statement 41
Corporate Governance  >  Board Meetings and Committees
   

 

Compensation and Succession Committee

The executive vice president and chief human resources officer, senior vice president of total rewards, general counsel and chief legal officer, CFO, vice chair, and CEO participate in meetings. The committee regularly meets in executive sessions with 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, Governance and Social Responsibility Committee

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

 

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 2020 annual meeting of stockholders attended the annual meeting. Messrs. Brown and Hume joined the Board following the 2020 annual meeting.   99%
Average attendance of directors as a group at Board and committee meetings during 2020
 

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42 www.allstateproxy.com
Corporate Governance  >  Board Meetings and Committees
   
   

The Allstate Corporation Board of Directors

 

Judith A. Sprieser,

Independent Lead Director

 

Thomas J. Wilson,

Chair

 

Highly Independent Board

 

Eleven out of twelve 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.

         
Meetings in 2020: 10        
         

   The company’s response to the Coronavirus pandemic was discussed at several meetings, including two special meetings held solely for that purpose.

   The Board met for three days in October to focus solely on strategy.

   Succession planning and inclusive diversity and equity were each discussed at four meetings.

   
               
Audit Committee(1)  Report, pg. 82     Compensation and
Succession Committee
 Report, pg. 65

Chair: Kermit R. Crawford

 

Other Members:

Siddharth N. Mehta

Jacques Perold

 

Meetings in 2020: 9

 

Gregg M. Sherrill

 

     

Chair: Michael L. Eskew

 

Other Members:

Margaret M. Keane

Andrea Redmond

 

Meetings in 2020: 8

 

Judith A. Sprieser

Perry M. Traquina

 

 
               

“We reviewed financial statement implications and changes to the internal controls in response to the pandemic. We also continued an industry leading practice of engaging an independent cybersecurity advisor for the fifth year in a row.”

 

— Kermit R. Crawford, Chair

   

“We continued our review of Allstate’s human capital management practices and organizational health. We once again received an independent assessment of pay equity to ensure equity within Allstate’s compensation practices. We determined that Allstate’s executive compensation program did not require any changes in light of the pandemic.”

 

— 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

   Oversees Allstate’s data privacy programs

   Has authority to engage independent counsel and other advisors to carry out its duties

   

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

   Conducts an annual review of the company’s human capital management practices for its people generally, and the organizational health of those practices, including metrics related to recruitment, geographic dispersion, leadership and development, compensation, turnover, employee and agent survey data, the ethical health of the company’s culture, the diversity and inclusiveness of the culture, and pay equity

   Reviews CEO’s performance in light of approved goals and objectives

               
(1) The Board determined that all members of the audit committee are independent under the New York Stock Exchange (“NYSE”) and Securities and Exchange Commission (“SEC”) requirements, and that Messrs. Mehta and Sherrill are each an audit committee financial expert as defined under SEC rules. Additionally, it is expected that Messrs. Brown and Eskew will be added to the audit committee following the 2021 Annual Meeting. There are also considered audit committee financial experts under SEC rules.
 

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2021 Proxy Statement 43
Corporate Governance  >  Board Meetings and Committees
   

 

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 2020, outside firms were engaged to provide independent assessments of Allstate’s pay equity practices and cybersecurity program.

 

“Over the past year, we were actively engaged in Allstate’s response to the pandemic and were kept apprised of steps taken to protect both employees and customers. We enhanced our oversight around inclusive diversity and equity and made a commitment to disclose a consolidated EEO-1 Report in 2021. We discussed with management strategic topics at every Board meeting and we were actively engaged in progress around Transformative Growth.”

 

— Judith A. Sprieser

Independent Lead Director

     
Nominating, Governance and Social
Responsibility Committee
    Risk and
Return Committee

Chair: Andrea Redmond

 

Other Members:

Michael Eskew

Margaret M. Keane

 

Meetings in 2020: 5

 

Gregg M. Sherrill

 

     

Chair: Siddharth N. Mehta

 

Other Members:

Kermit R. Crawford

Jacques P. Perold

Meetings in 2020: 6

 

Judith A. Sprieser

Perry M. Traquina

 
               

“In 2020, we added two new directors, one with extensive technology expertise and the other with financial expertise, which will build on the Board’s strategic capabilities and support Transformative Growth. Our Board remains 50% diverse. ESG priorities and progress were reviewed over multiple meetings.”

— Andrea Redmond, Chair

   

“We reviewed extremely low frequency high severity scenarios (“ELFS”) specifically related to the pandemic and climate and weather-related risks. Risks and performance measures being used for Transformative Growth were also assessed.”

— 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

   Reviews priorities and reporting related to Allstate’s ESG activities, including political contributions and sustainability initiatives

   

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 ELFS on an annual basis, including a periodic review of ELFS related to climate and weather-related risks

               

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 2020.

 

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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 2020, 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, governance and social responsibility, 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. Directors with more than 12 years of service are subject to specific considerations to ensure an undiminished level of independence. 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.

  DIRECTOR INDEPENDENCE

 

 

Related Person Transactions

 

The nominating, governance and social responsibility 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 2020.

 

The committee or committee chair reviews transactions with Allstate in which the amount involved exceeds $120,000 and in which any related person had, has, or will have a direct or indirect material interest. In general, related persons are directors, executive officers, their immediate family members, and stockholders beneficially owning more than 5% of our outstanding stock. The committee or committee chair approves or ratifies only those transactions that are in, or not inconsistent with, the best interest of Allstate and its stockholders. Transactions are reviewed and approved or ratified by the committee chair when it is not practicable or desirable to delay review of a transaction until a committee meeting. The committee chair reports any approved transactions to the committee. Any ongoing, previously approved, or ratified related person transactions are reviewed annually.

 

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2021 Proxy Statement 45
Corporate Governance  >  Director Compensation
   

 

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, governance and social responsibility 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 2020. While Allstate’s director compensation program is slightly below market median, no changes were recommended after the 2020 annual review.

 

 

(1) Paid quarterly in advance on the first business 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 up to the nearest whole share.
   
Director Equity Compensation   Further Director Compensation Highlights

   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.

 

   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 or committee meeting attendance.

 

 

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www.allstateproxy.com

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 Messrs. Brown and Hume, who joined the Board within the last year.

 

2020 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 2020.

 

Name   Leadership Roles Held During 2020   Fees
Earned or
Paid in Cash
($)(1)
  Stock
Awards
($)(2)(3)
  Total
($)
Donald E. Brown       20,719   90,436   111,155
Kermit R. Crawford   Audit Committee Chair   160,000   155,045   315,045
Michael L. Eskew   Compensation and Succession Committee Chair   155,000   155,045   310,045
Richard T. Hume       69,025   142,115   211,140
Margaret M. Keane       125,000   155,045   280,045
Siddharth N. Mehta   Risk and Return Committee Chair   160,000   155,045   315,045
Jacques P. Perold       125,000   155,045   280,045
Andrea Redmond   Nominating, Governance and Social Responsibility Committee Chair   145,000   155,045   300,045
Gregg M. Sherrill       125,000   155,045   280,045
Judith A. Sprieser   Lead Director   175,000   155,045   330,045
Perry M. Traquina       125,000   155,045   280,045

 

(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 2020, 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 2020, 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, 2020, 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   10,662
Mr. Traquina   5,632

 

(2) Grant date fair value for restricted stock units granted in 2020 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 2020.) Messrs. Brown and Hume each received a prorated award when they joined the Board in 2020. The final grant date closing price was $99.07, except with respect to the prorated awards granted to Messrs. Brown and Hume, which were $88.75 and $95.70, respectively. 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).
 

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2021 Proxy Statement

 Corporate Governance > Director Compensation

47
   

 

(3) The following table provides outstanding restricted stock units as of December 31, 2020, for each director. The value of the restricted stock units is based on the closing price of our common stock of $109.93 on December 31, 2020.

 

Name   Restricted
Stock Units
(#)
  Value of
Restricted
Stock Units
as of 12/31/20
($)
  Multiple of
Annual Cash
Retainer
Mr. Brown   1,019   112,019   0.9
Mr. Crawford   17,906   1,968,407   16.6
Mr. Eskew   13,245   1,456,023   11.8
Mr. Hume   1,485   163,246   1.3
Ms. Keane   4,840   532,061   7.1
Mr. Mehta   14,384   1,581,233   12.7
Mr. Perold   10,030   1,102,598   8.9
Ms. Redmond   33,378   3,669,244   31.1
Mr. Sherrill   4,840   532,061   5.3
Ms. Sprieser   43,028   4,730,068   37.8
Mr. Traquina   8,589   944,189   8.2

 

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.

 

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Executive Compensation

 

 

PROPOSAL

2

 

 

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

 

 

The Board recommends a vote FOR this proposal.

 

  Independent oversight by compensation and succession committee with the assistance of an independent consultant.
     
  Executive compensation targeted at 50th percentile of peers and aligned with short- and long-term business goals and strategy.
     
  Compensation programs are working effectively. Annual incentive compensation funding for our named executives in 2020 was 120.7% of target, reflecting above maximum 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 48-80 of the Notice of 2021 Annual Meeting and Proxy Statement.

 

Compensation Discussion and Analysis

 

Our Compensation Discussion and Analysis describes Allstate’s executive compensation program, including total 2020 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 Vice Chair and CEO, Protection Products and Services
Glenn T. Shapiro President, Personal Property-Liability
John Dugenske President, Investments and Financial Products

 

(1) See Appendix C for a full list of Allstate’s executive officers and titles.


 

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 Executive Compensation > Compensation Discussion and Analysis

49
   

 

Business Highlights

In 2020, Allstate delivered strong results and implemented multiple initiatives to drive long-term profitable growth. Our management team continued to advance all five Operating Priorities:

 

 

 

$2.4 billion

Distributed to stockholders in cash through stock repurchases and common stock dividends

 

Better serve customers  

•  Allstate acted quickly and led the industry in taking care of customers during the pandemic by providing two Shelter-in-Place Paybacks, financial flexibility through Special Payment Plans and offering free identity protection in 2020.

•  The Net Promoter Score, which measures how likely customers are to recommend us, increased for the enterprise.

Grow customer base  

•  Consolidated policies in force grew to 175.9 million in 2020, a 20.5% increase to the prior year. Property-Liability policies in force were down slightly compared to the prior year as Allstate brand growth was more than offset by a decline in the Encompass brand.

•  Protection Services policies in force grew to 136.3 million, a 28.6% increase to the prior year, driven by continued rapid expansion in Allstate Protection Plans.

Achieve target returns on capital  

•  Adjusted net income return on shareholders’ equity* was 19.8% in 2020, primarily driven by strong Property-Liability results.

•  Allstate’s return was above the long-term target adjusted net income return on equity** of 14% to 17%.

Proactively manage investments  

•  Total return on the $94.2 billion investment portfolio was 7.1% in 2020 as increased asset valuations offset a decline in net investment income.

•  Net investment income of $2.9 billion in 2020 was 9.7% below prior year reflecting lower reinvestment rates and reduced performance-based income.

Build long-term growth platforms  

•  Allstate made substantial progress in building higher growth business models to increase personal property-liability market share under the Allstate brand.

•  Allstate Protection Plans expanded its total addressable market through new accounts addressing furniture, appliances and entering international markets.

 

* 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 93-96 of our 2021 Proxy Statement.
** A reconciliation of this non-GAAP measure to return on common shareholders’ equity, a GAAP measure, is not possible on a forward-looking basis because it is not possible to provide a reliable forecast for catastrophes or investment income on limited partnership interests, and prior year reserve reestimates are expected to be zero because reserves are determined based on our best estimate of ultimate losses as of the reporting date.

 

Comparison of Total Shareholder Return (%) Against Allstate Peers

 

5-YEAR

Allstate ranks

2 out of 11

 

3-YEAR

Allstate ranks

3 out of 11

 

1-YEAR

Allstate ranks

4 out of 11

         
   
         
 

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 Executive Compensation > Compensation Discussion and Analysis

   

 

2020 Executive Compensation At-a-Glance

 

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

 

 

 

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51
   

 

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, 92% of votes cast supported our executive compensation program. Investors generally believed that Allstate utilized many best practices and focused on pay for performance.

 

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 Did
Clearly describe how the pandemic and the use of discretion impacted annual incentive payouts  

•  The compensation and succession committee reviewed the executive compensation program and determined that no changes were needed in light of the pandemic.

•  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. A description of how the measures were calculated is included on pages 56-58.

•  The annual cash incentive awards for the CEO and three other NEOs were equal to the calculated funding level, with no discretion applied. As described on page 54, Mr. Rizzo received positive discretion.

Consider adding ESG-oriented goal, or other non-financial metric, in the executive compensation program  

•  In 2020, the annual incentive plan design is calculated using three numerical measures: Total Premiums, Performance Net Income and Net Investment Income. Beginning in 2021, we added a fourth measure, the Strategic Initiatives Scorecard, to measure the progress made against Transformative Growth and inclusive diversity and equity strategies throughout the year.

•  The Strategic Initiatives Scorecard measure will carry a 20% weighting.

Prefer that CEO receive change in control cash severance payable of two times the sum of base salary and target annual incentive   •  Beginning in 2021, in the event of the CEO’s termination without cause or termination for good reason within two years following a change in control, CEO will receive cash severance payable of two times the sum of base salary and target annual incentive, the same as the other executive officers.

 

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

  Provide clear rationale for the metrics used 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

 

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Compensation Elements

 

The following table lists the elements of target direct compensation for our 2020 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 third anniversary of the grant date.

 

Actual amounts of PSAs vesting based on performance on three-year Performance Net Income ROE(2) and Relative TSR(2) with a requirement of positive net income in order for our executives to earn PSAs for Average Performance Net Income ROE 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 2020.
(2) For a description of how these measures are determined, see pages 78-80. In 2021, Strategic Initiatives Scorecard was added as a fourth funding measure to the annual incentive plan to measure progress made against Transformative Growth and inclusive diversity and equity strategies. Items in Force Growth was added as a third measure to the PSAs to assess growth within the Allstate business segments.
 

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Executive Compensation > Compensation Discussion and Analysis  

 

 

Compensation Decisions for 2020

 

 

Thomas J. Wilson

Chair, President, and Chief Executive Officer

 

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

 

 

2020 Performance

Mr. Wilson’s compensation reflects his responsibilities, experience and performance, peer company CEO compensation and compensation program design. An independent compensation consultant provides guidance to the committee on plan design and actual compensation in comparison to operating results and peers.

 

Mr. Wilson’s performance as Chair, President, and CEO is assessed over one- and three- year periods under the following five categories:

 

Operating Results

Strong results on all five 2020 Operating Priorities: Better Serve Customers, Achieve Target Economic Returns on Capital, Grow Customer Base, Proactively Manage Investments, and Build Long-term Growth Platforms.

 

Strategic Position

Designed and implementing strategy to increase market share in personal property-liability and expand protection solutions offered to customers. Significant progress in implementing Transformative Growth. Excellent results in expanding protection solutions through Allstate Protection Plans.

 

Leadership Team

Talented, experienced and highly engaged senior leadership team with excellent collaboration to achieve strategic vision. Ranked in Top 250 Best Managed Companies by the Wall Street Journal/Drucker Institute for 2018-2020.

 

Corporate Stewardship

Allstate recognized as “A Most Ethical Company” by Ethisphere for all three years. Corporate reputation and leadership of inclusive diversity and equity are highly rated.

 

Board Effectiveness

Excellent ratings of governance processes, board diversity and stockholder engagement.

 

2020 Compensation
Weighting Actual Target Outcome

8.0%

  Salary
(Cash)
$1,375,962(1) N/A N/A

27.0%

 

  Annual
Incentive
(Cash)
$4,889,565 300%
of salary
120.7%
of target

65.0%

 

 

 

 

 

  Long-
Term
Incentive
Award (Equity)
$11,717,087(2) 775%
of salary
105%
of target

Salary (Cash)

The committee did not adjust Mr. Wilson’s salary of $1,350,000. Mr. Wilson’s last salary increase was in February 2019.

 

 

Incentive Targets

Mr. Wilson’s annual incentive targets did not change in 2020. Mr. Wilson’s annual incentive target was 300% of salary and his target equity incentive opportunity was 775% of salary.

 

 

Annual Incentive (Cash)

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 2020. The committee approved an annual cash incentive award of $4,889,565, which was equal to the funding level as determined by the actual results for the three performance measures of 120.7% of target.

 

 

Long-Term Incentive Award (Equity)

In February 2020, based on its assessment of Mr. Wilson’s performance in delivering strong business results in 2019, his job scope, and market data, the committee granted him equity awards with a grant date fair value of $11,717,087, which was 105% above Mr. Wilson’s target equity incentive award opportunity of 775% of salary due to positive discretion exercised by the committee.

   
(1) Actual salary is higher than salary approved by committee due to extra pay period during 2020.
(2) Reflects the accounting value of the equity award. This is higher than the closing price on the date of grant, which is used to calculate the number of performance-based shares awarded. See footnote 1 to the Summary Compensation Table on page 66 for more details on the Monte Carlo valuation.


 

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Mario Rizzo

 

Executive Vice President and Chief Financial Officer

 

Mr. Rizzo 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, capital market transactions, discontinued operations and data and analytics.

 

 

2020 Performance and Compensation

In 2020, Mr. Rizzo’s annual performance was evaluated on four criteria: overall corporate results, area of responsibility results, developing and implementing long-term strategy and corporate leadership. Compensation was above target funding with positive discretion applied.

 

The annual incentive plan funded at 120.7% based on overall corporate results.
Operating responsibilities well executed, including providing strong operational oversight and maintaining strong internal controls. Strong capital management with retiring preferred stock, issuing debt, and repurchasing common shares.
Strategic position enhanced through National General acquisition and negotiating an agreement to sell Allstate Life Insurance Company.
Leadership enhanced initiatives, including expense reductions and enhancing inclusive diversity and equity. Successfully completed debt issuance using only Minority, Women and Veteran owned banking enterprises.

 

Weighting Actual Target Outcome

17.0%

  Salary (Cash) $752,039(1) N/A N/A

29.0%

 

  Annual Incentive
(Cash)
$1,250,000 125%
of salary
135.4%
of target

54.0%

 

 

 

 

  Long-Term
Incentive Award (Equity)
$2,298,227(2) 300%
of salary
100%
of target

 

Salary (Cash)

The committee approved an increase from $720,000 to $742,000 during 2020 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 targets did not change in 2020. Mr. Rizzo’s annual incentive target was 125% of salary and his target equity incentive opportunity was 300% of salary.

 

 

Annual Incentive (Cash)

The committee approved an annual cash incentive award of $1,250,000 for Mr. Rizzo, which was 135.4% of target and above the funding level as determined by the actual results for the three performance measures.

 

 

Long-Term Incentive Award (Equity)

In February 2020, based on its assessment of Mr. Rizzo’s performance in delivering strong business results in 2019, his job scope, and market data, the committee granted him equity awards with a grant date fair value of $2,298,227, which was Mr. Rizzo’s target equity incentive award opportunity.

 

 

Don Civgin

 

Vice Chair and CEO, Protection Products and Services

 

Mr. Civgin is our vice chair and has overall corporate leadership responsibility and operational oversight of Allstate’s protection services, which includes Allstate Dealer Services, Allstate Roadside Services, Answer Financial, Arity, Allstate Protection Plans and Avail.

 

 

2020 Performance and Compensation

In 2020, Mr. Civgin’s performance was assessed based on four criteria: overall corporate results, area of responsibility results, developing and implementing long-term strategy and corporate leadership. Compensation was at target funding with no discretion applied.

 

The annual incentive plan funded at 120.7% based on overall corporate results. Protection products and services businesses had strong performance, particularly Allstate Protection Products. Arity, the telematics on demand business, continued to successfully evolve.
Strong thought leadership in developing and executing strategies for market facing businesses and corporation.
Collaborative partner and active mentorship with senior leaders.

 

Weighting Actual Target Outcome

15.0%

  Salary (Cash) $905,769(1) N/A N/A

31.0%

 

 

  Annual Incentive
(Cash)
$1,810,861 175%
of salary
120.7%
of target

54.0%

 

 

 

 

  Long-Term Incentive
Award (Equity)
$3,128,087(2) 350%
of salary
100%
of target

Salary (Cash)

The committee approved an increase from $840,000 to $900,000 during 2020, 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 and equity incentive target opportunities were increased based on an expansion of his role. Mr. Civgin’s annual incentive target was 175% of salary (previously 125%) and his target equity incentive opportunity was 350% (previously 300%).

 

 

Annual Incentive (Cash)

The committee approved an annual cash incentive award of $1,810,861 for Mr. Civgin, which was equal to the funding level as determined by the actual results for the three performance measures of 120.7% of target.

 

 

Long-Term Incentive Award (Equity)

In February 2020, based on its assessment of Mr. Civgin’s performance in delivering strong business results in 2019, his job scope, and market data, the committee granted him equity awards with a grant date fair value of $3,128,087, which was Mr. Civgin’s target equity incentive award opportunity.


(1) Actual salary is higher than salary approved by committee due to extra pay period during 2020.
(2) Reflects the accounting value of the equity award. This is higher than the closing price on the date of grant, which is used to calculate the number of performance-based shares awarded. See footnote 1 to the Summary Compensation Table on page 66 for more details on the Monte Carlo valuation.
 

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Executive Compensation > Compensation Discussion and Analysis  

 

 

 

 

Glenn T. Shapiro

 

President, Personal Property-Liability

 

Mr. Shapiro leads the personal property-liability businesses, which comprises approximately 80% of Allstate’s total insurance premiums and contract charges.

 

 

2020 Performance and Compensation

In 2020, Mr. Shapiro’s performance was assessed based on four criteria: overall corporate results, area of responsibility results, developing and implementing long-term strategy and corporate leadership. Compensation was at target funding with no discretion applied.

 

The annual incentive plan funded at 120.7% based on overall corporate results. Allstate personal property-liability business had strong operating and financial results. Exceptional response to impact of pandemic by executing Shelter-In-Place payback of almost $1 billion, transitioning to remote workforce and increasing focus on claims severity.
Significant progress in implementing Transformative Growth to increase market share in personal property-liability. Developed operating plan to leverage National General capabilities in expanding independent agent businesses when the acquisition closed in early 2021.
Engaging leader that directs and drives operating performance and change.

 

Weighting Actual Target Outcome

17.0%

  Salary (Cash) $828,077(1) N/A N/A

29.0%

 

 

  Annual
Incentive
(Cash)
$1,473,089 150%
of salary
120.7%
of target

54.0%

 

 

 

 

  Long-Term
Incentive Award

(Equity)
$2,697,125(2) 325%
of salary
100%
of target

Salary (Cash)

The committee approved an increase from $780,000 to $820,000 during 2020 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 targets did not change in 2020. Mr. Shapiro’s annual incentive target was 150% of salary and his target equity incentive opportunity was 325% of salary.

 

 

Annual Incentive (Cash)

The committee approved an annual cash incentive award of $1,473,089 for Mr. Shapiro, which was equal to the funding level as determined by the actual results for the three performance measures of 120.7% of target.

 

 

Long-Term Incentive Award (Equity)

In February 2020, based on its assessment of Mr. Shapiro’s performance in delivering strong business results in 2019, his job scope, and market data, the committee granted him equity awards with a grant date fair value of $2,697,125, which was Mr. Shapiro’s target equity incentive award opportunity.

 

 

John Dugenske

 

President, Investments and Financial Products

 

Mr. Dugenske is responsible for the company’s investment portfolio, financial products, corporate strategy and business transformation.

 

 

2020 Performance and Compensation

In 2020, Mr. Dugenske’s performance was assessed based on four criteria: overall corporate results, area of responsibility results, developing and implementing long-term strategy and corporate leadership. Compensation was at target funding with no discretion applied.

 

The annual incentive plan funded at 120.7% based on overall corporate results. Strong overall investment return of 7.1% despite volatility in performance-based portfolio results.
Supported development of Allstate life and annuities strategy, which resulted in the decision to divest these businesses. Expanded corporate business transformation oversight of Transformative Growth.
Excellent leadership using decision clarity, measurement and performance feedback to drive performance and build leadership.

 

Weighting Actual Target Outcome

17.0%

  Salary (Cash) $810,577(1) N/A N/A

29.0%

 

  Annual Incentive (Cash) $1,410,109 150%
of salary
120.7%
of target

54.0%

 

 

 

 

  Long-Term Incentive
Award (Equity)
$2,679,904(2) 325%
of salary
100%
of target

Salary (Cash)

The committee approved an increase from $775,000 to $800,000 during 2020 based on evaluation of his performance, level of responsibility, experience and target compensation as compared to the peer group.

 

 

Incentive Targets

Mr. Dugenske’s annual incentive and equity incentive target opportunities were increased based on an expansion of his role. Mr. Dugenske’s annual incentive target was 150% of salary (previously 125%) and his target equity incentive opportunity was 325% (previously 300%).

 

 

Annual Incentive (Cash)

The committee approved an annual cash incentive award of $1,410,109 for Mr. Dugenske, which was equal to the funding level as determined by the actual results for the three performance measures of 120.7% of target.

 

 

Long-Term Incentive Award (Equity)

In February 2020, based on its assessment of Mr. Dugenske’s performance in delivering strong business results in 2019, his job scope, and market data, the committee granted him equity awards with a grant date fair value of $2,679,904, which was Mr. Dugenske’s target equity incentive award opportunity.


(1) Actual salary is higher than salary approved by committee due to extra pay period during 2020.
(2) Reflects the accounting value of the equity award. This is higher than the closing price on the date of grant, which is used to calculate the number of performance-based shares awarded. See footnote 1 to the Summary Compensation Table on page 66 for more details on the Monte Carlo valuation.
 

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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   NOVEMBER-JANUARY   FEBRUARY
         
Benchmarking   Establishing Plan Design and Key Metrics   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 shareholder 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 against 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.

 

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.
 

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2021 Proxy Statement 57
Executive Compensation > Compensation Discussion and Analysis  
   

 

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 2020, the pool was funded based on the collective results of three measures: Total Premiums Written, 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 2020 cash incentive awards in March 2021. The following description shows how this corporate pool was funded and distributed to individual participants:

 

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 (43.6%)(1) – captures growth and competitive position of the businesses

   Performance Net Income (43.6%)(1) – aligns with stockholders’ expectations of operating profitability

   Net Investment Income (12.8%)(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 78-79.

  The annual incentive compensation plan was funded at 120.7% of target in 2020 for officers.

 

  (1) The numbers reflect the approximate percentage that each performance measure contributed to the total pool.  

 

Determine Annual Incentive Payments to the Named Executives and other Executive Officers
  Minimal discretion was applied to the Named Executives by the committee in 2020

 

   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 53-55.

  The payout for the named executives ranged from $1.3 million to $4.9 million and the average was 122.3% of target.
 

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Determine Annual Incentive Payment for Other Eligible Participants
  The committee provides oversight of annual incentive processes and decisions below executive officers

 

   The CEO may allocate the corporate pool between the Market-Facing Businesses (“MFB”) and Areas of Responsibility (“AOR”) if justified by relative performance against annual operating goals and other key business success metrics.   For 2020, the CEO did not alter allocations between MFBs or AORs.
   Individual awards for eligible employees are determined by senior leaders.   For 2020, actual differentiation for the top quartile was 2.1 times the lowest quartile.
   To align pay with individual performance, the highest quartile performing participants are expected to receive awards at least two times the payout earned by the lowest quartile performing participants.  

 

Performance Stock Awards and Stock Options

We grant equity awards annually to executives consistent with market practice and our philosophy that a significant amount of compensation should be in the form of equity. Additionally, from time to time, equity awards are granted to attract new executives and to retain existing executives.
Since 2016, the mix of equity incentives for senior executives has been 60% PSAs and 40% stock options. We believe both PSAs and stock options are forms of performance-based incentive compensation because PSAs are earned based on achieving established performance goals and stock options require stock price appreciation to deliver value to an executive.

 

 

The 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.
Relative TSR was selected as the second measure because it is consistent with market practice and provides further alignment with stockholder interests while also recognizing factors that impact our industry and peers. 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. For awards made in 2020, the TSR peer group consists of The Allstate Corporation, the compensation peers (page 61), S&P 500 Index, and S&P Financial Index. The Life and Accident & Health peers were removed from the TSR peer group for the 2021-2023 performance cycle. Allstate added three new Property & Casualty peers including Cincinnati Financial, American Financial, and W.R. Berkley. Peer groups are designed in consultation with our compensation consultant.
Items in Force Growth was added as a third measure because it helps to assess growth within the Allstate business segments. Policy counts are based on number of items insured rather than number of customers.
The measures are further described on pages 79-80. 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
 

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2021 Proxy Statement 59
Executive Compensation > Compensation Discussion and Analysis  
   

 

  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 pages 79-80.
At the end of each measurement period, the committee certifies the level of achievement on each performance measure.

 

For the 2021-2023 award, the Average Performance Net Income ROE and Relative TSR measures are calculated, respectively, as follows(1):

 

 

(1) For a description of how the Items in Force Growth measure is determined, see page 80.
(2) Performance Net Income for the 2021-2023 PSA award is defined on pages 78-80.
(3) Adjusted Common Shareholders’ Equity for the 2021-2023 PSA award is defined on page 79.
(4) ROE calculation excludes parent holding company level deployable assets and associated income in excess of $2 billion.
(5) 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.
(6) 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.
(7) See pages 58 and 61 for information on these peer companies.

 

2021-2023 PERFORMANCE STOCK AWARD RANGE OF PERFORMANCE

 

    Performance Measures
    Threshold   Target   Maximum
Average Performance Net Income ROE (50%)(1)   10%   16%   18%
Relative Percentile Rank TSR (30%)(2)   <25th   55th   90th
Items in Force (20%)(3)   -   -   -
Payout   0%   100%   200%

 

(1) Subject to positive net income hurdle. For a description of how this measure is determined, see pages 79-80.
(2) The 25th percentile would result in a 50% payout. If greater than the 25th percentile, results would be interpolated.
(3) Items in Force Growth 2021 performance measures are not included because target performance is set at the 3-year strategic plan, which is proprietary information. For a description of how this measure is determined, see page 80.

 

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 93 of our senior executives and other officers as of December 31, 2020, 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.

 

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STOCK OWNERSHIP AS MULTIPLE OF BASE SALARY AS OF DECEMBER 31, 2020

 

        Vested in the  
    Stock Ownership   Money Option  
Named Executive   Requirement   Actual   Value (after-tax)  
Mr. Wilson   6   75.9   31.9  
Mr. Rizzo   3   3.4   2.1  
Mr. Civgin   3   20.6   1.9  
Mr. Shapiro   3   3.1   0.7  
Mr. Dugenske   3   6.4   1.8  
76
times annual salary
The value of shares of
Allstate’s common stock
held by Mr. Wilson as of
December 31, 2020


 

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

 

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 35 and 41, 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 2020 compensation benchmarking. No changes were made to the peer group for 2021.

 

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2021 Proxy Statement 61
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.   22.1   30.8   165.1   18.6   -13.6   8.8   67.2  
American International Group Inc.   43.7   32.6   586.5   31.4   -23.3   -30.4   -30.1  
Chubb Limited   35.6   69.4   190.8   33.1   1.4   12.7   46.9  
CNA Financial Corporation   10.8   10.6   64.0   7.6   -5.4   -8.0   64.1  
The Hartford Financial Services Group Inc.   20.5   17.6   74.1   17.6   -16.9   -6.3   26.0  
Manulife Financial Corporation   57.6   34.5   690.9   24.6   -7.2   -2.1   46.5  
MetLife Inc.   67.8   41.9   795.1   47.6   -3.5   4.6   31.7  
The Progressive Corporation   42.6   57.9   64.1   39.3   41.5   93.6   259.3  
Prudential Financial Inc.   57.0   30.9   940.7   37.2   -11.5   -21.9   17.7  
The Travelers Companies Inc.   32.0   35.4   116.8   29.0   5.4   11.4   40.1  
Allstate   44.8   33.4   126.0   39.5   -0.1   11.6   95.0  
Allstate Ranking Relative to Peers:                              
Property and Casualty Insurance Products   2 of 8   5 of 8   4 of 8   2 of 8   4 of 8   3 of 8   2 of 8  
Life Insurance and Financial Products   4 of 7   3 of 7   6 of 7   2 of 7   1 of 7   1 of 7   1 of 7  
All Peer Companies   4 of 11   6 of 11   7 of 11   2 of 11   4 of 11   3 of 11   2 of 11  

 

(1) Information as of year-end 2020.

 

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   l   l   l
Supplemental retirement benefit   l   l    
Health and welfare benefits(2)   l   l   l
Supplemental long-term disability   l   l    
Deferred compensation   l   l    
Tax preparation and financial planning services(3)   l   l    
Personal use of aircraft, ground transportation, and mobile devices(4)   l   l    
Tickets to Allstate events(5)   l   l   l

 

(1) Allstate contributed $0.80 for every dollar of matchable pre-tax or Roth 401(k) deposits made in 2020 (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. In addition to, and separate from, the use of corporate aircraft for personal use, Mr. Wilson can utilize the company’s arrangements with FlexJet and pay FlexJet directly for incremental incurred costs in accordance with Federal Aviation Administration regulations. 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.
 

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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:

 

In 2020, the amount of cash severance payable to the CEO under the change in control severance plan (the “CIC Plan”) was three times the sum of base salary and target annual incentive. For the other executive officers, the amount of cash severance payable was two times the sum of base salary and target annual incentive.
  Beginning in 2021, the amount of cash severance payable to the CEO is two times the sum of base salary and target annual incentive, in line with the other named executives.
The 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 75-76 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 beginning in 2020 and annual cash incentive awards for performance years beginning in 2020 are subject to clawback in accordance with the clawback policy approved by the committee. The clawback policy provides for the recovery of certain equity awards and annual cash incentive awards 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. The clawback policy 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.

 

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2021 Proxy Statement 63
Executive Compensation > Compensation Discussion and Analysis  

 

 

Earned Annual Cash Incentive Awards

In 2020, the total corporate pool was based on three measures: Total Premiums, Performance Net Income, and Net Investment Income. The 2020 annual incentive plan targets for Total Premiums and Net Investment Income were above 2019 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 2020 was set below 2019 actual results, reflecting normalized catastrophes in 2020 and favorable prior-year reserve re-estimates in 2019 partially offset by increased 2020 performance-based investment income. Net Investment Income target was set above 2019 driven by higher performance-based investment income and the inclusion of performance-based realized capital gains in the measure, partially offset by lower market-based income increases.

 

The 2021 annual incentive plan targets are not included since those targets do not relate to 2020 pay, and because target performance is set at the 2021 operating plan, which is proprietary information.

 

     2019   2020
Measure   Target   Actual   Payout
%
  Target   Actual   Payout
%
Total Premiums ($ in millions)   39,800   39,455   75.4%   40,700   40,258   55.8%
Performance Net Income ($ in millions)   3,150   3,571   164.8%   3,300   4,967   200.0%
Net Investment Income ($ in millions)   3,315   3,260   87.5%   3,400   3,240   71.9%
Aggregate Payout Percentage for Named Executives       117.5%       120.7%

 

For a description of how the 2020 measures are determined, see pages 78-79. The ranges of performance and 2020 actual results are shown in the following table.

 

2020 ANNUAL CASH INCENTIVE AWARD RANGES OF PERFORMANCE

 

Measure  
2019 Actual
Results
  2020
Threshold
  2020
Target
  2020
Maximum
  2020
Actual
Results
  Increase/(Decrease)
Versus 2019
Actual Results
  %
Target
Total Premiums ($ in millions)   39,455   40,200   40,700   41,200   40,258   803   55.8%
Performance Net Income ($ in millions)   3,571   2,600   3,300   4,000   4,967   1,396   200.0%
Net Investment Income ($ in millions)   3,260   3,115   3,400   3,685   3,240   (20)   71.9%
Payout Percentages(1)                            
Named Executives       50% (2) 100%   200%           120.7%

 

(1) Payout percentages reflect contribution to incentive compensation pool.
(2) Actual performance below threshold results in a 0% payout.
 

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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.

 

PERFORMANCE STOCK AWARDS RANGES OF PERFORMANCE

 

                Actual   Payout   Total Shareholder
Return
Performance Cycle   Threshold   Target   Maximum   Results   Percentage   Allstate   Peers
Vested Awards                            
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%        
2018-2020                   200%   11.6%   14.2%
- Performance Net Income ROE (70%)   7.0%   13.5%   15.0%   19.1%   200%        
- Earned Book Value (30%)   7.0%   12.5%   14.0%   19.9%   200%        

 

Performance Cycle   Threshold   Target   Maximum   Actual
Results
  Payout
Percentage
Outstanding Awards                    
2019-2021                    
- Performance Net Income ROE (70%)   7.0%   14.0%   16.0%   Two year results are above
- Earned Book Value (30%)   7.0%   12.0%   14.0%   target for both measures(1)
2020-2022                    
- Performance Net Income ROE (70%)   7.0%   14.0%   17.0%   One year results are above
- Relative TSR (30%)   <25th   55th   90th   target for both measures(1)
Payout Percentages   0%   100%   200%        
    Subject to positive        
    net income hurdle for        
    Performance Net Income ROE        

 

(1) 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 2018-2020, 2019-2021, and 2020-2022 performance cycles.

 

PERFORMANCE CYCLE(1)

 

    Target Number of PSAs for
Named Executive   2018-2020 Performance Cycle   2019-2021 Performance Cycle   2020-2022 Performance Cycle
Mr. Wilson   62,635   65,380   53,175
Mr. Rizzo   13,578   13,628   10,430
Mr. Civgin   15,517   15,964   14,196
Mr. Shapiro   15,760   15,818   12,240
Mr. Dugenske   14,871   14,601   12,162

 

(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, Earned Book Value (for awards granted prior to 2020) and Relative TSR (for awards granted in 2020) for the applicable measurement period. The number of PSAs that vest will be determined in 2021, 2022, and 2023 respectively.
 

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2021 Proxy Statement 65
Executive Compensation > Compensation Committee Report  

 

 

Compensation Committee Report

 

The committee has reviewed and discussed with management the Compensation Discussion and Analysis contained on pages 48-65 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
     
JUDITH A. SPRIESER PERRY M. TRAQUINA  
 

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Summary Compensation Table

 

The following table summarizes the compensation of the named executives for the last three fiscal years.

 

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     2020       1,375,962             7,312,094       4,404,993       4,889,565       3,116,842       26,930       21,126,386       18,009,544  
Chair, President, and     2019       1,340,385             6,045,035       4,030,005       4,730,100       3,354,557       115,614       19,615,696       16,261,139  
Chief Executive Officer     2018       1,290,385             5,812,528       3,874,998       6,719,194       873,170       116,971       18,687,246       17,814,076  
Mario Rizzo     2020       752,039             1,434,229       863,998       1,250,000       516,698       26,112       4,843,076       4,326,378  
Executive Vice     2019       716,154             1,260,045       840,002       1,053,000       531,414       25,530       4,426,145       3,894,731  
President and Chief     2018       690,577             1,260,038       840,004       1,510,788             25,391       4,326,798       4,326,798  
Financial Officer                                                                                
Don Civgin     2020       905,769             1,952,092       1,175,995       1,810,861       113,798       28,664       5,987,179       5,873,381  
Vice Chair and CEO,     2019       836,154             1,476,031       983,993       1,400,000       111,961       33,101       4,841,240       4,729,279  
Protection Products     2018       816,154             1,439,978       960,000       1,900,000       80,984       37,580       5,234,696       5,153,712  
and Services                                                                                
Glenn T. Shapiro     2020       828,077             1,683,122       1,014,003       1,473,089       67,206       34,382       5,099,879       5,032,673  
President, Personal     2019       774,231             1,462,532       974,999       1,366,000       77,506       35,281       4,690,549       4,613,043  
Property-Liability     2018       743,942             1,462,528       974,995       2,050,000       46,564       38,270       5,316,299       5,269,735  
John Dugenske     2020       810,577             1,672,397       1,007,507       1,410,109       59,411       25,482       4,985,483       4,926,072  
President, Investments     2019       770,193             1,350,008       900,001       1,132,000       64,737       24,760       4,241,699       4,176,962  
and Financial Products     2018       745,192       2,000,000       1,380,029       920,007       1,616,607       78,006       24,560       6,764,401       6,686,395  

 

(1) 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 2020 to each named executive is provided in the Grants of Plan-Based Awards table on page 68. The value of the PSAs granted in 2020 if maximum corporate performance were to be achieved is as follows: Mr. Wilson $11,937,096, Mr. Rizzo $2,341,399, Mr. Civgin $3,186,817, Mr. Shapiro $2,747,721, and Mr. Dugenske $2,730,211.
  The aggregate grant date fair value of PSAs granted in 2020, 2019, and 2018, is computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 718 (ASC 718). The fair value of PSAs that do not include a market-based condition is based on the final closing price of Allstate’s common stock on the grant date, which reflects the payment of expected future dividends. The fair value of the PSA component with a market-based condition is measured on the grant date using a Monte Carlo simulation model. Market-based condition measures the company’s TSR relative to the TSR of peer companies, expressed in terms of the company’s TSR percentile rank among the peer companies, over a three calendar-year performance period. The Monte Carlo simulation model uses a risk-neutral framework to model future stock price movements based upon the risk-free rate of return at the time of grant, volatilities of the company and the peer companies, and expected term assumed to be equal to the remaining measurement period. The market value in part reflects the payment of expected future dividends.
  For the year ended December 31, 2020, the 2020 PSA component with a market-based condition assumes a risk-free rate of 1.4%, volatility of 16.9%, average peer volatility of 35.1% and an expected term of 2.9 years. See note 18 to our audited financial statements for 2020.
(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 2020) as set forth in the following table:

 

  2020 2019 2018
Weighted average expected term 6.1 years 5.8 years 5.7 years
Expected volatility 16.3%-37.1% 15.6 - 28.9% 15.6-30.7%
Weighted average volatility 17.6% 18.4% 19.8%
Expected dividends 1.6%-2.4% 1.9 - 2.2% 1.5-2.2%
Weighted average expected dividends 1.8% 2.2% 2.0%
Risk-free rate 0.1%-1.8% 1.3 - 2.7% 1.3-3.2%

 

  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 2020 to each named executive is provided in the Grants of Plan-Based Awards table on page 68.
(3) Amounts reflect the aggregate increase in actuarial value of the pension benefits as set forth in the Pension Benefits table, accrued during 2020, 2019, and 2018. 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 2020.)
     

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2021 Proxy Statement 67
Executive Compensation > Summary Compensation Table  

 

 

The following table reflects the respective change in the actuarial value of the benefits provided to the named executives in 2020:

  ARP SRIP
Name ($) ($)
Mr. Wilson 203,762 2,913,080
Mr. Rizzo 287,464 229,234
Mr. Civgin 14,399 99,399
Mr. Shapiro 8,840 58,366
Mr. Dugenske 8,539 50,872

 

  Interest rates and other assumptions can have a significant impact on the change in pension value from one year to another.
(4) The following table describes the incremental cost of other benefits provided in 2020 that are included in the “All Other Compensation” column.

 

  Personal Use 401(k)   Total All Other
  of Aircraft(1)