Corporate Governance

Proposal 1

Election of 10 Directors

The Board recommends a vote FOR each nominee.

The Board recommends 10 nominees for election to the Allstate Board for one-year terms beginning in May 2019 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 11, 2018, for a one-year term. The Board expects all nominees named in this proxy statement to be available for election. If any nominee is not available, then the proxies may vote for a substitute. On the following pages, we list the reasons for nominating each individual.

Director Nominees’ Skills and Experience

Our Board selected the nominees based on their diverse set of skills and experience, which align with our business strategy and contribute to the effective oversight of Allstate. Our nominees are talented, both as individuals and as a team. Fifty percent of our Board is ethnically or gender diverse. They bring a full array of business and leadership skills to their oversight responsibilities. Most nominees serve on other public company boards, enabling our Board to more quickly adopt best practices from other companies. Their diversity of experience and expertise facilitates robust 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.

Risk Management
Aids in the Board’s role in overseeing the risks facing our Company.

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

Technology
Relevant to how Allstate approaches improving its internal operations and the customer experience.

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


Complex, Highly Regulated Businesses
Our business is highly regulated and is directly impacted by government actions.

Operational Risk Management
Provides effective oversight of our enterprise risk and return management (“ERRM”) program, which is important to customer and stockholder protection.

Succession Planning
Important for ensuring Allstate has sufficient talent available for all senior management positions.

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

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


 

Director Nominees

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Kermit R. Crawford

Independent
Age 59


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.

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

Other Public Board Service
  • None

Allstate Board Service

Director since 2013 (6 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 tenure.
  • 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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Michael L. Eskew

Independent
Age 69


Professional Experience
  • Former Chairman and CEO of United Parcel Service, Inc., a provider of specialty transportation and logistics services.
  • Presiding director at International Business Machines Corporation since May 2014 and lead director at 3M Company since 2012.
Relevant Skills
  • Expertise in strategy and leadership development.
  • Oversight of a highly regulated company as a director of Eli Lilly and Company.

Michael led the redesign of UPS’ operational platforms using digital technologies to more effectively and efficiently deliver a customer-focused worldwide service.

Other Public Board Service
  • Eli Lilly and Company (2008–present)
  • IBM (2005–present)
  • 3M Company (2003–present)

Allstate Board Service

Director since 2014 (5 years of tenure)

Committee Assignments and Rationale
Compensation and Succession Committee (Chair)
  • Significant management experience as former Chairman and CEO of UPS from 2002 to 2007 and director of other publicly traded companies.
  • Former chair of the 3M compensation committee and member of the Eli Lilly compensation committee.
Audit Committee
  • Chair of the IBM and Eli Lilly audit committees and a past member of the 3M audit committee.
  • Successful execution of financial oversight responsibilities as CEO of UPS.

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Margaret M. Keane

Independent

Age 59


Professional Experience
  • Current President and CEO of Synchrony Financial, a consumer financial services company.
  • Former President and CEO of GE Capital Retail Finance.
Relevant Skills
  • Extensive operational and strategic experience in the financial services industry as President and CEO of Synchrony Financial.
  • Valuable insights into innovation, technology transformation, and employee development.
  • Successful leadership experience across roles spanning consumer finance, vendor financial services, operations and quality.

Margaret is leading the strategic, operational, and technology transformation in the rapidly changing consumer payments industry.

Other Public Board Service
  • Synchrony Financial (2014–present)

Allstate Board Service

Director since 2018 (1 year of tenure)

Committee Assignments and Rationale
Compensation and Succession Committee
  • Significant current market knowledge of executive compensation as President and CEO of Synchrony Financial.
  • Substantial experience in establishing management performance objectives and specific goals.
Nominating and Governance Committee
  • It is expected that Ms. Keane will be assigned to the nominating and governance committee after the Annual Meeting.
  • Significant management experience as the President and CEO of Synchrony Financial.

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Siddharth N. (Bobby) Mehta

Independent

Age 60


Professional Experience
  • Former President, CEO, and current director of TransUnion, a global provider of credit information and risk management solutions.
  • Former Chairman and CEO, HSBC North America Holdings Inc.
  • Former CEO, HSBC Finance Corporation.
Relevant Skills
  • 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.

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

Other Public Board Service
  • Northern Trust Corp. (2019–present)
  • Piramal Enterprises Ltd. (2013–present)
  • TransUnion (2012–present)

Allstate Board Service

Director since 2014 (5 years of tenure)

Committee Assignments and Rationale
Risk and Return Committee (Chair)
  • Significant experience in financial markets through multiple executive leadership positions at HSBC Group.
  • In-depth understanding and experience in risk and return management as a director and former chief executive officer.
Audit Committee
  • Multiple leadership positions with financial oversight responsibility, including President and CEO of TransUnion, CEO of HSBC Finance Corporation, and Chairman and CEO of HSBC North America Holdings Inc.
  • Chair of Allstate risk and return committee.

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Jacques P. Perold

Independent

Age 60


Professional Experience
  • Former President of Fidelity Management & Research Company, a privately-held investment and asset management company serving clients worldwide.
  • Founder, former President and Chief Investment Officer of Geode Capital Management LLC, a global asset manager and independent institutional investment firm and sub-advisor to Fidelity.
  • Current trustee of New York Life Insurance Company’s MainStay Funds.
Relevant Skills
  • 30 years of successful leadership of strategy and operations and investment expertise in the financial services industry.
  • Leader of one of the world’s largest asset management firms.

Jacques had significant success in leading the investments and operations for Fidelity’s family of mutual funds with over $1.8 trillion in assets under management.

Other Public Board Service
  • MSCI Inc. (2017–present)

Allstate Board Service

Director since 2015 (3 years of tenure)

Committee Assignments and Rationale
Nominating and Governance Committee
  • Investor perspective on corporate governance as a result of asset management expertise.
  • Significant governance experience as President of Geode Capital, which involved interlocking financial and operating relationships.
Risk and Return Committee
  • Significant experience in management and oversight of risk for three large asset management firms.
  • Current trustee of several mutual funds.

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Andrea Redmond

Independent

Age 63


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.

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

Other Public Board Service
  • None

Allstate Board Service

Director since 2010 (9 years of tenure)

Committee Assignments and Rationale
Nominating and Governance Committee (Chair)
  • Significant expertise recruiting and evaluating directors for a variety of public companies.
  • A senior partner at a highly regarded global executive search firm, Russell Reynolds Associates, from 1986 to 2007, including significant tenure as co-head of the CEO/board services practice.
Compensation and Succession Committee
  • Experience in executive recruiting, succession planning, and human capital management.
  • Extensive experience working with numerous publicly traded companies to recruit and place senior executives.

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Gregg M. Sherrill

Independent

Age 66


Professional Experience
  • Current non-executive Chairman, and former Chairman and CEO of Tenneco Inc., a producer of automotive emission control and ride control products and systems.
  • Former Corporate Vice President and President of Power Solutions at Johnson Controls Inc., a global diversified technology and industrial company.
Relevant Skills
  • Extensive operational and strategic experience in the automotive industry as Chair and CEO at Tenneco, which provides valuable insights into Allstate’s strategic discussions related to the rapid changes in the personal transportation system.
  • Successful experience managing international operations as CEO at a global public company with employees in 23 countries.

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

Other Public Board Service
  • Snap-on Inc. (2010–present)
  • Tenneco Inc. (2007–present)

Allstate Board Service

Director since 2017 (1 year of tenure)

Committee Assignments and Rationale
Audit Committee
  • Multiple leadership positions with financial oversight responsibility, including as Chairman and CEO at Tenneco.
Nominating and Governance Committee
  • Significant management experience as the Chairman and former CEO of Tenneco.
  • Significant experience on boards of publicly traded and international companies.

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Judith A. Sprieser

Lead Independent Director

Age 65


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, and Reckitt Benckiser Group 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.

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

Other Public Board Service
  • Newell Brands Inc. (2018-present)
  • Intercontinental Exchange Inc. (2004–present)

Allstate Board Service

Director since 1999 (20 years of tenure)

Committee Assignments and Rationale
Lead Director
  • Prior chair of audit committee (7 years).
  • Board service at Allstate during many different external operating environments and two CEOs.
Nominating and Governance Committee
  • Significant experience on boards of publicly traded and international companies.
  • Current member of nominating and governance committee at Intercontinental Exchange Inc. and Newell Brands.
Risk and Return Committee
  • Insight from service as prior chair of Allstate’s audit committee and current audit committee chair at Intercontinental Exchange Inc.
  • Tenure as an Allstate director has provided experience through multiple operating environments.

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Perry M. Traquina

Independent

Age 62


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 Assistant Vice President, Director of Global Research, 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.

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

Other Public Board Service
  • Morgan Stanley (2015–present)
  • eBay (2015–present)

Allstate Board Service

Director since 2016 (2 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.
  • Shareholder perspective on compensation and succession as a significant investor and director of other public companies.
Risk and Return Committee
  • In-depth understanding of financial markets, asset allocation strategies, and investment performance management.
  • Current chair of the risk committee at Morgan Stanley.

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Thomas J. Wilson

Board Chair, President, and Chief Executive Officer

Age 61


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 24 years.
  • Developed Allstate’s Shared Purpose and corporate strategy to grow market share in protecting people from life’s uncertainties.
  • Created and implemented Allstate’s risk and return optimization program, allowing Allstate to simultaneously withstand the 2008 financial market crisis and adapt to increases in severe weather and hurricanes.
  • In-depth understanding of the insurance industry.
  • Industry and community leadership, including former chair of the Financial Services Roundtable, chair of the U.S. Chamber of Commerce, co-chair of a public-private partnership to reduce violence in Chicago, and national and Illinois co-chair for WE.

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

Other Public Board Service
  • None

Allstate Board Service

Director since 2006 (13 years of tenure)

Committee Assignments and Rationale
Executive Committee (Chair)
  • Comprehensive knowledge of Allstate’s business and industry, with 24 years of leadership experience at the Company.

Board Composition and Nominee Considerations

In addition to fulfilling the core competencies and additional capabilities listed on page 10, the Board and nominating and governance 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.

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

Board nominees are identified through a retained search firm, suggestions from current directors and stockholders, and through other methods, including self-nominations.

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

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

Nomination Process for Board Election

The Board continually considers potential director candidates in anticipation of retirements, resignations, or the need for additional capabilities. The graphic below describes the ongoing process to identify highly qualified candidates for Board service.

nominationprocess_high.jpg

Board Effectiveness

Evaluation Process

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

STEPS TO ACHIEVE BOARD EFFECTIVENESS
            Process     Performed By     Description      

 

 

 

Evaluation at every in-person meeting

 

Independent Directors

 

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

 

2018 OUTCOME

Based on the Board evaluation process, enhancements were made to meeting schedules and the timing and frequency of the distribution of Board materials to allow for more conversations around strategy and succession.

    Biennial review of responsibilities and time allocation   Board and Committees

 

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

 

 

 

Annual evaluation

 

Board

 

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

 

 

 

 

 

 

NEW  
  • In 2018, an independent outside consultant was engaged to conduct the Board evaluation

 

 
                   
      Process   Performed By   Description    

 

 

 

Annual evaluation

 

Lead Director, Nominating and Governance Committee (“NGC”) Chair, and Board Chair

 

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

 

2018 OUTCOME

Results of evaluations are used by the nominating and governance committee in connection with the annual nomination process. Specific action plans are discussed with each director.

 

 

Biennial evaluation

 

Lead Director, NGC Chair, and Board Chair

 

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

 

 

 

Change in circumstances

 

Board

 

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

 

Director Onboarding and Continuing Education

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.

In addition, 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.

Our Commitment to Effective Governance

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

Stockholder Rights

  • Annual election of directors with a majority vote standard in uncontested elections
  • Proxy access rights
  • No stockholder rights plan (“poison pill”) and no supermajority voting provisions
  • Confidential voting
  • Right to call a special meeting and request action by written consent for stockholders with 10% or more of outstanding shares

Independent Oversight

    • Strong independent lead director and committee chair roles with clearly articulated responsibilities
    • Independent Board committees
    • Nine out of ten directors are independent
    • Executive sessions at every in-person Board and committee meeting without management present
    • Independent reviews by the Board, audit, and risk and return committees of Allstate’s strategy, business, and the related key risks and mitigation activities
See page 20 for information related to risk oversight of political contributions, cybersecurity, and refinements to Allstate’s risk and return framework in 2018.
  • Use of outside experts such as independent auditors, compensation consultants, governance specialists, cybersecurity experts, board search firm representatives, and financial advisors

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 at least 1/3 of outstanding shares each year
  • Robust Board and committee self-evaluation process, including at the end of each in-person meeting and annual reviews for the entire Board and each individual director
NEW
See page 17 for information about the independent outside consultant that was engaged to conduct the annual Board evaluation in 2018
  • Comprehensive Sustainability Report with information on public policy (including political contributions), climate change, information security, environmental, social, and governance performance and management, and inclusive diversity
  • Robust Global Code of Business Conduct and ethics training for all directors
  • Effective director education program
  • Strong equity ownership requirements for executives and directors 

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 shareholders; (2) shareholders should be entitled to voting rights in proportion to their economic interest; (3) boards should be responsive to shareholders 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.

The Board’s Risk Oversight Responsibilities

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

Board Of Directors
Formal Review at Least Twice a Year

Risk and Return Committee

Reviews Risk At Least Five Times Annually

  • Oversees the effectiveness of Allstate’s ERRM framework, governance structure and decision making
    • Reported through a quarterly risk dashboard that identifies key risks, measurement of the current risk profile, and alignment with risk and return principles
    • Includes a review of the chief risk officer’s assessment of strategic and operating plans
    • Reviews extremely low frequency scenarios (“ELFs”) at least annually
  • Reviews regulatory Own Risk and Solvency Assessment (“ORSA”) report
  • Reviews Risk Factors included in our Form 10-K, including risks related to climate change and severe weather
  • The audit committee chair is a risk and return committee member to enhance cross-committee communication
  • The chief risk officer attends all meetings and has regular executive sessions with the committee
  • The chief audit executive attends all meetings
Audit Committee

Reviews Risk At Least Four Times Annually

  • Oversees Allstate’s internal controls related to key risks and the major financial risk exposures
    • Reported through a semi-annual risk control dashboard
  • Conducts quarterly reviews to oversee the efficacy of cybersecurity risk initiatives and related policies and procedures
    • Receives regular reports from the chief risk officer, chief information security officer, and outside experts
    • Engages an external, independent cybersecurity advisor
  • Reviews Risk Factors included in our Form 10-K
  • The risk and return committee chair is an audit committee member to enhance cross-committee communication
  • The chief audit executive attends all meetings and has regular executive sessions with the committee
  • The chief risk officer attends all meetings
Compensation and Succession Committee

Reviews Risk At Least Once Annually

  • Oversees executive compensation programs (including the design, performance measures and ranges in incentive plans)
    • Includes a review of the chief risk officer’s assessment of incentive compensation programs
  • Oversees talent development and senior executive succession planning to ensure they appropriately align with Allstate’s risk and return principles
Nominating and Governance Committee

Reviews Risk As Needed

  • Oversees director elections and corporate governance practices to ensure they appropriately align with Allstate’s risk and return principles NEW
  • Oversees the Company’s political contributions and activities, as well as its sustainability practices
CURRENT DEVELOPMENTS IN THE BOARD’S RISK OVERSIGHT
Political Contributions and Activity         Cybersecurity
In addition to a thorough annual review by the Board, the nominating and governance committee now reviews political contributions twice a year. The chief risk officer conducted a risk and return assessment of Allstate’s involvement in political activities to ensure proper oversight.     An independent cybersecurity advisor was retained for a third year to provide an objective assessment of Allstate’s capabilities in this rapidly developing area.
Refined Economic Capital Model     Advancement of Risk Framework
The risk and return committee oversaw the refinement of Allstate’s economic capital framework, which is used to make strategic decisions, set operational priorities and measure performance. The refinements were in response to recommendations made during an independent external review of the framework conducted by leading experts in economics and regulation.     The maturity of Allstate’s operational risk and return management framework was advanced with the formalization of additional policies, the formation of an operational risk council, and investments in additional employee and technology resources. The enhancements improved operational risk assessment capabilities as well as awareness and accountability throughout the enterprise.
       

NEW 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. During 2018, in response to stockholder feedback, Allstate enhanced oversight of its public policy program by:

  • Instituting a semi-annual review of Allstate’s public policy activity by the nominating and governance committee, in addition to the annual review by the Board.
  • Expanding the disclosure in Allstate’s Sustainability Report to include the top legislative and regulatory issues addressed by Allstate.
  • The chief risk officer conducting an annual risk and return assessment of Allstate’s political activities to ensure appropriate oversight and management of Allstate’s political activities. We believe this risk and return assessment is an industry leading practice.

The assessment was based on an independent, external framework published by Transparency International UK (a global anti-corruption agency) on the Principles and Guidance for Responsible Corporate Political Engagement but was expanded to address Allstate’s specific activities and risk profile. The chief risk officer concluded that Allstate’s control framework appropriately manages the risks in Allstate’s political activities and that sufficient governance and oversight exist to ensure activities are aligned with Allstate’s risk and return principles. The chief risk officer evaluated the risks of Allstate’s activities and concluded the individual initiatives were fully assessed, prudent, and necessary. In addition, the assessment noted that failure to engage in the political process could result in unfavorable policies and legislation and adverse business outcomes and could negatively impact Allstate’s strategic position and business model.

Risk Management and Compensation

Compensation policies and practices are structured to provide incentives for employees to successfully execute the Company’s strategies and achieve annual operating goals while meeting all risk and return principles. The plans are also structured to ensure management does not take unnecessary or excessive risk. Analysis provided by an external consultant, the chief risk officer, and review by the compensation and succession committee concluded the plans achieve these objectives. 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 and appropriate mix of cash and equity through annual and long-term incentives that align with short- and long-term business goals. No one, regardless of eligibility, is guaranteed an award under the annual cash incentive program. Multiple performance measures are utilized that correlate with long-term stockholder value creation and diversify the risk associated with any single performance indicator. In addition, the annual incentive program contains a funding adjustment for senior executives in the event of a net loss, which reduces the corporate pool funding for those officers by 50% of actual performance. Likewise, for the performance stock award program, the committee requires positive net income for executives to earn awards above target. Equity awards to executive officers after 2009 and annual cash incentive awards beginning in 2010 are subject to clawback in the event of certain financial restatements. Executives are also subject to rigorous stock ownership requirements.

Board Role in Setting Compensation

The compensation and succession committee makes recommendations to the Board on compensation for the CEO and executive officers and the structure of plans used for executive officers. The compensation and succession committee reviews the executive compensation program throughout the year with the assistance of an independent compensation consultant, Compensation Advisory Partners (“CAP”). CAP benchmarks Allstate’s plans and compensation payments to the market and evaluates changes to the executive compensation program. The compensation consultant also assesses Allstate’s executive compensation design, peer group selection, relative pay for performance, and total direct compensation for individual senior executive positions. Representatives of the compensation consultant participated in six out of seven compensation and succession committee meetings in 2018. 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 2013 Equity Incentive Plan. The Board has delegated limited authority to the CEO to grant equity awards to non-executive officers. All awards granted between compensation and succession committee meetings are reported at the next meeting.

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

Board Role in Human Capital Management and Management Succession

Allstate’s Shared Purpose is based on the premise that all employees must exercise leadership. Allstate manages talent by providing employees with training, mentoring and career development; promoting from within; emphasizing inclusive diversity; attracting new employees; and monitoring engagement through annual employee surveys. Allstate takes a thorough approach to ensure employees are treated equitably regarding their compensation. A pay analysis compares the base salary between men and women, and non-minorities and minorities, who are in similar jobs and geographic areas. If pay discrepancies are identified, adjustments are made.

The Board reviews these human capital management practices, including the pay fairness analyses, annually since they are vital to Allstate’s continued success. 

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 through informal meetings held throughout the year.

Board Review of Succession Planning and Talent Development Practices
boardreview_high.jpg

Corporate Sustainability

The Board believes sustainability benefits Allstate’s stakeholders and drives long-term value creation. Allstate and The Allstate Foundation created positive societal change through several initiatives in 2018, including:

Privacy and Information Security      Community
  • Launched an internal campaign to raise awareness about the importance of protecting personal information within Allstate
  • Offered reskilling opportunities to build an internal pipeline of cybersecurity talent, with the first group of employees graduating from the program in 2018

 

 

  • Gave nearly $47 million in charitable contributions throughout the nation, including contributions from employees and agents
  • Helped over 6 million youth participate in service-based learning through The Allstate Foundation’s Good Starts Young program
  • Since 2005, served over 1.7 million domestic violence survivors through The Allstate Foundation’s Purple Purse program, focused on ending domestic violence through financial empowerment
Risk and Climate

 

 

Workforce and Inclusive Diversity
  • Continued to strengthen Allstate’s catastrophe response and risk management programs through technology such as drone usage, QuickFoto Claim® and Mobile Claims Centers
  • Utilize reinsurance to minimize the economic impact on shareholders of severe weather
  • Assisted customers in mitigating their carbon footprint through energy-efficient endorsements

 

 

  • Invested in training opportunities, with employees completing 444,302 courses and 465,804 hours of learning
  • Worked to ensure the diversity of the workforce, resulting in 69.4% diverse employees
  • Retained 86.7% of our employee population (a useful barometer for the health of the workforce culture)
  • Provided leadership with feedback about the health of Allstate’s culture semi-annually, with this more frequent feedback enabling stronger development of managers and employee culture
       
Ethisphere has named Allstate as one of the World’s Most Ethical Companies each of the last five years, recognizing Allstate for high ethical standards in its business practices and values-based leadership.
To learn more about our corporate sustainability efforts, please view Allstate’s 2018 Sustainability Report at http://allstatesustainability.com
 

More Information

You can learn more about our corporate governance by visiting www.allstateinvestors.com, where you will find our Corporate Governance Guidelines, each standing committee charter, and Director Independence Standards. Allstate has adopted a comprehensive Global Code of Business Conduct that applies to the CEO, CFO, vice chair, controller, and other senior financial and executive officers, as well as the Board of Directors and other employees. It is also available at www.allstateinvestors.com. Each of the above documents is available in print upon request to the Office of the Secretary, The Allstate Corporation, 2775 Sanders Road, Suite F7, Northbrook, IL 60062-6127.

Stockholder Engagement

Allstate proactively engages with significant stockholders throughout the year. Dialogue, transparency, and responsiveness are the cornerstones of our stockholder engagement program. Such discussions are held before the annual meeting, during stockholder voting, and after the annual meeting and include our lead director, chair of the nominating and governance committee, Chair of the Board, and other committee chairs or directors as necessary. Direct engagement involves reaching out to our largest stockholders representing approximately one-third of our total outstanding shares. We also engage with proxy and other investor advisory firms that represent the interests of various stockholders. In addition to input on current governance and executive compensation topics specific to Allstate, we invite discussion on any other topics or trends stockholders may wish to share with us. Their input is reported to the nominating and governance committee, which in turn allocates specific issues to relevant Board committees for further consideration. Each Board committee reviews relevant feedback and determines if additional discussion or actions are necessary by the respective committee or full Board. In addition, broader investor surveys provide perspective on investor concerns.

STOCKHOLDER ENGAGEMENT CYCLE
stockholderengagement_high.png
 

Communication with the Board

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

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

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

directors@allstate.com

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

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 eight years. Allstate’s Corporate Governance Guidelines describe the responsibilities of the lead director and the selection process, including the characteristics that the Board considers important in a lead director.

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

Considerations in Selecting the Current Lead Director
The independent directors consider several factors, including the director’s corporate governance expertise, operational and leadership experience, board service and tenure, integrity, prior Board leadership roles, and ability to meet the required time commitment. It is preferable that the lead director hold a previous position as chair of a Board committee, either at Allstate or another company. Ms. Sprieser was chosen by the independent directors as she exemplified these characteristics. She has devoted significant time fulfilling her duties as lead director since May 2015. During her tenure on Allstate’s Board, she has cultivated an expansive knowledge of Allstate in multiple operating environments. Her long-term perspective complements the perspectives of newer Board members, six of whom have joined in the last five years. The independent directors believe that Ms. Sprieser is exceptionally well-qualified to serve as Allstate’s independent lead director.
Judith A. Sprieser
LEAD DIRECTOR
  • Lead director since 2015
  • Member of the nominating and governance, risk and return and executive committees
  • Prior chair of audit committee for seven years
  • Allstate Board experience in multiple operating environments and under two CEOs
LEAD INDEPENDENT DIRECTOR RESPONSIBILITIES
Board Meetings and Executive Sessions
  • Has the authority to call meetings of the independent directors
  • Approves meeting agendas and schedules and information sent to the Board to ensure there is sufficient time for discussion of all items and that directors have the information necessary to perform their duties
  • Chairs executive sessions of independent directors at every Board meeting
  • Presides at all Board meetings when the Chair is not present
Duties to the Board
  • Has regular communications with the CEO about Allstate’s strategy and performance
  • Performs additional duties designated by the independent directors
Succession Plans
  • Facilitates the development of a succession plan for the Chair and CEO
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
CEO Performance Evaluation
  • Facilitates and communicates the Board’s performance evaluation of the Chair and CEO with the chair of the compensation and succession committee
Communication Between Chair and Independent Directors
  • Serves as liaison between the Chair and independent directors
  • Consults with the Chair and discusses items raised in executive sessions

Communication with Stockholders

  • Communicates with significant stockholders and other stakeholders on matters involving broad corporate policies and practices, when appropriate

Board and Individual Director Evaluations

  • Facilitates the evaluation of individual director, Board and committee performance with the chair of the nominating and governance committee and the Chair

Board Chair

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

At present, the independent directors have determined Allstate is well-served by having these roles performed by Mr. Wilson, who provides excellent leadership and direction for both management and the Board. This promotes a strong connection between the Board and management that is subject to strong independent oversight by Allstate’s independent lead director and the other independent directors. The Board believes it benefits from the considerable knowledge and perspective that Mr. Wilson has acquired from more than 24 years of insurance industry experience. Given his extensive Company knowledge and his ability to effectively fulfill both roles simultaneously, he is uniquely qualified to lead discussions of the Board and is in the best position to facilitate the flow of business information and communications between the Board and management.

Board Meetings and Committees

Board Attendance

Each director attended at least 75% of the combined Board meetings and meetings of committees of which he or she was a member. Directors are expected to attend Board and committee meetings and the annual meeting of stockholders. All directors who stood for election at the 2018 annual meeting of stockholders attended the annual meeting.

99%

Average attendance of directors as a group at Board and committee meetings during 2018.

Management Participation in Committee Meetings

Key members of management regularly attend and participate in Board meetings, presenting on key topics. Regular attendees include the CEO, vice chair, CFO, general counsel, president of Allstate Personal Lines, president of Allstate Financial Businesses, president of Service Businesses, chief investment and corporate strategy officer, and chief risk officer. Other senior leaders attend as meeting topics warrant. In addition, senior leadership also participates in committee meetings.

Audit Committee
The CFO, chief audit executive, chief compliance executive, chief risk officer, CEO, vice chair, general counsel and controller all actively participate in meetings. Senior business unit and technology executives, including the chief technology officer, are present when appropriate. Executive sessions of the committee are scheduled and held throughout the year, including sessions in which the committee meets exclusively with the independent registered public accountant, independent cybersecurity advisor, chief audit executive, and chief compliance executive.
Compensation and Succession Committee
The senior human resources executive, general counsel, CFO and CEO regularly participate in meetings. The committee regularly meets in executive sessions that include just the independent compensation consultant or senior human resources executive.
  • The senior human resources executive provides the committee with internal and external analyses of the structure of compensation programs. Throughout the year, the estimated and actual results under our incentive compensation plans are reviewed.
  • The CFO discusses financial results relevant to incentive compensation, other financial measures, and accounting rules.
  • The CEO advises on the alignment of incentive plan performance measures with strategy and the design of equity incentive awards. He also provides the committee with performance evaluations of senior executives and recommends merit increases and compensation awards.
  • The general counsel 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.
Nominating and Governance Committee
The CEO and general counsel participate in meetings. The committee regularly meets in executive session without management present.
Risk and Return Committee
The chief risk officer, CFO, general counsel, CEO, vice chair, and chief audit executive participate in meetings. The committee regularly meets in executive session, including sessions with the chief risk officer.

The Allstate Corporation Board of Directors

Independent Lead Director: Judith A. Sprieser

Chair: Thomas J. Wilson

Meetings in 2018: 7

NEW
  • The Board’s meeting schedule was revised in 2018 to solely focus on strategy for three days in October  
  • Succession planning discussed at four meetings annually

Highly Independent Board

Nine out of ten directors on the Board are independent. Each director has input into Board and committee meeting schedules, agendas and materials. In addition, directors are provided opportunities throughout the year for independent discussion and reflection. The directors hold executive sessions without management present at every in-person Board and committee meeting. In 2018, small group director breakfasts were added to allow for additional independent contemplation of the matters discussed at meetings.

Photo

Audit Committee(1)

Report, pg. 85


Chair: Kermit R. Crawford

Meetings in 2018: 9

Other Members:

  • Michael L. Eskew
  • Siddharth N. Mehta
  • Gregg M. Sherrill

“The controls over operations and financial statement preparation continue to be highly effective. Cybersecurity risk continued to be an area of significant attention, and the independent cybersecurity advisor was retained for a third year to provide additional assessment capabilities. We also reviewed an independent external assessment of Allstate’s ethics and compliance program.”

— KERMIT R. CRAWFORD, CHAIR

Key Responsibilities:
  • Oversees integrity of financial statements and other financial information and disclosures
  • Oversees the system of internal control over accounting and financial reporting and disclosure controls and procedures
  • Reviews the enterprise risk control assessment and guidelines, including cybersecurity risk and the major financial risk exposures and management'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 independent cybersecurity advisor
  • Oversees Allstate’s internal audit function
  • Has authority to engage independent counsel and other advisors to carry out its duties
  1. The Board determined that all members of the audit committee are independent under the New York Stock Exchange (“NYSE”) and Securities and Exchange Commission (“SEC”) requirements, and that Messrs. Eskew, Mehta, and Sherrill are each an audit committee financial expert as defined under SEC rules.
Photo

Compensation and Succession Committee

Report, pg. 52


Chair: Michael L. Eskew

Meetings in 2018: 7

Other Members:

  • Margaret M. Keane
  • Andrea Redmond
  • Perry M. Traquina

“In 2018, the annual incentive plan and long-term equity plan were fully reviewed, with minor modifications made to ensure continued alignment with shareholder interests. We also focused on management succession over multiple time periods and operating scenarios, the strength of Allstate’s human capital management programs, Allstate’s inclusive diversity practices and annual pay fairness analyses.”

— MICHAEL L. ESKEW, CHAIR

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

Each of the committee chair roles includes the approval of meeting agendas and committee materials. Prior to each meeting, each committee chair has a separate conference call with the CEO and relevant operating executives. The committee chairs discuss meeting materials and agendas in advance of each meeting, which fosters independence and successful execution of each committee’s responsibilities.

Use of Independent Advisors

Each committee operates under a written charter and has the ability to hire third-party advisors. Outside experts such as independent auditors, compensation consultants, governance specialists, cybersecurity experts, board search firm representatives, and financial advisors attend meetings to provide directors with additional information on issues. All committees, other than the executive committee, used independent external consultants in 2018.

NEW In 2018, an external advisor was used to assess Allstate’s ethics and compliance program.

Photo

Judith A. Sprieser
Independent Lead Director

“Oversight of strategy is a major area of attention, with the three-day October meeting focused solely on strategy. We spent considerable time reviewing initiatives to advance Allstate’s strategy to grow market share in protecting people from life’s uncertainties. This served as the foundation for the acquisition of InfoArmor. In response to stockholder engagement, the Board also reviewed the chief risk officer’s first annual risk and return assessment of Allstate’s political contributions program.”

Photo

Nominating and Governance Committee


Chair: Andrea Redmond

Meetings in 2018: 5

Other Members:

  • Jacques P. Perold
  • Gregg M. Sherrill
  • Judith A. Sprieser

“The Committee is committed to ensuring Allstate continues to adopt best practices in corporate governance. In 2018, we focused on Board evaluations and effectiveness and hired an independent consultant to evaluate the Board. We also began overseeing Allstate’s political contributions program in response to stockholder engagement.”

— ANDREA REDMOND, CHAIR

Key Responsibilities:
 
  • Recommends candidates for Board election and nominees for Board committees
  • Recommends candidates for lead director and Chair
  • Recommends criteria for selecting directors and the lead director, and determines director independence
  • Reviews the Corporate Governance Guidelines and advises the Board on corporate governance issues
  • Determines performance criteria and oversees the performance assessment of the Board, Board committees, and lead director
  • Reviews Allstate’s non-employee director compensation program
  • Has authority to retain a director search firm and director compensation consultant
NEW
  • Reviews Allstate’s political contributions and sustainability initiatives
Photo

Risk and Return Committee


Chair: Siddharth N. Mehta

Meetings in 2018: 6

Other Members:

  • Kermit R. Crawford
  • Jacques P. Perold
  • Judith A. Sprieser
  • Perry M. Traquina

“Allstate’s sophisticated risk and return management program was further refined during the year. We spent considerable time revising Allstate’s enterprise risk-return principles, overseeing operational risk, and discussing economic capital methodologies. We also reviewed the potential impact of extremely low frequency scenarios, or ELFs.”

— SIDDHARTH N. MEHTA, CHAIR

Key Responsibilities:
  • Assists the Board in risk and return governance and oversight
  • Reviews risk and return processes, policies, and guidelines used by management to evaluate, monitor, and manage enterprise risk and return
  • Reviews Allstate’s enterprise risk and return management function, including its performance, organization, practices, budgeting, and staffing
  • Supports the audit committee in its oversight of risk assessment and management policies
  • Has authority to retain outside advisors to assist in its duties

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 2018.

Board Independence and Related Person Transactions

Nominee Independence Determinations

The Board has determined that all directors who served during 2018, other than Mr. Wilson, are independent according to applicable law, the NYSE listing standards, and the Board’s Director Independence Standards (which are included on www.allstateinvestors.com). In accordance with the Director Independence Standards, the Board has determined that the nature of the relationships with the corporation that are set forth in Appendix B do not create a conflict of interest that would impair a director’s independence. The Board also determined that the members of the audit, compensation and succession, nominating and governance, and risk and return committees are independent within the meaning of applicable laws, the NYSE listing standards, and the Director Independence Standards.

When evaluating the independence of director nominees, the Board weighs numerous factors, including tenure. In particular, the Board weighed the potential impact of tenure on the independence of our longest-serving director, Ms. Sprieser. Ms. Sprieser has significant experience serving at Allstate under different operating environments and management teams, and served on the Board under two CEOs and prior to Mr. Wilson’s appointment. The Board concluded that Ms. Sprieser is an effective director who fulfills her responsibilities with integrity and independence of thought. She appropriately challenges management and the status quo, and is reasoned, balanced, and thoughtful in Board deliberations and in communications with management. The Board determined that her independence from management has not been diminished by her years of service.

Related Person Transactions

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

There were no related person transactions identified for 2018.

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.

Director Compensation

Director Compensation Program

The director compensation program is designed to appropriately compensate our non-employee directors for the time, expertise, and effort required to serve as a director of a large, complex, and highly regulated company and to align the interests of directors and long-term stockholders. The nominating and governance committee reviews non-employee director compensation annually and proposes changes, as appropriate, based on its review, benchmark information from peer companies, advice from an independent compensation consultant, and relevant compensation surveys. 

AMONG THE HIGHLIGHTS OF OUR PROGRAM:

  • Director total compensation, lead director and committee chair retainers, and equity grant practices are all benchmarked against insurance industry peer group and targeted at peer median.
  • 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.
  • Special roles (such as lead director and committee chairs) are fairly recognized for their additional time commitments.
  • No additional fees are paid for board meeting attendance.
  • 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.

The following table describes each component of our non-employee director compensation program for 2018.

Role
Quarterly
Cash Retainer(1)(2)
Equity
Non-Employee Director
$
31,250
The Board believes that a meaningful portion of a director’s compensation should be in the form of equity securities to create a linkage with corporate performance and stockholder interests. Directors are granted restricted stock units on June 1 equal in value to $155,000 divided by the closing price of a share of Allstate common stock on such grant date, rounded to the nearest whole share.
Lead Director
$
12,500
Audit Committee Chair
$
8,750
Compensation and Succession Committee Chair and Risk and Return Committee Chair
$
6,250
Nominating and Governance Committee Chair
$
5,000
  1. Paid in advance on the first day of January, April, July, and October. The retainer is prorated for a director who joins the Board during a quarter.
  2. In 2018, based on peer benchmarking and an evaluation of the increased demands associated with committee service, effective January 1, 2019, the quarterly chair fee for the compensation and succession committee and risk and return committee was increased to $7,500 and $8,750, respectively. Both the annual retainer and chair fees for the committees were last increased effective January 1, 2017. No other changes were recommended for 2019 as director total compensation continues to be aligned with the insurance peer group and survey median.

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

2018 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 2018.

Name Leadership Roles
Held During 2018
Fees Earned or
Paid in Cash
($)(1)
Stock
Awards
($)(2)(3)
All Other
Compensation
($)(4)
Total
($)
Kermit R. Crawford Audit Committee Chair (May – December) 147,404 155,057 302,461
Michael L. Eskew Compensation and Succession Committee Chair (May – December) 141,003 155,057 296,060
Margaret M. Keane   125,000 219,663 344,663
Siddharth N. Mehta Risk and Return Committee Chair 150,000 155,057 305,057
Jacques P. Perold   125,000 155,057 280,057
Andrea Redmond Nominating and Governance Committee Chair 145,000 155,057 300,057
John W. Rowe Retired May 2018, Compensation and Succession Committee Chair (January – May) 75,000 0 10,000 85,000
Gregg M. Sherrill   125,000 155,057 280,057
Judith A. Sprieser Lead Director 175,000 155,057 330,057
Mary Alice Taylor Retired May 2018, Audit Committee Chair (January – May) 80,000 0 10,000 90,000
Perry M. Traquina   125,000 155,057 280,057
  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 2018, Margaret Keane elected to receive 50% of her retainer in stock and 50% in cash. Also, under Allstate’s Deferred Compensation Plan for Non-Employee Directors, directors may elect to defer their retainers to an account that is credited or debited, as applicable, based on (a) the fair market value of, and dividends paid on, Allstate common shares (common share units); (b) an average interest rate calculated on 90-day dealer commercial paper; (c) 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 2018, 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, 2018, for any 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 7,051
    Mr. Traquina 2,844
  2. Grant date fair value for restricted stock units granted in 2018 is based on the final closing price of Allstate common stock on the grant dates, which in part also reflects the payment of expected future dividend equivalent rights. (See note 18 to our audited financial statements for 2018.) Ms. Keane received a prorated award when she joined the Board in 2018. The final grant date closing price was $93.86, except with respect to the prorated award granted to Ms. Keane, which was $104.71. The values were computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. Each restricted stock unit entitles the director to receive one share of Allstate common stock on the conversion date (see footnote 3).
  3. The following table provides outstanding restricted stock units as of December 31, 2018, for each director. The value of the restricted stock units is based on the closing price of our common stock of $82.63 on December 31, 2018.
    Name Restricted
    Stock Units
    (#)
    Value of
    Restricted
    Stock Units
    as of 12/31/18
    ($)
    Multiple
    of Annual
    Cash
    Retainer
    Mr. Crawford 14,718 1,216,148 9.7
    Mr. Eskew 10,057 831,010 6.6
    Ms. Keane 2,269 187,487 1.5
    Mr. Mehta 11,196 925,125 7.4
    Mr. Perold 6,842 565,354 4.5
    Ms. Redmond 30,190 2,494,600 20.0
    Mr. Rowe (Retired May 2018) 0
    Mr. Sherrill 2,777 229,464 1.8
    Ms. Sprieser 43,848 3,623,160 29.0
    Mrs. Taylor (Retired May 2018) 8,000 661,040
    Mr. Traquina 5,401 446,285 3.6

    Restricted stock unit awards granted before September 15, 2008, convert into common stock one year after termination of Board service. Restricted stock unit awards granted on or after September 15, 2008, and before June 1, 2016, convert into common stock upon termination of Board service. Restricted stock units granted on or after June 1, 2016, convert into common stock on the earlier of the third anniversary of the date of grant or upon termination of Board service. Directors had the option to defer the conversion of the restricted stock units granted on June 1, 2016, for ten years from the date of grant or the later of termination of Board service or June 1, 2024. The conversion of restricted stock units granted after June 1, 2016, may be deferred for ten years or until termination of Board service. In addition to the conversion periods described above, restricted stock units will convert upon death or disability. Each restricted stock unit includes a dividend equivalent right that entitles the director to receive a payment equal to regular cash dividends paid on Allstate common stock. Under the terms of the restricted stock unit awards, directors have only the rights of general unsecured creditors of Allstate and no rights as stockholders until delivery of the underlying shares.

    Non-employee directors do not receive stock options as part of their compensation as a result of a policy change effective on June 1, 2009. There were no outstanding stock options as of year-end 2018.

  4. The $10,000 represents a charitable contribution made by Allstate to an entity selected by each of Mr. Rowe and Mrs. Taylor upon their retirement from the Board.