Allstate’s non-employee director compensation is reviewed annually. The nominating and governance committee proposes changes to director compensation based on this annual review and benchmark information from peer companies and relevant compensation surveys. The following table describes each component of our non-employee director compensation program for 2016. No meeting fees or other professional fees were paid to the directors.
|Non-Employee Director||$26,250||To create a linkage with corporate performance and stockholder interests, the Board believes that a meaningful portion of a director’s compensation should be in the form of equity securities. For that reason, directors are granted restricted stock units on June 1 equal in value to $150,000 divided by the closing price of a share of Allstate common stock on such grant date, rounded to the nearest whole share. For the 2017 award, the amount was increased to $155,000.|
|Audit Committee Chair||$6,250|
|Other Committee Chair
(except Executive Committee)
|(1)||Paid in advance on the first day of January, April, July, and October. The retainer is prorated for a director who joins the Board during a quarter.|
Based on peer benchmarking and an evaluation of the increased demands associated with Board service, effective January 1, 2017, the standard retainer was increased to $31,250, the quarterly chair fee for the compensation and succession and risk and return committees was increased to $6,250 and the audit committee chair fee was increased to $8,750. Director compensation was last increased in 2015.
Each director is expected, within five years of joining the Board or within five years of an increase in annual retainer, if applicable, to accumulate an ownership position in Allstate common stock equal to five times the annual value of the standard retainer.
Each director has met the ownership guideline, except for Messrs. Mehta, Perold, and Traquina, who joined the Board in the last five years.
The following table summarizes the compensation for each of our non-employee directors who served as a member of the Board and its committees in 2016.
Held During 2016
|Fees Earned or
Paid in Cash
|Mr. Beyer||Retired May 2016
Risk and Return Committee Chair (January - May)
|Mr. Mehta||Risk and Return Committee Chair (May – December)||117,088||150,054||0||267,142|
|Ms. Redmond||Nominating and Governance Committee Chair||125,000||150,054||0||275,054|
|Mr. Rowe||Compensation and Succession Committee Chair||125,000||150,054||0||275,054|
|Ms. Sprieser||Lead Director||155,000||150,054||0||305,054|
|Mrs. Taylor||Audit Committee Chair||130,000||150,054||0||280,054|
|(1)||Mr. Traquina received a prorated retainer as he joined the Board in June 2016.|
|(2)||Under the 2006 Equity Compensation Plan for Non-Employee Directors, directors may elect to receive Allstate common stock in lieu of cash compensation. Mr. Traquina elected to receive stock in lieu of cash. Also, under Allstate’s Deferred Compensation Plan for Non-Employee Directors, directors may elect to defer their retainers to an account that is credited or debited, as applicable, based on (a) the fair market value of, and dividends paid on, Allstate common shares (common share units); (b) an average interest rate calculated on 90-day dealer commercial paper; (c) Standard & Poor’s 500 Index, with dividends reinvested; or (d) a money market fund. No director has voting or investment powers in common share units, which are payable solely in cash. Subject to certain restrictions, amounts deferred under the plan, together with earnings thereon, may be transferred between accounts and are distributed after the director leaves the Board in a lump sum or over a period not in excess of ten years in accordance with the director’s instructions. For 2016, Messrs. Eskew and Henkel each elected to defer his cash retainer into common share units.|
|(3)||Grant date fair value for restricted stock units granted in 2016 is based on the final closing price of Allstate common stock on the grant dates, which in part also reflects the payment of expected future dividend equivalent rights. (See note 18 to our audited financial statements for 2016.) Mr. Traquina received a prorated award when he joined the Board in 2016. The final grant date closing price was $67.44, except with respect to the prorated award granted to Mr. Traquina, which was $69.95. The values were computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. Each restricted stock unit entitles the director to receive one share of Allstate common stock on the conversion date (see footnote 4).|
|(4)||The following table provides outstanding restricted stock units and stock options as of December 31, 2016 for each director.|
OUTSTANDING AWARDS AT FISCAL YEAR-END 2016
Restricted stock unit awards granted before September 15, 2008, convert into common stock one year after termination of Board service. Restricted stock unit awards granted on or after September 15, 2008 and before June 1, 2016, convert into common stock upon termination of Board service. Restricted stock units granted on or after June 1, 2016, convert into common stock on the earlier of the third anniversary of the date of grant or upon termination of Board service. Directors had the option to defer the conversion of the restricted stock units granted on June 1, 2016, for ten years from the date of grant or the later of termination of Board service or June 1, 2024. The conversion of restricted stock units granted after June 1, 2016, may be deferred for ten years or until termination of Board service. In addition to the conversion periods described above, restricted stock units will convert upon death or disability. Each restricted stock unit includes a dividend equivalent right that entitles the director to receive a payment equal to regular cash dividends paid on Allstate common stock. Under the terms of the restricted stock unit awards, directors have only the rights of general unsecured creditors of Allstate and no rights as stockholders until delivery of the underlying shares.
Non-employee directors do not receive stock options as part of their compensation as a result of a policy change effective on June 1, 2009. All outstanding stock options were exercisable as of December 31, 2016.
All outstanding options were awarded under the terms of the 2006 Equity Compensation Plan for Non-Employee Directors, which specifies that the exercise price for the option awards is equal to the fair market value of Allstate common stock on the grant date. For options granted in 2007 and 2008, the fair market value is equal to the closing sale price on the date of the grant. If there was no such sale on the grant date, then on the last previous day on which there was a sale. The options became exercisable in three substantially equal annual installments and expire ten years after grant. Stock option repricing is not permitted. An outstanding stock option will not be amended to reduce the option exercise price. However, the plan permits repricing in the event of an equity restructuring (such as a split) or a change in corporate capitalization (such as a merger).
|(5)||This amount represents a charitable contribution made by Allstate to an entity selected by Mr. Beyer upon his retirement from the Board.|