Director Compensation Program
The nominating and governance committee reviews non-employee director compensation annually and proposes changes, as appropriate, based on its review, benchmark information from peer companies and relevant compensation surveys. The following table describes each component of our non-employee director compensation program for 2017. No meeting fees or other professional fees were paid to the directors.
|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.|
|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|
- Paid in advance on the first day of January, April, July, and October. The retainer is prorated for a director who joins the Board during a quarter.
Director Stock Ownership Guidelines
Each director is expected, within five years of joining the Board or within five years of an increase in annual retainer, if applicable, to accumulate an ownership position in Allstate common stock equal to five times the annual value of the standard retainer.
Each director has met the ownership guideline, except for Ms. Keane, and Messrs. Mehta, Perold, Sherrill, and Traquina, who joined the Board in the last five years.
2017 Director Compensation
The following table summarizes the compensation for each of our non-employee directors who served as a member of the Board and its committees in 2017. Margaret Keane has not been included as she was elected to the Board effective January 1, 2018.
Held During 2017
|Fees Earned or
Paid in Cash
|Mr. Henkel||Retired May 2017||62,500||0||–||62,500|
|Mr. Mehta||Risk and Return Committee Chair||150,000||155,014||–||305,014|
|Ms. Redmond||Nominating and Governance Committee Chair||145,000||155,014||–||300,014|
|Mr. Rowe||Compensation and Succession Committee Chair||150,000||155,014||–||305,014|
|Ms. Sprieser||Lead Director||175,000||155,014||–||330,014|
|Mrs. Taylor||Audit Committee Chair||160,000||155,014||–||315,014|
- Under the 2017 Equity Compensation Plan for Non-Employee Directors, directors may elect to receive Allstate common stock in lieu of cash compensation. In 2017, none of the directors elected to receive stock in lieu of cash. Also, under Allstate’s Deferred Compensation Plan for Non-Employee Directors, directors may elect to defer their retainers to an account that is credited or debited, as applicable, based on (a) the fair market value of, and dividends paid on, Allstate common shares (common share units); (b) an average interest rate calculated on 90-day dealer commercial paper; (c) S&P 500 Index, with dividends reinvested; or (d) a money market fund. No director has voting or investment powers in common share units, which are payable solely in cash. Subject to certain restrictions, amounts deferred under the plan, together with earnings thereon, may be transferred between accounts and are distributed after the director leaves the Board in a lump sum or over a period not in excess of ten years in accordance with the director’s instructions. For 2017, Messrs. Eskew and Traquina elected to defer their cash retainer into common share units.
- Grant date fair value for restricted stock units granted in 2017 is based on the final closing price of Allstate common stock on the grant dates, which in part also reflects the payment of expected future dividend equivalent rights. (See note 18 to our audited financial statements for 2017.) Mr. Sherrill received a prorated award when he joined the Board in 2017. The final grant date closing price was $86.94, except with respect to the prorated award granted to Mr. Sherrill, which was $91.91. The values were computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. Each restricted stock unit entitles the director to receive one share of Allstate common stock on the conversion date (see footnote 3).
The following table provides outstanding restricted stock units and stock options as of December 31, 2017, for each director.
Outstanding Awards at Fiscal Year-End 2017
Mr. Crawford 13,066 0 Mr. Eskew 8,405 0 Mr. Henkel 0 0 Mr. Mehta 9,544 0 Mr. Perold 5,190 0 Ms. Redmond 28,538 0 Mr. Rowe 17,687 0 Mr. Sherrill 1,125 0 Ms. Sprieser 42,196 0 Mrs. Taylor 42,196 4,000 Mr. Traquina 3,749 0
Restricted stock unit awards granted before September 15, 2008, convert into common stock one year after termination of Board service. Restricted stock unit awards granted on or after September 15, 2008, and before June 1, 2016, convert into common stock upon termination of Board service. Restricted stock units granted on or after June 1, 2016, convert into common stock on the earlier of the third anniversary of the date of grant or upon termination of Board service. Directors had the option to defer the conversion of the restricted stock units granted on June 1, 2016, for ten years from the date of grant or the later of termination of Board service or June 1, 2024. The conversion of restricted stock units granted after June 1, 2016, may be deferred for ten years or until termination of Board service. In addition to the conversion periods described above, restricted stock units will convert upon death or disability. Each restricted stock unit includes a dividend equivalent right that entitles the director to receive a payment equal to regular cash dividends paid on Allstate common stock. Under the terms of the restricted stock unit awards, directors have only the rights of general unsecured creditors of Allstate and no rights as stockholders until delivery of the underlying shares.
Non-employee directors do not receive stock options as part of their compensation as a result of a policy change effective on June 1, 2009. All outstanding stock options were exercisable as of December 31, 2017.
All outstanding options were awarded under the terms of the 2006 Equity Compensation Plan for Non-Employee Directors, which specifies that the exercise price for the option awards is equal to the fair market value of Allstate common stock on the grant date. The fair market value is equal to the closing sale price on the date of the grant. If there was no such sale on the grant date, then on the last previous day on which there was a sale. The options became exercisable in three substantially equal annual installments and expire ten years after grant. Stock option repricing is not permitted. An outstanding stock option will not be amended to reduce the option exercise price. However, the plan permits repricing in the event of an equity restructuring (such as a split) or a change in corporate capitalization (such as a merger).