Compensation Discussion and Analysis
Our Compensation Discussion and Analysis describes Allstate’s executive compensation program, including total 2017 compensation for our named executives listed below(1):
Thomas J. Wilson — Chair and Chief Executive Officer (CEO)
Steven E. Shebik — Executive Vice President and Chief Financial Officer (CFO)
Don Civgin — President, Emerging Businesses
John E. Dugenske — Executive Vice President and Chief Investment Officer
Matthew E. Winter — President
- The titles and responsibilities for certain of these officers changed in 2018. Additionally, Mr. Winter retired effective February 23, 2018. See Appendix C for current titles and a list of Allstate’s other executive officers.
In 2017, Allstate delivered strong results and implemented multiple initiatives to drive long-term profitable growth. Our management team continued to advance all five operating priorities:
Distributed to stockholders in cash through stock repurchases and common stock dividends
|Better serve our customers||
|Achieve target economic returns on capital||
|Grow customer base||
|Proactively manage investments||
|Build long-term growth platforms||
- Measures used in this proxy statement that are not based on generally accepted accounting principles (“non-GAAP”) are denoted with an asterisk (*). These measures are defined and reconciled to the most directly comparable GAAP measures in Appendix A.
Allstate’s one-year total shareholder return was 43.3%. The following chart shows Allstate’s total shareholder return over one, three and five years relative to the market cap weighted average of the peer group used for 2017 compensation benchmarking (identified on page 45).
Comparison of Total Shareholder Return (%)
- Market Cap Weighted Average
Allstate’s executive compensation program includes industry best practices with a focus on pay for performance and a strong link between performance measures and strategic objectives.
Comparison with Peers
The committee uses the 50th percentile of our peer companies as a guideline when setting total target direct compensation.
The Board considers feedback from shareholders on matters including compensation. At our last shareholder meeting, 95% of votes cast supported our executive compensation program. The committee considered the vote results, investor input, and current market practices and determined that no significant changes should be made to the program.
An independent compensation consultant provides advice on incentive design and the overall executive compensation program and pay levels.
ALIGNMENT OF PAY WITH PERFORMANCE
Annual Cash Incentive
- For a description of how these measures are determined, see pages 64-66
- This performance measure has been utilized in prior years, and was previously called Adjusted Operating Income
Annual Incentive Plan (“AIP”) % of Target
2015-2017 Performance Stock Awards
2017 Compensation Mix
The committee designs the executive compensation program to award pay in accordance with corporate, business unit and individual performance. A large percentage of total target compensation is at risk through long-term equity awards and annual cash incentive awards. These awards are linked to performance measures that correlate with long-term stockholder value creation. The mix of target total direct compensation for 2017 for our CEO and the average of our other named executives is shown in the chart below.
Allstate’s Executive Compensation Principles
Allstate’s executive compensation program is designed to ensure that the interests of our executives are aligned with our shareholders:
We Pay for Performance
The majority of our CEO and other NEOs compensation opportunity is at-risk and based on measurable performance goals.
We Establish A Strong Link between Performance Measures and Strategic Objectives
Performance measures are linked to operating priorities designed to create long-term stockholder value.
Moreover, our program adheres to high standards of compensation governance.
What We Do
- Benchmark to Peers of Similar Industry, Size and Business Complexity.
- Target Pay at 50th Percentile of Peers.
- Independent Compensation Consultant.
- Moderate Change-in-Control Benefits.
- 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 of Certain Compensation if Restatement or Covenant Breach.
What We Do Not Do
- 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 Dividends Paid on Unvested PSAs.
- No Excessive Perks.
The following table lists the elements of target direct compensation for our 2017 executive compensation program.
- Represents the average of the target direct compensation elements for all of the named executives in 2017.
- For a description of how these measures are determined, see pages 64-66.
- The compensation and succession committee may award cash and/or restricted stock units in connection with the hire of a new executive. Awards are typically to cover compensation amounts forfeited at prior employer.
Compensation Decisions for 2017
THOMAS J. WILSON
Chair and Chief Executive Officer(1)
Our Chair and CEO was responsible for managing the company’s business operations and the oversight of senior management. He led the execution of Allstate’s overall strategic direction, performance, and operations.
Mr. Wilson’s total compensation and the amount of each compensation element are driven by the design of our compensation program, his experience, his responsibility for Allstate’s overall strategic direction, performance and operations, and the committee’s analysis of peer company CEO compensation. In conjunction with the committee’s independent compensation consultant, the committee conducts an annual review of Mr. Wilson’s total target direct compensation and determines if any changes are warranted.
Mr. Wilson’s performance as Chair and CEO is evaluated under the following categories, which are determined by the committee: operating results, total shareholder return, developing and implementing long-term strategy, maintaining and motivating a high-performance team, corporate stewardship and Board effectiveness. Performance is assessed over one- and three-year time periods.
During the 2017 annual review, the committee determined that Mr. Wilson’s target direct compensation was appropriately aligned with the median of the compensation peer group. Furthermore, Mr. Wilson’s annual cash incentive target of 300% of salary and long-term equity incentive target of 750% of salary remained unchanged.
- Served in these roles during 2017.
STEVEN E. SHEBIK
Executive Vice President and Chief Financial Officer(1)
Our CFO had primary responsibility for the management of the company’s overall financial condition, as well as for financial analysis and reporting. Mr. Shebik served as interim Chief Investment Officer until Mr. Dugenske joined the company in March 2017. Mr. Shebik also served as interim Chief Risk Officer until the election of Mr. Merten in December 2017.
President, Emerging Businesses(1)
Mr. Civgin oversaw Allstate Emerging Businesses including Allstate Dealer Services, Allstate Roadside Services, Answer Financial, Arity, and SquareTrade. Mr. Civgin also oversaw Esurance.
Served in this role during 2017.
JOHN E. DUGENSKE
Executive Vice President and Chief Investment Officer(1)
Mr. Dugenske was Executive Vice President and Chief Investment Officer of Allstate Insurance Company and President of Allstate Investments. He oversaw the company’s $83 billion investment portfolio.
MATTHEW E. WINTER
Mr. Winter was President of The Allstate Corporation and Chief Executive Officer of Allstate Life Insurance Company. He led the personal property-liability businesses, including the Allstate agency and Encompass operations. He was responsible for all business operations and distribution, which includes the 15 field offices located across the United States and in Canada. Mr. Winter retired effective February 23, 2018.
- Served in this role during 2017.
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 works to identify performance measures and ranges of performance 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
- 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 evaluations of their performance, using the enterprise-wide merit increase budget as a guideline.
ANNUAL CASH INCENTIVE AWARDS
The committee sets performance measure goals based on the operating plan. Target performance is equal to the operating plan. Threshold and maximum measures are based on a range of sensitivities relative to the operating plan. To further test the appropriateness of the ranges, the committee’s independent consultant provides advice based on peer performance, market expectations and industry trends. The chief risk officer reviews the performance measures and ranges to ensure they are consistent with Allstate’s risk and return principles.
Actual performance on the performance measures determines the overall funding level of the corporate pool and the aggregate total award budget for eligible employees. In 2017, the pool was funded based on the collective results of four measures: Performance Net Income, Total Premiums, Net Investment Income, and Total Return. 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. 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 a natural catastrophe or extreme financial market conditions.
Target annual incentive percentages for each named executive are based on market data pay levels of peer companies and our benchmark target for total direct compensation at the 50th percentile.
Individual awards are based on job scope, market data, pool funding, and individual performance.
Allstate has established the maximum awards that could be paid to any of the named executives as the lesser of the stockholder approved maximum of $10 million under the Annual Executive Incentive Plan or a percentage of an award pool, which we refer to herein as the “162(m) Pool.” For 2017, the 162(m) Pool is equal to 1.0% of Performance Net Income (defined on pages 64-65), and the percentage of the award pool for Mr. Wilson is 35%, Mr. Winter, 20%, and for each other named executive, 15%. Allstate established these maximums in order to qualify annual cash incentive awards for 2017 as deductible performance-based awards under Internal Revenue Code Section 162(m) as was in effect prior to the passage of the Tax Cuts and Jobs Act (the “Tax Legislation”). Under the Tax Legislation, the exemption for deductibility of performance-based compensation under Internal Revenue Code Section 162(m) has generally been eliminated for fiscal years beginning after December 31, 2017. The committee retains complete discretion to pay less than the maximums established by the Annual Executive Incentive Plan and the award pool.
We paid the 2017 cash incentive awards in March 2018. The following table shows how the corporate pool was funded and distributed to individual participants:
- The committee has discretion to determine the amount of the awards paid from the corporate pool to the named executives. For treatment of catastrophe losses and performance-based long-term income in the funding calculation, see discussion of performance measures on pages 64-67.
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 PSAs vest based on results for Performance Net Income ROE (70%) and Earned Book Value (30%) over the three-year measurement period. The actual number of PSAs vesting is between 0% to 200% of target number of PSAs granted.
The committee selected Performance Net Income ROE as a performance measure because it:
Measures performance in a way that is tracked and understood by investors.
Captures both income and balance sheet impacts, including capital management actions.
Provides a useful gauge of overall performance while limiting the effects of factors management cannot influence, such as extreme weather conditions.
Correlates to changes in long-term stockholder value.
Earned Book Value was selected to create greater alignment with the increase in performance-based assets in the investment portfolio.
Both measures are further described on pages 64-67. For both measures, the committee considered historical and expected performance, market expectations and industry trends when approving the range of performance.
For awards granted in 2015, the number of PSAs that vested depended on the three-year Average Performance Net Income ROE. Performance Net Income ROE for 2015 is defined on pages 64-67.
For all PSA awards, Performance Net Income and Earned Book Value 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 our executives to earn PSAs based on Performance Net Income ROE above target. If Allstate has a net loss in a measurement period, the number of PSAs vested would not exceed target, regardless of the Performance Net Income ROE. This positive Net Income hurdle is included to prevent misalignment between Allstate reported net income and the PSAs vested based on the 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 caused Allstate to report a net loss for the period.
At the end of each measurement period, the committee certifies the level of our Performance Net Income ROE and Earned Book Value achievement. PSAs will vest following the end of the three-year performance cycle if the performance conditions are met, subject to continued employment (other than in the event of death, disability, retirement, or a qualifying termination following a change in control).
For the 2018-2020 award, the Average Performance Net Income ROE and Earned Book Value measures are calculated, respectively, as follows:
- Performance Net Income for the 2018-2020 PSA award is defined on pages 64-67.
- Adjusted Common Shareholders’ Equity for the 2018-2020 PSA award is defined on page 66.
- Earned Book Value is defined on pages 66-67.
2018-2020 Performance Stock Award Range of Performance
|Average Performance Net Income ROE (70%)(1)||7.0%||13.5%||15.0%|
|Earned Book Value (Compound Annual Growth) (30%)||7.0%||12.5%||14.0%|
- Subject to positive Net Income hurdle
EQUITY OWNERSHIP REQUIREMENTS
Instituted in 1996, stock ownership guidelines require 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 guidelines and the equity holdings that count toward the requirement.
The current stock ownership guidelines apply to 94 of our senior executives and other officers as of December 31, 2017, and require these executives to hold 75% of net shares received as a result of equity compensation awards until their salary multiple guidelines are met.
Stock Ownership as Multiple of Base Salary as of December 31, 2017
|Named Executive||Guideline||Actual||Vested in
49 times annual salary
The value of shares of Allstate's Common Stock held by Mr. Wilson as of December 31, 2017
What Counts Toward the Guideline
- Allstate shares owned personally and beneficially
- Shares held in the Allstate 401(k) Savings Plan
- Unvested restricted stock units
What Does Not Count Toward the Guideline
- Unexercised stock options
- Unvested performance stock awards
Allstate no longer utilizes additional equity holding requirements for any equity awards outstanding. Allstate previously required, regardless of stock ownership level, senior executives to retain 75% of net shares received as a result of equity compensation awards for one year. After benchmarking peers and reviewing leading practices, it was determined that the additional equity holding requirements are not aligned with the market, and are a minority practice.
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 or hedging, such as selling short or buying or selling options. 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.
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, or for recognition grants, such other date specified by the committee.
For additional information on the committee’s practices, see portions of the Board Leadership Structure and Practices section of this proxy statement on pages 21-22, and 24.
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, Compensation Advisory Partners, 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. In 2017, the committee made one change to the peer group. CNA Financial Corporation is now included in the peer group for 2017 compensation benchmarking. The following table reflects the peer group used for 2017 compensation benchmarking. No changes were made to the peer group for 2018.
($ in billions)
($ in billions)
($ in billions)
($ in billions)
|Total Shareholder Return (%)|
|One Year||Three Years||Five Years|
|American International Group Inc.||49.5||53.6||498.3||34.3||-6.8||12.2||80.4|
|CNA Financial Corporation||9.5||14.4||56.6||7.0||35.3||68.8||149.9|
|The Hartford Financial Services Group Inc.||17.0||20.1||225.3||14.3||20.1||42.2||172.1|
|Manulife Financial Corporation||43.7||41.4||581.7||21.8||20.6||20.1||77.8|
|The Progressive Corporation||26.8||32.8||38.7||25.7||60.6||121.1||201.6|
|Prudential Financial Inc.||59.7||48.6||831.9||37.4||13.4||37.9||144.1|
|The Travelers Companies Inc.||28.9||36.8||103.5||25.7||13.1||36.4||109.6|
|Allstate Ranking Relative to Peers:|
|— Property and Casualty Insurance Products||3 of 8||4 of 8||5 of 8||2 of 8||2 of 8||3 of 8||2 of 8|
|— Life Insurance and Financial Products||5 of 7||5 of 7||7 of 7||3 of 7||1 of 7||1 of 7||1 of 7|
|All Peer Companies||5 of 11||6 of 11||8 of 11||3 of 11||2 of 11||3 of 11||2 of 11|
- Information as of year-end 2017.
In its executive pay discussions, the committee also reviewed compensation information for 19 general industry companies in the S&P 100 with fiscal year 2016 revenues between $16 billion and $56 billion. 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, 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
|All Full-time and
|401(k)(1) and defined benefit pension|
|Supplemental retirement benefit|
|Health and welfare benefits(2)|
|Supplemental long-term disability|
|Tax preparation and financial planning services(3)|
|Personal use of aircraft, ground transportation, and mobile devices(4)|
|Tickets to Allstate events(5)|
- Allstate contributed $0.80 for every dollar of matchable pre-tax or Roth 401(k) deposits made in 2017 (up to 5% of eligible pay).
- Including medical, dental, vision, life, accidental death and dismemberment, long-term disability, and group legal insurance. For named executives and other senior officers, Allstate offers an executive physical program.
- All officers are eligible for tax preparation services. Financial planning services were provided only to senior executives.
- 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. The committee also approved the President’s usage of corporate aircraft for personal use up to 40 hours annually. In limited circumstances approved by the CEO, other senior executives are permitted to use our corporate aircraft for personal purposes. Ground transportation is available to senior executives. Mobile devices are available to senior executives, other officers, and certain managers and employees depending on their job responsibilities.
- Tickets to Allstate-sponsored events or the Allstate Arena are offered as recognition for service.
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 regular 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 all eligible employees earn future 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. A change in control of Allstate could have a disruptive impact on both Allstate and our executives. Change-in-control benefits and post-termination benefits are designed to mitigate that impact and to maintain alignment between the interests of our executives and our stockholders.
The following summarizes Allstate’s change-in-control benefits for the executive officers:
The change-in-control severance plan (CIC Plan) does not include excise tax gross ups or a lump sum cash pension enhancement.
For the CEO, the amount of cash severance payable is three times the sum of base salary and target annual incentive. For the other executive officers, the amount of cash severance payable is two times the sum of base salary and target annual incentive.
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 60-62 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
Awards made to executive officers after May 19, 2009, under short- and long-term incentive compensation plans, are subject to clawback in the event of certain financial restatements. Annual cash incentive and equity awards granted after May 19, 2009, are also subject to cancellation or recovery in certain circumstances if the recipient violates non-solicitation covenants. Equity awards granted after February 21, 2012, are subject to cancellation in certain circumstances if the recipient violates non-competition covenants.
Impact of Tax Considerations on Compensation
In 2017, we were able to take a tax deduction of no more than $1 million per executive for compensation paid in any year to our CEO and the three other most highly compensated executives, excluding any individual that served as CFO during the year, as of the last day of the fiscal year in which the compensation is otherwise deductible, unless the compensation met specific standards. Under Internal Revenue Code Section 162(m) as in effect before the passage of the Tax Legislation, we were able to deduct more than $1 million in compensation if the compensation was performance-based and paid under a plan that met certain requirements. The committee considered the impact of this Internal Revenue Code rule in developing, implementing, and administering our compensation programs for 2017. Under the Tax Legislation, the exemption for deductibility of performance-based compensation under Internal Revenue Code Section 162(m) has generally been eliminated for fiscal years beginning after December 31, 2017. The committee has and will continue to consider the deductibility of compensation, including in light of the revisions to Internal Revenue Code Section 162(m). However, the committee balances this consideration with our primary goals of structuring compensation programs to attract, motivate and retain executives and ensuring that pay aligns with performance. In light of this balance and the need to maintain flexibility in administering compensation programs, the committee may authorize compensation in any year that exceeds $1 million for which we may not be able to recognize a tax deduction.
EARNED ANNUAL CASH INCENTIVE AWARDS
In 2017, the total corporate pool was based on four measures: Performance Net Income, Total Premiums, Net Investment Income, and Total Return. The 2017 annual incentive plan targets for Net Investment Income and Total Return were both lower than actual 2016 performance to reflect the business and market conditions in the operating plan. Modest adjustments were made to the range between threshold and maximum for each of the performance measures in alignment with the operating plan and the probability of achieving the results.
The 2018 annual incentive plan targets are not included since those targets do not relate to 2017 pay, and because target performance is set at the 2018 operating plan, which is proprietary information.
For a description of how the 2017 measures are determined, see pages 64-66. The ranges of performance and 2017 actual results are shown in the following table.
2017 Annual Cash Incentive Award Ranges of Performance
|Performance Net Income (in millions)||$1,400||$2,000||$2,600||$2,703||200|
|Total Premiums (in millions)||$34,125||$34,900||$35,275||$35,120||159|
|Net Investment Income (in millions)||$2,825||$3,000||$3,175||$3,188||200|
- Payout percentages reflect contribution to incentive compensation pool. Actual awards are fully discretionary and vary depending on individual performance.
- Actual performance below threshold results in a 0% payout.
PERFORMANCE STOCK AWARDS (“PSAs”)
For the last five PSA grants, the performance measures and levels of performance needed to earn the threshold, target and maximum number of PSAs, as well as actual results and payout percentages, are set forth in the table below. The total shareholder returns for Allstate and its peers are also shown.
Performance Stock Awards Ranges of Performance
|Performance Cycle(1)||Threshold||Target||Maximum||Actual Results||Payout
|Total Shareholder Returns|
|- Performance Net Income ROE (70%)||6.0%||13.0%||14.0%||Two year results are above
target for both measures(3)
|- Earned Book Value (30%)||6.0%||12.0%||15.0%|
|- Performance Net Income ROE (70%)||6.0%||11.0%||13.0%||One year results are above
target for both measures(3)
|- Earned Book Value (30%)||6.0%||9.0%||11.0%|
|Subject to positive Net Income hurdle
For Performance Net Income ROE
- For the performance cycles prior to 2016, Average Performance Net Income ROE was the performance measure. In 2016, Earned Book Value was added as a second performance measure.
- Represents the average of the separate one-year performance goals and payouts. Actual results are 13.4%, 13.2%, 11.9% with payout percentage of 200.0%, 180.0% and 84.3% for 2013, 2014 and 2015, respectively.
- 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 2015-2017, 2016-2018, and 2017-2019 performance cycles.
|Named Executive||Target Number of PSAs for 2015-2017 Performance Cycle||Target Number of PSAs for 2016-2018 Performance Cycle||Target Number of PSAs for 2017-2019 Performance Cycle|
- 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 or Average Performance Net Income ROE and Earned Book Value for the measurement period. The number of PSAs that vest will be determined in 2018, 2019, and 2020, respectively.