2018 Annual Meeting of Stockholders

Stockholder Proposals

PROPOSAL
4

Stockholder Proposal on Independent Board Chairman

  • The Board recommends a vote AGAINST this proposal.
    • Allstate’s independent lead director provides meaningful independent leadership of the Board.
    • Allstate’s independent lead director is selected through a robust process, and her performance is evaluated annually.
    • The Board should continue to have flexibility to determine whether to split or combine the Chair and CEO roles and not be required to utilize one approach.
    • The Board has split the roles of Chair and CEO in the past.
    • The lead director is just one of many structural safeguards that provide effective independent oversight of Allstate.

Mr. Kenneth Steiner, 14 Stoner Ave., 2M, Great Neck, NY 11021, beneficial owner of no less than 300 shares of Allstate common stock as of December 5, 2017, intends to propose the following resolution at the annual meeting.

Shareholders request our Board of Directors to adopt as policy, and amend our governing documents as necessary, to require henceforth that the Chair of the Board of Directors, whenever possible, to be an independent member of the Board. The Board would have the discretion to phase in this policy for the next CEO transition, implemented so it does not violate any existing agreement.

If the Board determines that a Chair who was independent when selected is no longer independent, the Board shall select a new Chair who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent director is available and willing to serve as Chairman. This proposal requests that all the necessary steps be taken to accomplish the above.

Caterpillar is an example of a company recently changing course and naming an independent board chairman. Caterpillar had strongly opposed a shareholder proposal for an independent board chairman as recently as its 2016 annual meeting. Wells Fargo also changed course and named an independent board chairman in 2016.

It was reported that 53% of the Standard & Poors 1,500 firms separate these 2 positions (2015 report): Chairman and CEO. This proposal topic won 50%-plus support at 5 major U.S. companies in 2013 including 73%-support at Netflix.

This proposal topic also won impressive 47%-support at our 2016 annual meeting. This 47%-support would have been higher (perhaps 51%) if small shareholders had the same access to corporate governance information as large shareholders.

Extra consideration could be given to this proposal since our Lead Director, Judith Sprieser lacked an important attribute. Ms. Sprieser had 18-years long tenure. Long-tenure can impair the independence of a director — no matter how well qualified. Independence is a highly valuable attribute in a director —especially in a Lead Director who has additional responsibilities in the oversight of our CEO.

An independent chairman would have the time to improve the qualifications and commitment of our directors. For instance the following 4 directors had almost zero “skin in the game” since they owned zero stock or almost zero stock:

Judith Sprieser 
Jacques Perold 
Michael Eskew 
Siddharth Mehta

This is compounded by the fact that Allstate pays these directors $250,000 each for perhaps 250 hours of work in a year. This is further compounded by the fact that Ms. Sprieser had collected Allstate director pay for 18-years. In its response to this proposal management can let us know the total director pay that Allstate has given to Ms. Sprieser in 18-years.

Plus these 4 directors controlled 5 positions on our most important board committees and Ms. Sprieser was our Lead Director. Serious consideration should be given to whether a director who owns zero stock can serve on an important board committee or as a Lead Director.

Please vote to enhance the oversight of our CEO:

Independent Board Chairman – Proposal 4

Board of Directors’ Statement in Opposition to the Stockholder Proposal on Independent Board Chairman

The Board recommends that stockholders vote AGAINST this proposal for the following reasons:

ALLSTATE’S INDEPENDENT LEAD DIRECTOR PROVIDES MEANINGFUL INDEPENDENT LEADERSHIP OF THE BOARD.

  • The powers of the lead director and committee chairs were formalized and expanded in 2016 as a result of stockholder dialogue. For a more detailed description of our lead director role, see page 19.

  • Our lead director is selected after a comprehensive annual process and has well-defined and substantive responsibilities:

    • Is elected solely by independent members of the Board;

    • Has authority to call meetings of the independent members of the Board;

    • Approves Board meeting agendas, schedules and information provided to the Board;

    • Facilitates and communicates the Board’s performance evaluation of the CEO and Chair;

    • Facilitates the evaluation of Board and director performance;

    • Ensures implementation of the Board committee self-evaluation process and reports to the Board, and provides guidance to Committee chairs, as needed;

    • Facilitates the Chair and CEO succession process;

    • Presides at all Board meetings at which the Chair is not present and at all executive sessions; and

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

ALLSTATE’S INDEPENDENT LEAD DIRECTOR IS SELECTED THROUGH A ROBUST PROCESS, AND HER PERFORMANCE IS EVALUATED ANNUALLY.

  • Each year, the nominating and governance committee recommends a director to the independent members of the Board to serve as the independent lead director. The lead director is elected annually by the independent directors but is generally expected to serve for more than one year.

  • The lead director’s performance is assessed annually; as part of that review, the nominating and governance committee evaluates the criteria for nominees for the lead director role and assesses any needed changes. In selecting the lead director, the independent directors consider market, operational, and governance issues facing Allstate. They consider relevant leadership, operational and corporate governance experience, relationships with the other Board members and external commitments. In addition, the lead director is expected to have a thorough understanding of the company’s business operations and history.

  • Contrary to what the proponent states, each of Allstate’s directors has “skin in the game.” The restricted stock units held by each director at the end of 2017 are listed on page 29. As shown on that table, each of our directors has a substantial economic interest valued between $118,000 and $4,400,000 based on the closing price of Allstate’s common stock of $104.71 on December 29, 2017.

THE BOARD SHOULD CONTINUE TO HAVE FLEXIBILITY TO DETERMINE WHETHER TO SPLIT OR COMBINE THE CHAIR AND CEO ROLES AND NOT BE REQUIRED TO UTILIZE ONE APPROACH.

  • The Board believes it is important to maintain the flexibility to choose whether to split the Board Chair and CEO roles at Allstate. Requiring a split of the roles would reduce the Board’s ability to act in the best interests of the Company as the needs of the Board and the Company change over time.

  • According to a survey by a major corporate governance firm in 2017, only 12% of the S&P 100 companies REQUIRE the separation of the roles. Most boards believe it is beneficial to have flexibility in determining whether to split or combine the roles.

  • At present, the independent directors have determined Allstate is well-served by having both Chair and CEO roles performed by Mr. Wilson, who provides excellent leadership and direction for both management and the Board. 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.

THE BOARD HAS SPLIT THE ROLES OF CHAIR AND CEO IN THE PAST.

  • Allstate’s Board previously and effectively used the flexibility to separate the role of Chair and CEO. The Board split the roles of Chair and CEO in 2007 during a leadership transition. When Thomas Wilson replaced Edward Liddy as CEO, the Board determined that Mr. Liddy should remain Chair. Mr. Liddy retired in 2008 and the Board decided to elect Mr. Wilson to serve as Chair while retaining his role as CEO.

  • The practice of splitting the roles during leadership transitions so that a company’s former CEO can continue to provide perspective to a new CEO is common among companies. According to a study by a leading global advisory firm, published in January 2017, 37% of stand-alone board chairs of Fortune 500 companies previously served as CEO of the same company.

THE LEAD DIRECTOR IS JUST ONE OF MANY STRUCTURAL SAFEGUARDS THAT PROVIDE EFFECTIVE INDEPENDENT OVERSIGHT OF ALLSTATE.

  • In addition to the strong role of our independent lead director, the Board has policies and practices that support a balanced and strong governance system, including:

    • All of Allstate’s Board members are independent within the meaning of applicable laws, with the exception of the CEO;

    • All members of each of the key Board committees (the audit, compensation and succession, nominating and governance, and risk and return committees) are independent; and

    • The committee chairs’ responsibilities were proactively enhanced to include the power to approve committee agendas and meeting materials.

    • Each committee operates under a written charter that has been approved by the Board and that details the oversight of key matters, such as the integrity of Allstate’s financial statements, executive compensation, CEO performance, nomination of directors, evaluation of the Board, and risk and return management;

    • The Board performs a formal annual evaluation of the Chair and CEO in an executive session; and

    • All key Board committees have access to and utilize independent external advisors.