STOCKHOLDER PROPOSALS

Proposal
6

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.
  • 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 500 shares of Allstate common stock as of November 28, 2016, intends to propose the following resolution at the annual meeting.

Proposal 6 – Independent Board Chairman

Shareholders request our Board of Directors to adopt as policy, and amend our governing documents as necessary, to require 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 Chair. This proposal requests that all the necessary steps be taken to accomplish the above.

Caterpillar reversed itself by naming an independent board chairman in October 2016. Caterpillar had opposed a shareholder proposal for an independent board chairman as recent as its June 2016 annual meeting. Wells Fargo also reversed itself and named an independent board chairman in October 2016.

This proposal is of greater importance to our company because our Lead Director, Judith Sprieser was cited as a flagged director by GMI Analysis because she was involved with a company that went bankrupt. Ms. Sprieser had 17 years long-tenure (one of 2 directors with over 17-years tenure) which can make a director act like an insider.

This proposal topic won 47% voting support at our 2016 annual meeting. This means that the overwhelming number of shareholders who are well informed on both sides of the issues involving an independent board chairman — supported this proposal topic.

According to Institutional Shareholder Services 53% of the Standard & Poors 1,500 firms separate these 2 positions — “2015 Board Practices,” April 12, 2015. This proposal topic won 50%-plus support at 5 major U.S. companies in 2013 including 73%-support at Netflix.

It is the responsibility of the Board of Directors to protect shareholders’ long-term interests by providing independent oversight of management. By setting agendas, priorities and procedures, the Chairman is critical in shaping the work of the Board.

Having a board chairman who is independent of management is a practice that will promote greater management accountability to shareholders and lead to a more objective evaluation of management.

A number of institutional investors said that a strong, objective board leader can best provide the necessary oversight of management. Thus, the California Public Employees’ Retirement System’s Global Principles of Accountable Corporate Governance recommends that a company’s board should be chaired by an independent director, as does the Council of Institutional Investors. An independent director serving as chairman can help ensure the functioning of an effective board. Please vote to enhance shareholder value:

Independent Board Chairman – Proposal 6


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 21.
  • 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.
  • 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.
  • The committee chairs’ responsibilities were proactively enhanced to include the power to approve committee agendas and meeting materials.

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 separate 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 executive search firm in 2015, only 4% of S&P 500 companies REQUIRE the separation of the roles. Most boards believe it is beneficial to have flexibility in determining whether to separate or combine the roles.
  • In response to a similar proposal last year, the Board engaged in an extensive outreach campaign to our largest stockholders representing approximately 40% of Allstate’s outstanding shares in 2016. Topics discussed included the lead director role and the decision to maintain a combined Chair and CEO. Based on feedback from our stockholders and the Board’s analysis of its needs, the lead director role and committee chair responsibilities were enhanced, codifying existing practices and incorporating additional responsibilities.
  • 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 this flexibility to benefit stockholders. The Board split the roles of Chair and CEO in 2007 during a leadership transition. In January 2007, Thomas Wilson replaced Edward Liddy as CEO, and the Board determined that Mr. Liddy should remain Chair. During this period, both Mr. Liddy and Mr. Wilson attended Board and committee meetings to provide historical context and a seamless transition. Mr. Liddy retired in 2008 and the Board decided to have Mr. Wilson be Chair while retaining his role as CEO.
  • The practice of splitting the roles during leadership transitions is common among companies. According to a survey from a leading global advisory firm, 37% of current stand-alone board chairs 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 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;
  • 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.