8-KMaterial Agreements

ALLSTATE CORP 8-K Report, Material Agreement (Nov 15, 2004)

Filed November 15, 2004For Securities:ALLALL-PJALL-PBALL-PHALL-PI

Summary

Allstate Corporation filed an 8-K on November 15, 2004, reporting on material definitive agreements related to its executive and director compensation plans. The company's Compensation and Succession Committee approved performance goals and target awards for the 2005-2007 Long-Term Executive Incentive Compensation Plan. This plan aims to attract and retain talent by linking executive compensation to long-term performance, with 50% of the measure based on return on equity compared to peers, 25% on property and casualty policy growth, and 25% on financial services premium and deposit growth. Additionally, the Nominating and Governance Committee amended and restated the Equity Incentive Plan for Non-Employee Directors. Effective November 9, 2004, non-employee directors will receive annual grants of 2,000 restricted stock units instead of direct shares, aligning their interests with shareholders and providing an incentive to serve on the board. These units include dividend equivalent rights.

Key Highlights

  • 1Allstate's Compensation Committee set performance goals for its 2005-2007 Long-Term Executive Incentive Compensation Plan.
  • 2The executive incentive plan links compensation to a mix of financial performance metrics: 50% Return on Equity (ROE) against peers, 25% property/casualty policy growth, and 25% financial services growth.
  • 3Minimum ROE threshold for executive payouts is set at the average 3-year Treasury Note rate plus 200 basis points.
  • 4Maximum award for executives achieving target performance is 300% of their target award.
  • 5Allstate amended its Equity Incentive Plan for Non-Employee Directors.
  • 6Non-employee directors will now receive 2,000 restricted stock units annually instead of common stock shares.
  • 7Restricted stock units for directors include dividend equivalent rights.

Frequently Asked Questions

The plan is designed to attract and retain talented executives by linking their cash awards to the achievement of specific performance objectives over a three-year cycle, thereby promoting long-term corporate performance and maximizing compensation deductibility under Section 162(m) of the Internal Revenue Code.

For the 2005-2007 cycle, 50% of the performance measure is based on Allstate's return on equity compared to a peer group. The remaining 25% is based on the growth of Allstate Protection (property and casualty) policies, and the final 25% on the growth of Allstate Financial premiums and deposits.

Under the amended Equity Incentive Plan for Non-Employee Directors, each non-employee director will now receive an annual grant of 2,000 restricted stock units instead of an annual grant of 2,000 shares of Allstate's common stock. These units are subject to certain vesting conditions and include dividend equivalent rights.

Awards for the 2005-2007 performance cycle will be calculated and are payable in March 2008, after the Compensation and Succession Committee has certified in writing the degree to which the performance objectives were met.