Strong corporate governance is a critical component to our success in driving sustained value. We are working diligently to ensure executive and Board-level transparency and accountability.
Corporate Governance Structure
The Allstate Board of Directors has ultimate responsibility for the conduct of the company. In 2011, our Board was comprised of 11 members including Thomas J. Wilson, who serves as Chairman of the Board, President and Chief Executive Officer of Allstate. Mr. Wilson has served as Chairman of Allstate since May 2008 and as President and Chief Executive Officer since January 2007.
The Board is responsible for selecting the Chairman of the Board and the Chief Executive Officer (CEO). Allstate’s Corporate Governance Guidelines allow the Board to allocate the responsibilities of these positions in any way that it considers to be in Allstate’s best interest. The Board believes such flexibility helps it adapt the leadership function to changing circumstances.
In 2011 the Board also elected a lead independent director who, among other duties, presides at all Board meetings where the Chairman is not present and at all executive sessions; serves as a liaison between the Chairman and the independent directors when necessary to provide a supplemental channel of communications; works with the Chairman to develop Board meeting agendas, schedules and information provided to the Board; and communicates with significant stockholders on matters involving broad corporate policies and practices when appropriate.
The CEO meets at least annually with the Compensation and Succession Committee and the Nominating and Governance Committee, either separately or jointly, as appropriate, to discuss succession planning and management development for senior executives. The senior leadership team is selected by the CEO and is responsible for the day-to-day management of the business. The Board acts as advisor to senior leadership and oversees its performance. The Compensation and Succession Committee reviews succession plans for senior officers, confers with the Chief Executive Officer about executives’ qualifications for potential senior leadership vacancies, and recommends to the Board officer elections.
Allstate’s Board of Directors has adopted “Director Independence Standards” which are applied to determine that each nominee, with the exception of Mr. Wilson, is independent in accordance with Allstate’s Corporate Governance Guidelines.
These Guidelines also include criteria used in selecting nominees for election to the Board. These criteria are periodically reviewed to ensure they appropriately reflect the issues that should be considered in evaluating director candidates. The Nominating and Governance Committee recommends criteria for assessment of the performance of the Board of Directors.
Management reports annually to the Nominating and Governance Committee the status of the Corporation’s Board compensation in relation to peer companies. No specific element of the Board’s compensation is directly based on the Corporation’s sustainability performance. To link compensation with corporate performance, a meaningful portion of each director’s compensation is provided in the form of restricted stock units which currently provide for delivery of the underlying shares of Allstate common stock upon the earlier of a) the date of the director’s death or disability or b) the date the director leaves the Board. Within five years of joining the Board, each director is expected to accumulate an ownership position in Allstate securities equal to five times the value of the annual cash retainer paid for Board service.
A full description of the Corporation’s director compensation is provided in the Corporation’s annual proxy statement available on the Investor Relations page within the About Allstate section of our website.
Governance of Sustainability
Allstate’s Office of Public Social Responsibility, which resides in the company’s Corporate Relations department, is responsible for managing sustainability, corporate responsibility and environmental reporting, strategic philanthropy and companywide volunteer service. It reports regularly to our Senior Leadership Team to keep them apprised of sustainability issues and initiatives.
In addition to the Public Social Responsibility team, we established a Sustainability Leadership Committee in 2009, composed of officers and senior staff from all areas of the company. The Committee meets quarterly to review our environmental efforts from an enterprise-wide perspective, build alignment, create momentum for Allstate’s heightened sustainability efforts, and identify opportunities associated with environmental responsibility and climate change.
Allstate’s Sustainability Leadership Committee completes an annual review of the company’s operations, stakeholder expectations and competitive actions to identify internal opportunities related to climate change. The Committee considers potential opportunities related to: employee engagement, current and future regulation, improved operational efficiencies, and customer and consumer expectations.
Allstate’s Vice President of Public Social Responsibility, who leads the Sustainability Leadership Committee, reports to the Senior Leadership Team on the efforts and assessments of the Committee. These results are then reported to the Board when necessary.
More details regarding oversight can be found on the Risk Management page of this site.