CORPORATE GOVERNANCE STRUCTURE
Our Board selects nominees based on their diverse skills and experience and believes each Director should be well-versed in certain core competencies including strategic oversight, stockholder advocacy, corporate governance and leadership. This diversity of experience and expertise facilitates robust and thoughtful decision-making on Allstate’s Board. The Board screens all potential candidates for conflicts of interest, and all Directors are independent, except the CEO. The Board believes that a mix of long- and short-tenured Directors ensures an appropriate balance of views and insights and allows the Board as a whole to benefit from the historical and institutional knowledge that longer-tenured Directors possess and the fresh perspectives contributed by newer Directors. Allstate’s Board has 10 members, seven of whom joined the Board in the past five years.
Thomas Wilson serves as the company’s Chairman of the Board and Allstate’s CEO and President. Mr. Wilson has been Chairman since May 2008 and CEO since January 2007. Judith A. Sprieser has been our Independent Lead Director since May 2015. Among many responsibilities, the Independent Lead Director is the liaison between the Chairman and the independent Directors, chairs executive sessions of the independent Directors, shapes agendas and information provided to the Board, and presides at all Board meetings at which the Chairman is not present.
The primary role and responsibility of the Board is to oversee the affairs of the company for the benefit of the stockholders. As the highest authority within the company, they are responsible for selecting executive leadership that manage and operate Allstate effectively and responsibly. The Board provides counsel and direction to the executive leadership of the company and monitors their performance. Their responsibilities include, but are not limited to, oversight of the company’s strategy, business performance, compensation programs and shareholder advocacy. The Board also regularly reviews the company’s significant risk exposures and how those exposures are managed. The Board houses five sub-committees: audit, compensation and succession, nominating and governance, risk and return, and executive. For a more detailed description of the duties and responsibilities of each individual committee, please see pages 26-27 of Allstate’s 2018 Proxy Statement.
Enterprise Risk and Return Management (ERRM)
The Risk and Return Committee (RRC) of the Board oversees our Enterprise Risk and Return Management (ERRM) framework as well as management’s design and implementation of ERRM, including integration with strategy and operations. The framework is further supported by strong organizational commitment at the senior management level which includes an executive management committee structure, an enterprise Chief Risk Officer (CRO) and business unit CROs.
Allstate uses a principle-based approach to ERRM focusing on measurement, transparency and dialogue. We regularly measure, monitor and report on the major categories of enterprise risk: insurance, financial, investment, operational and strategic. Our risk-return principles define how we operate and guide decision-making around risk and return. These principles state that our priority is to protect solvency, comply with laws, maintain a supportive political and regulatory environment, and act with integrity, and protect information assets and technology. Building upon this foundation, we strive to build strategic value and optimize risk and return.
The Board believes that Directors should act on behalf of all stockholders, should not represent the interests of particular constituents and should reflect a diversity of background, expertise and perspective arising from gender, age, experience, ethnicity, skills and viewpoints. As of year-end 2017, Allstate had five non-executive Directors who brought gender or ethnic diversity to the Board.
With input from the Lead Director, the Nominating and Governance Committee annually reviews, and recommends for approval by the Board, the criteria and processes to be used to evaluate the performance of the Board as a whole, and each committee. The contributions and performance of each individual Director are evaluated annually by the Lead Director, the Chair and the chair of the Nominating and Governance Committee. We utilize an ongoing Board and committee self-evaluation process, including at the end of each regularly scheduled in-person meeting. Please see page 17 of the 2018 Proxy Statement for more information.
Executive compensation programs are designed with assistance from an independent consultant, to be aligned with our strategy, key performance metrics and total shareholder returns. The executive compensation programs deliver 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. These programs have consistently received high stockholder support, as reflected by the stockholder advisory vote with 93% or greater support for each of the last three years.
Allstate has a proactive practice of discussing corporate governance issues with significant stockholders throughout the year. Such discussions are held before the annual meeting, during stockholder voting and after the annual meeting, and they include our Lead Director, chair of the Nominating and Governance Committee, Chair of the Board and other committee chairs or Directors as necessary. Each Board committee reviews relevant feedback and determines if additional discussion or actions are necessary by the respective committee or full Board. During 2017, Allstate reached out to stockholders representing approximately 38% of outstanding shares.
Allstate’s Board discusses management succession at least four times a year. Discussions cover the CEO and other senior executive roles and include a broader discussion on organizational health. The Board has regular and direct exposure to senior leadership and high potential officers through informal meetings held throughout the year.
Since the pace of economic change continues to accelerate, a diligent Board must simultaneously focus on current performance and long-term strategy. As part of strategic planning, the Board reviews Allstate’s relative competitive positioning and alternatives to maximize profitable growth. In 2017, the Board devoted significant time to Allstate’s strategy and how to effectively capture opportunities presented by changes in the automobile industry, including autonomous vehicle technology and ride-sharing. Long-term growth was enhanced through existing businesses and the creation of new businesses.
For more information on Allstate’s corporate governance, visit our Investor Hub.
GOVERNANCE OF SUSTAINABILITY
Click here to learn more about our 2015 sustainability materiality assessment. Because of the assessment, Allstate is focused on four topics significant to both Allstate and our stakeholders — Community, Workforce and Diversity (Human Capital), Risk and Climate and Privacy and Information Security. In response, our report now focuses on these four topics with detailed information designed to answer the questions of all interested stakeholder groups.
While the Board of Directors is responsible for the overall performance of Allstate, the following three bodies of leadership directly guide Allstate’s corporate responsibility and sustainability efforts:
Our CEO and Select Executive Leaders
These individuals provide counsel, strategic oversight and direction to the groups below.
The Corporate Responsibility and Sustainability Team
Residing in Allstate’s Corporate Relations department, the corporate responsibility and sustainability team — in partnership with The Allstate Foundation and corporate citizenship team — manages sustainability, environmental reporting, strategic philanthropy, corporate sponsorships and grants, employee engagement and companywide volunteer service. They regularly report to our senior executives
on sustainability trends and initiatives. In addition, the corporate responsibility and sustainability team briefs the Board of Directors on the status of Allstate’s corporate responsibility efforts.
The Allstate Sustainability Council
Allstate has maintained a Sustainability Council since 2007. The council, which meets up to three times annually, represents each of the following departments within Allstate:
- Allstate Brand Operations
- Accounting Services
- Administration and Real Estate
- Agency Operations
- Allstate Technology and Strategic Ventures
- Corporate Relations
- Enterprise Risk and Return Management (ERRM)
- Human Resources
- Sourcing and Procurement
This cross-functional council reviews opportunities regarding operational efficiency, climate change and employee-focused sustainability initiatives. Allstate’s senior vice president of corporate responsibility leads the council and updates senior executives on its activity annually.