<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to S 240.14a-11(c) or S 240.14a-12
The Allstate Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form of Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------
3) Filing Party:
---------------------------------------------
4) Date Filed:
---------------------------------------------
<PAGE>
LOGO
PRELIMINARY COPY
DEFINITIVE COPY INTENDED TO BE SENT TO
STOCKHOLDERS MARCH 27,
1998
LOGO
March 27, 1998
Jerry D.
Choate
Chairman of
the Board
Dear Stockholder:
You are cordially invited to attend Allstate's 1998
annual meeting of stockholders to be held on Tuesday, May
19, 1998. The meeting will be held at 1:30 p.m. in the
Education Center of the Chicago Botanic Garden, 1000 Lake
Cook Road, Glencoe, Illinois.
Following this letter is the Notice of Meeting, which
lists the matters to be considered at the meeting. After
the Notice of Meeting is the Proxy Statement, which
describes the matters listed in the Notice of Meeting and
which provides financial information about the Company and
management's discussion and analysis of the Company's
operations and financial condition. Also enclosed is your
proxy card, which enables you to vote on the matters to be
considered, and a copy of Allstate's 1997 Annual Report.
PLEASE COMPLETE AND MAIL IN YOUR PROXY CARD PROMPTLY,
whether or not you plan to attend the meeting. You can
attend the meeting and vote in person even if you have sent
in a proxy card.
Your Board of Directors and management look forward to
greeting personally those stockholders who are able to
attend.
Sincerely,
LOGO
Jerry D. Choate
<PAGE>
LOGO
March 27, 1998
Robert W. Pike
Vice President,
Secretary and General Counsel
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------------------
The annual meeting of stockholders of The Allstate Corporation ("Allstate")
will be held in the Education Center of the Chicago Botanic Garden, 1000 Lake
Cook Road, Glencoe, Illinois on Tuesday, May 19, 1998, at 1:30 p.m., for the
following purposes:
1. to elect eight directors;
2. to vote on the recommendation of the Board of Directors that Deloitte &
Touche LLP be appointed Allstate's independent auditors for 1998;
3. to vote on a proposed amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of common
stock to 2,000,000,000;
4. to vote on a stockholder proposal for cumulative voting for the Board of
Directors; and
5. to transact such other business as may properly come before the meeting.
By Order of the Board of Directors,
LOGO
Robert W. Pike
Secretary
<PAGE>
The Allstate Corporation
Proxy Statement
March 27, 1998
- --------------------------------------------------------------------------------
The Board of Directors of Allstate is soliciting proxies from its
stockholders for the annual meeting of stockholders to be held on May 19, 1998.
You are entitled to vote at that meeting if you were a stockholder of record
at the close of business on March 20, 1998. On March 20, 1998, there were
xxx,xxx,xxx Allstate common shares outstanding. On March 27, 1998, Allstate
began mailing to all such stockholders and to participants in The Savings and
Profit Sharing Fund of Allstate Employees (the "Profit Sharing Plan") a proxy
card, this proxy statement, and Allstate's 1998 Annual Report.
For participants in the Profit Sharing Plan, the number of shares shown on
the proxy card includes shares of Allstate common stock equivalent to the value
of the credits to your account in the Profit Sharing Plan. As to these shares,
the proxy card constitutes instructions to The Northern Trust Company, the
Profit Sharing Plan Trustee.
Your signed proxy card will appoint James G. Andress, Warren L. Batts and
Edward A. Brennan as proxy holders to vote your shares.
If you sign and return your proxy card without giving voting directions the
proxy holders will vote your shares:
(i) for all of the nominees for director listed in this proxy statement;
(ii) for the appointment of Deloitte & Touche LLP as independent auditors
for 1998;
(iii) for the proposed amendment to the Certificate of Incorporation; and
(iv) against the stockholder proposal for cumulative voting for the
Board.
The proxy card permits you to direct the proxy holders to withhold your votes
from particular director nominees, and to vote "for," "against," or "abstain"
from the appointment of auditors, the proposed amendment to the Certificate of
Incorporation, and the stockholder proposal for cumulative voting for the
Board.
Signing and returning your proxy card will not prevent you from voting in
person at the meeting. If you vote in person at the meeting, your previously
voted proxy will be automatically revoked. You may also revoke your proxy any
time before it is voted by sending notice prior to the meeting to:
First Chicago Trust Company of New York
P.O. Box 8010
Edison, NJ 08818-9007
If you submit more than one proxy, each later-dated proxy will revoke all
previous proxies.
The Board of Directors expects all nominees named below to be available for
election. In case any nominee is not available, the proxy holders may vote your
shares for a substitute if you have submitted a signed proxy card.
As far as Allstate knows, the only matters to be brought before the meeting
are those referred to in this proxy statement. As to any other matters
presented at the meeting, if you send in a signed proxy card, the proxy holders
may vote your shares in their discretion.
No business can be conducted at the meeting unless a majority of all
outstanding shares entitled to vote are either present at the meeting in person
or represented by proxy.
The eight nominees who receive the most votes will be elected to the eight
open directorships even if they get less than a majority of the votes. For
approval of the appointment of Deloitte & Touche LLP as auditors (Item 2) and
the stockholder proposal for cumulative voting for the Board (Item 4), more
shares must be voted "for" than "against" each proposal. For approval of the
proposed amendment to the Certificate of Incorporation (Item 3), a majority of
all outstanding shares must be voted "for" the proposal.
Abstention with respect to Items 2, 3 or 4 will be counted as shares present
at the meeting and will have the effect of a vote against the Item. Broker non-
votes (that is, if the broker holding your shares in street name does not
1
<PAGE>
vote with respect to an Item) on Item 2 or 4 will not be counted as shares
voted on the Item and will have no effect on the outcome of the vote on the
Item. Broker non-votes on Item 3 will have the effect of a vote against the
Item.
All proxies, ballots and tabulations that identify the vote of a particular
stockholder are kept confidential, except as necessary (i) to allow the
inspectors of election to certify the voting results, or (ii) to meet certain
legal requirements--for example, in the pursuit or defense of lawsuits. Those
counting votes and the inspectors are independent of Allstate and its
directors, officers and employees. Representatives of First Chicago Trust
Company of New York will act as the inspectors of election and will count the
votes.
Comments written on proxies or ballots may be transcribed and provided to the
Secretary of Allstate with the name and address of the stockholder. The
comments will be provided without reference to the vote of the stockholder,
unless the vote is mentioned in the comment or disclosure of the vote is
necessary to understand the comment. At Allstate's request, those counting
votes may provide Allstate with a list of stockholders that have not voted and
periodic status reports on the aggregate vote. These status reports may include
break-downs of vote totals by different types of stockholders, as long as
Allstate is not able to determine how a particular stockholder voted.
Item 1: Election of Directors
-------------------------------------------------------------------
Each nominee was previously elected by the stockholders at Allstate's 1997
Annual Meeting on May 20, 1997, and has served continuously as a director for
the period succeeding the date of his or her election. The terms of all
directors will expire at this Annual Meeting. No person, other than the
directors of Allstate acting solely in that capacity, is responsible for the
naming of the nominees.
Information as to each nominee follows. Unless otherwise indicated, each
nominee has served for at least 5 years in the business position currently or
most recently held.
NOMINEES FOR DIRECTOR
JAMES G. ANDRESS
LOGO President and Chief Executive Officer of Warner Chilcott
PLC, a pharmaceutical company, since November 1996. Mr.
Andress served as Co-Chief Executive Officer, Chief Operating
Officer and President of Information Resources, Inc. ("IRI"),
a market research and corporate software organization, from
May 1994 until September 1995. Previously, Mr. Andress had
served as Vice Chairman and Chief Executive Officer of IRI
from June 1993 until May 1994. Mr. Andress had also served as
President and Chief Executive Officer of IRI from May 1990
until June 1993. Mr. Andress is also a director of IRI; The
Liposome Company, Inc.; NeoRx Corporation; OptionCare, Inc.;
Sepracor, Inc.; and Xoma Corporation.
Member: Compensation and Nominating Committee.
Director since 1993. Age: 59.
Common shares: owned--1,837.
subject to option--500.
WARREN L. BATTS
Chairman and Chief Executive Officer of Tupperware
Corporation, a consumer products company, from June 1996
until his retirement in September 1997. He served as Chairman
and Chief Executive Officer of Premark International, Inc.
from September 1986 to June 1996 and as Chairman of the Board
of Directors of Premark International, Inc. until September
1997. He is also a director of Cooper Industries, Inc.;
Sears, Roebuck and Co.; and Sprint Corporation.
Chairman: Compensation and Nominating Committee.
Director since 1993. Age: 65.
Common shares: owned--8,175.
subject to option--500.
LOGO
2
<PAGE>
EDWARD A. BRENNAN
LOGO
Chairman of the Board of Directors, President and Chief
Executive Officer of Sears, Roebuck and Co. from January 1986
until his retirement in August 1995. Mr. Brennan is also a
director of AMR Corporation; Dean Foods Company; Minnesota
Mining and Manufacturing Company; Morgan Stanley Dean Witter,
Discover & Co.; The SABRE Group Holdings, Inc.; and Unicom
Corporation.
Member: Compensation and Nominating Committee.
Director since 1993. Age: 64.
Common shares: owned--210,505.
subject to option--500.
JERRY D. CHOATE
LOGO Chairman of the Board and Chief Executive Officer of
Allstate since January 1, 1995. Mr. Choate was elected
President and Chief Executive Officer of Allstate and a
member of the Board of Directors on August 10, 1994.
Previously, and since 1989, he served as Senior Executive
Vice President of Allstate Insurance Company ("AIC") and as
President of AIC's personal property and casualty business
unit.
Director since 1994. Age: 59.
Common shares: owned--41,377.
subject to option--454,082.
JAMES M. DENNY
LOGO Managing Director of William Blair Capital Partners, a
private equity fund, since September 1995. Mr. Denny served
as Vice Chairman of Sears, Roebuck and Co. from February 1992
until his retirement in August 1995. He is also a director of
Astra AB; ChoicePoint, Inc.; GATX Corporation; Gilead
Sciences, Inc.; and Northwestern Memorial Corporation.
Member: Audit Committee.
Director since 1993. Age: 65.
Common shares: owned--86,298.
subject to option--500.
MICHAEL A. MILES
LOGO Mr. Miles is Special Limited Partner of Forstmann Little &
Co., an investment banking company. Mr. Miles served as
Chairman of the Board and Chief Executive Officer of Philip
Morris Companies Inc. from September 1991 until his
retirement in July 1994. He is also a director of Morgan
Stanley Dean Witter, Discover & Co.; Dell Computer
Corporation; Sears, Roebuck and Co.; and Time Warner Inc.
Member: Audit Committee.
Director since 1995. Age: 58.
Common Shares: owned--10,249.
subject to option--500.
JOSHUA I. SMITH
Chairman and Chief Executive Officer of The MAXIMA
Corporation, a company engaged in technology systems support
services. Mr. Smith is also a director of Caterpillar, Inc.;
Federal Express Corporation; and Inland Steel Industries,
Inc.
Member: Audit Committee
Director since 1997. Age: 56.
Common Shares: owned--750.
subject to option--125.
LOGO
3
<PAGE>
MARY ALICE TAYLOR
LOGO
Corporate Executive Vice President--Global Operations &
Technology of Citicorp since January 1998. Previously, Ms.
Taylor had served as Executive Vice President--Operations of
Citicorp since January 1997. She had served as Senior Vice
President--United States and Canada, of Federal Express
Corporation from September 1994 to January 1997. Prior to
that she served as Senior Vice President--Central Support
Services of Federal Express from September 1991 until
September 1994. Ms. Taylor is also a director of Autodesk,
Inc.; and Perrigo Company.
Member: Audit Committee.
Director since March 1996. Age: 47.
Common shares: owned--1,551.
subject to option--500.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as to shares of voting
stock of Allstate beneficially owned by each director and nominee, each
executive officer named in the Summary Compensation Table, and by all executive
officers and directors of Allstate as a group. Shares reported include shares
held as nontransferable restricted shares awarded under Allstate's employee
benefit plans and subject to forfeiture under certain circumstances, and shares
subject to stock options exercisable on or prior to April 1, 1998. The
percentage of Allstate shares beneficially owned by any Allstate director or
nominee or by all directors and officers of Allstate as a group does not exceed
1%. Unless indicated otherwise in the footnotes below, all shares are directly
owned as of January 31, 1998.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP OF
ALLSTATE SHARES
NAME (A)
---- -----------------
<S> <C>
James G. Andress 2,337
Warren L. Batts 8,675
Edward A. Brennan 211,005
Jerry D. Choate 495,659(b)
James M. Denny 86,798
Michael A. Miles 10,749
Joshua I. Smith 875
Mary A. Taylor 2,051
Robert W. Gary 112,743(c)
Edward M. Liddy 439,968(d)
Louis G. Lower, II 180,992(e)
Casey J. Sylla 52,079(f)
All directors and executive
officers as a group 2,343,661(g)
</TABLE>
- ---------
(a) Each of the totals for Messrs. Andress, Batts, Brennan, Denny and Miles and
for Ms. Taylor include 500 Allstate shares subject to option, and the total
for Mr. Smith includes 125 Allstate shares subject to option.
(b) Includes 454,082 Allstate shares subject to option.
(c) Includes 98,033 Allstate shares subject to option.
(d) Includes 340,185 Allstate shares subject to option.
(e) Includes 166,760 Allstate shares subject to option.
(f) Includes 47,460 Allstate shares subject to option.
(g) Includes 1,727,432 Allstate shares subject to option.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
TITLE NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
-------- -------------------------- ----------------------- --------
<S> <C> <C> <C>
Common FMR Corporation
Edward C. Johnson 3d
Abigail P. Johnson
82 Devonshire Street
Boston, MA 02109-3614 44,643,136(a) 10.5%
Common The Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675 25,714,916(b) 6.1%
</TABLE>
- ---------
(a) Information is as of December 31, 1997, and is based on information in Form
13G filed by FMR Corporation and its two controlling stockholders, Edward
C. Johnson 3d and Abigail P. Johnson (collectively, the "Group"), on
February 10, 1998. Includes 44,640,356 shares over which each member of the
Group has sole dispositive power and 2,780 shares over which FMR
Corporation and Edward C. Johnson 3d have shared voting and dispositive
power. FMR Corporation also has sole voting power over 3,194,426 of the
shares reported as beneficially owned and Edward C. Johnson 3d has sole
voting power over 3,817 of the shares reported as beneficially owned.
(b) As of February 13, 1998. The Northern Trust Company holds the shares as
trustee on behalf of participants in the Profit Sharing Plan. Beneficial
ownership may under certain circumstances include both voting power and
investment power. Information is provided for reporting purposes only and
should not be construed as an admission of actual beneficial ownership.
Further Information Concerning the Board of Directors
-------------------------------------------------------------------
The Board of Directors held 5 meetings during 1997. Each director attended at
least 75% of the Board meetings and meetings of committees of which he or she
is a member. The standing committees of the Board of Directors and the number
of meetings held by each such committee in 1997 were as follows:
<TABLE>
<CAPTION>
NUMBER OF MEETINGS
COMMITTEE NAME HELD DURING 1997
-------------- ------------------
<S> <C>
Audit Committee 4
Compensation and Nominating Com-
mittee 6
</TABLE>
The Compensation and Nominating Committee. The Compensation and Nominating
Committee recommends nominees for election to the Board of Directors, to other
committees of the Board and to fill certain officer positions. The Committee
will consider a nominee for election to the Board recommended by a stockholder
if the stockholder submits the recommendation to the Committee. Stockholders
may submit such recommendations by addressing a letter to the Chairman of the
Compensation and Nominating Committee, The Allstate Corporation, 2775 Sanders
Road, Suite F8, Northbrook, Illinois 60062.
Under Allstate's By-Laws, if a stockholder wants to nominate a person for
election to the Board at Allstate's annual meeting, the stockholder must
provide advance notice to Allstate in order to place such person into
nomination. Notice of stockholder nominations for election at the 1999 annual
meeting must be received by the Secretary, The Allstate Corporation, 2775
Sanders Road, Suite F8, Northbrook, Illinois 60062, no earlier than January 19,
1999 and no later than February 18, 1999. The notice must set forth the name,
age, principal occupation, number of shares of Allstate stock beneficially
owned, and the business and residence addresses of both the proposed nominee
and the stockholder proposing to make the nomination. A copy of these By-Law
provisions is available upon request from the Secretary of Allstate.
The Compensation and Nominating Committee also administers Allstate's
executive compensation and benefit plans, and makes recommendations to the
Board of Directors concerning the proxy statement and form of proxy, plans for
the annual meeting and policies for stockholder voting.
The Audit Committee. The Audit Committee reviews Allstate's annual financial
statements and other financial information included in or incorporated by
reference in Allstate's Proxy Statement, 10-K and annual report to
stockholders. The Committee reviews recommendations by the independent auditors
and internal auditors on
5
<PAGE>
accounting methods and internal controls. The Committee makes recommendations
to the Board on the scope of audits. The Committee reviews reports by the
independent public accountants and internal auditors on compliance by
management with laws and with Allstate's business conduct and ethics policies.
The Committee may conduct independent inquiries. The Committee recommends to
the Board the appointment of independent auditors.
Directors' Compensation and Benefits
-------------------------------------------------------------------
The following table lists the compensation and benefits provided in 1997 to
directors who are not employees of Allstate or its affiliates ("non-employee
directors"):
NON-EMPLOYEE DIRECTORS' COMPENSATION AND BENEFITS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASH
COMPENSATION EQUITY COMPENSATION
---------------- ------------------------
GRANT OF STOCK OPTION
ANNUAL ALLSTATE FOR ALLSTATE
RETAINER FEE (A) SHARES (B) SHARES (C)
---------------- ---------- ------------
<S> <C> <C> <C>
Board Membership $25,000 500 shares 1,500 shares
Committee Chairmen:
Audit and Compensation and Nominat-
ing Committees $ 5,000
Committee Members:
Audit and Compensation and Nominat-
ing Committees -0-
</TABLE>
---------
(a) Under Allstate's Deferred Compensation Plan for Directors, directors may
elect to defer directors' fees to an account which generates earnings
based on:
1. The market value of and dividends on Allstate's common shares ("common
share equivalents").
2. The average interest rate payable on 90 day dealer commercial paper.
3. Standard & Poor's 500 Composite Stock Price Index (with dividends
reinvested).
4. A money market fund.
No director has voting or investment powers in common share equivalents,
which are payable solely in cash. Subject to certain restrictions,
amounts deferred under the plan (together with earnings thereon) may be
transferred between accounts and are distributed in a lump sum or over a
period not to exceed ten years.
(b) Granted each December 1 under the Equity Incentive Plan for Non-
Employee Directors (the "Equity Plan") and subject to restrictions on
transfer until the earliest of 6 months after grant, death or
disability or termination of service. Grants are accompanied by cash
payment to offset the increase in the director's federal, state and
local tax liabilities (assuming the maximum prevailing individual tax
rates) resulting from the grant of shares.
(c) Granted each June 1 at exercise prices equal to 100% of value on the
date of grant. The options become exercisable in 3 equal annual
installments, expire 10 years after grant, and permit the optionee to
exchange owned shares or to have option shares withheld to satisfy
all or part of the exercise price. The options also include a
"reload" feature which gives the optionee the right to purchase for
the remaining term of the original grant the same number of shares
tendered in payment of the exercise price at a price equal to the
fair market value on the exercise date. The vested portion of options
may be transferred to any immediate family member or to a trust for
the benefit of an immediate family member.
6
<PAGE>
Executive Compensation
-------------------------------------------------------------------
The following Summary Compensation Table sets forth information on
compensation earned in 1995, 1996 and 1997 by Mr. Choate and by each of the
four most highly compensated executive officers (the "Named Executives") of
Allstate, Allstate Insurance Company ("AIC"), AIC's property and casualty
business unit ("PP&C"), and Allstate Life Insurance Company ("ALIC"):
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------ ---------------------------------
AWARDS PAYOUTS
----------------------- ---------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) ($)(3) (#)(4) ($)(5) ($)(6)
------------------ ---- ------- --------- ------------ ---------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jerry D. Choate 1997 836,667 1,882,500 9,623 999,954 72,427 1,206,188 8,000
(Chairman and Chief 1996 770,000 405,713 5,684 -0- 39,615 -0- 5,250
Executive Officer) 1995 700,000 757,969 8,288 -0- 326,277 520,635 5,250
Robert W. Gary 1997 414,667 544,251 13,270 315,053 26,381 512,204 8,000
(President of PP&C) 1996 391,500 188,243 9,848 -0- 16,887 -0- 5,250
1995 353,167 321,575 9,713 -0- 101,760 20,126 5,250
Edward M. Liddy 1997 709,167 1,595,625 306,765 849,912 88,976 1,027,032 8,000
(President and Chief 1996 655,000 345,120 2,767 -0- 33,699 -0- 5,250
Operating Officer) 1995 600,000 649,688 6,854 -0- 170,328 226,173 5,250
Louis G. Lower, II 1997 453,225 500,000 22,933 280,589 25,914 570,068 8,000
(President of ALIC) 1996 436,800 246,781 10,246 -0- 18,258 -0- 5,250
1995 416,000 286,650 17,044 -0- 89,359 411,122 5,250
Casey J. Sylla 1997 364,000 636,618 3,106 239,510 18,192 373,013 8,000
(Senior Vice President 1996 353,500 228,829 649 -0- 12,378 -0- 5,206
and Chief Investment 1995 151,389 176,738 -0- -0- 65,000 -0- -0-
Officer of AIC)
</TABLE>
---------
(1) Payments under Allstate's Annual Executive Incentive Compensation Plan.
(2) The amount attributed to Mr. Liddy in 1997 represents principally
income tax benefit rights payments under stock options granted to Mr.
Liddy by Sears, Roebuck and Co. and assumed by Allstate when it was
spun off from Sears on June 30, 1995. The remainder of the amounts for
each of the Named Executives represent tax gross-up payments
attributable to income taxes payable on certain travel benefits, tax
return preparation fees and brokerage fees.
(3) On December 31, 1997, the Named Executives held the following shares of
restricted Allstate Common Stock valued at December 31, 1997 closing
price of $90.50 per share:
<TABLE>
<CAPTION>
NAMED EXECUTIVE # OF SHARES 12/31/97 MARKET VALUE
--------------- ----------- ---------------------
<S> <C> <C>
J. Choate 13,089 $1,184,555
R. Gary 4,525 409,513
E. Liddy 12,207 1,104,734
L. Lower 4,030 364,715
C. Sylla 3,440 311,320
</TABLE>
(4) These awards are set forth below in detail in the table titled
"Option/SAR Grants in Last Fiscal Year."
(5) Payments under Allstate's Long-Term Executive Incentive Compensation
Plan.
(6) Each of the Named Executives participated in the Profit Sharing Plan, a
qualified defined contribution plan sponsored by Allstate. The amounts
shown represents the value of the 1995, 1996 and 1997 allocations to
each Named Executive's account derived from employer contributions to
the Profit Sharing Plan and to its predecessor, The Savings and Profit
Sharing Fund of Sears Employees.
7
<PAGE>
Stock Options
-------------------------------------------------------------------
The following table is a summary of all Allstate stock options granted to the
Named Executives during 1997. Individual grants are listed separately for each
Named Executive. In addition, this table shows the potential gain that could be
realized if the fair market value of Allstate's common shares were not to
appreciate, or were to appreciate at either a 5% or 10% annual rate over the
period of the option term:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED ANNUAL
--------------------------------------------------------------- RATES OF STOCK PRICE
NUMBER OF APPRECIATION FOR OPTION
SECURITIES % OF TOTAL OPTIONS/SARS EXERCISE TERM
UNDERLYING GRANTED TO ALL OR BASE EXPIRATION -----------------------
NAME OPTIONS/SARS(1) EMPLOYEES IN 1997 PRICE ($/SH) DATE 0% 5%($) 10%($)
---- --------------- ----------------------- ------------ ---------- --- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Jerry D. Choate 2,117(2) 0.16 64.50 01/31/03 -0- 46,659 105,923
5,663(2) 0.44 64.50 07/06/05 -0- 186,432 452,183
64,647 4.97 73.28 08/14/07 -0- 2,979,283 7,550,087
Robert W. Gary 482(2) 0.04 61.38 01/31/03 -0- 9,619 21,690
22,824 1.75 73.28 08/14/07 -0- 1,051,853 2,665,602
3,075(2) 0.24 82.81 08/15/06 -0- 136,555 334,452
Edward M. Liddy 3,261(2) 0.25 62.19 01/31/03 -0- 69,481 157,790
5,309(2) 0.41 62.19 01/29/04 -0- 135,157 315,254
8,930(2) 0.69 62.19 01/31/05 -0- 266,695 639,460
54,759 4.21 73.28 08/14/07 -0- 2,523,590 6,395,273
16,717(2) 1.28 83.16 10/30/07 -0- 874,280 2,215,598
Louis G. Lower, II 25,914 1.99 73.28 08/14/07 -0- 1,194,257 3,026,482
Casey J. Sylla 18,192 1.40 73.28 08/14/07 -0- 838,386 2,124,634
</TABLE>
OPTION/SAR GRANTS IN 1997
- --------------------------------------------------------------------------------
---------
(1) These options are exercisable in three equal annual installments, were
granted with an exercise price equal to or higher than the fair market
value of Allstate's common shares on the date of grant, expire ten
years from the date of grant, and include tax withholding rights and a
"reload" feature. Tax withholding rights permit the optionee to elect
to have shares withheld to satisfy federal, state and local tax
withholding requirements. The reload feature permits payment of the
exercise price by tendering Allstate common stock, which in turn gives
the optionee the right to purchase the same number of shares tendered,
at a price equal to the fair market value on the exercise date. The
options permit the optionee to exchange shares owned or to have option
shares withheld to satisfy all or part of the exercise price. The
vested portions of all the options may be transferred to any immediate
family member or to a trust for the benefit of an immediate family
member.
(2) Options granted to replace shares tendered in exercise of options,
under the reload feature.
The following table shows Company stock options that were exercised during
1997 and the number of shares and the value of grants outstanding as of
December 31, 1997 for each Named Executive:
AGGREGATED OPTION/SAR EXERCISES IN 1997 AND 12/31/97 OPTION/SAR VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
SHARES 12/31/97(#) AT 12/31/97($)(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerry D. Choate 23,175 992,949 427,769 207,596 27,427,790 9,156,708
Robert W. Gary 13,353 632,697 89,113 71,559 5,519,882 3,020,277
Edward M. Liddy 174,328 10,030,400 314,021 168,218 20,829,095 6,085,418
Louis G. Lower, II -0- -0- 155,307 67,872 10,285,786 2,841,058
Casey J. Sylla -0- -0- 47,460 48,110 2,791,942 1,989,229
</TABLE>
---------
(1) Value is based on the closing price of Company common stock ($90.50) on
December 31, 1997, minus the exercise price.
8
<PAGE>
Long-Term Executive Incentive Compensation Plan--
Awards in 1997
-------------------------------------------------------------------
The following table shows the threshold, target and maximum long term cash
incentive award opportunities for the Named Executives for the performance
cycle 1997 through 1999. Any awards would be payable in March 2000 based on
actual financial performance results for the three year period:
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED
NUMBER OF PERFORMANCE OR PLANS ($)(B)
SHARES, UNITS OR OTHER PERIOD -----------------------------
NAME OTHER RIGHTS ($)(A) UNTIL PAYOUT THRESHOLD TARGET MAXIMUM
---- ------------------- -------------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Jerry D.
Choate 1,020,000 1/1/97-12/31/99 255,000 1,020,000 2,677,500
Robert W.
Gary 404,000 1/1/97-12/31/99 101,000 404,000 1,060,500
Edward M.
Liddy 864,000 1/1/97-12/31/99 216,000 864,000 2,268,000
Louis G.
Lower, II 458,700 1/1/97-12/31/99 114,675 458,700 1,204,088
Casey J.
Sylla 291,200 1/1/97-12/31/99 72,800 291,200 764,400
</TABLE>
---------
(a) Awards represent a cash incentive.
(b) Target awards are set for participants at the beginning of each cycle
based on a percentage of aggregate salary during the cycle. Actual
awards are based on a percentage of each participant's actual base
salary earned during the cycle. In years in which performance cycles
overlap, 50% of participants' salary are applied to each cycle. The
performance goal for the 1997-1999 cycle is based solely on return on
average equity which is subject to increase or decrease of up to 50%,
depending on the relative performance of Allstate with respect to its
goal as compared with the performance of an identified peer group of
large insurance companies with respect to the goal.
Pension Plans
-------------------------------------------------------------------
The following table indicates the estimated total annual benefits payable
upon retirement to the Named Executives under the specified compensation and
years of service classifications, pursuant to the combined current benefit
formulas of the AIC Retirement Plan and the unfunded Supplemental Retirement
Income Plan (the "Excess Benefits Plan.") The Excess Benefits Plan will pay the
portion of the benefits shown below which exceeds Internal Revenue Code limits
or is based on compensation in excess of Internal Revenue Code limits. Benefits
are computed on the basis of a participant's years of credited service
(generally, limited to 28) and average annual compensation over the
participant's highest five successive calendar years of earnings out of the 10
years immediately preceding retirement. Only annual salary and annual bonus
amounts as reflected in the Summary Compensation Table are considered annual
compensation in determining retirement benefits. As of December 31, 1997,
Messrs. Choate, Gary, Lower and Sylla had 36, 36, 21 and 2 full years of
service, respectively, with Allstate; and Mr. Liddy had 10 full years of
combined Allstate/Sears service. As a result of Mr. Liddy's prior Sears
service, a portion of his retirement benefit will be paid from the Sears Plan.
Annual retirement benefits are generally payable monthly, and benefits
accrued from January 1, 1978 through December 31, 1988 are reduced by a portion
of a participant's estimated social security benefits. Effective January 1,
1989 the retirement benefit calculation was integrated with the employees'
social security wage base. Benefits shown below are based on retirement at age
65 and selection of a straight life annuity:
PENSION PLAN TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------
REMUNERATION 15 20 25 30 35
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$1,000,000 $ 327,000 $ 436,000 $ 545,000 $ 610,000 $ 610,000
- --------------------------------------------------------------------------------
$1,500,000 $ 492,000 $ 656,000 $ 820,000 $ 918,000 $ 918,000
- --------------------------------------------------------------------------------
$2,000,000 $ 657,000 $ 876,000 $1,095,000 $1,226,000 $1,226,000
- --------------------------------------------------------------------------------
$2,500,000 $ 822,000 $1,096,000 $1,370,000 $1,534,000 $1,534,000
- --------------------------------------------------------------------------------
$3,300,000 $1,086,000 $1,448,000 $1,810,000 $2,027,000 $2,027,000
</TABLE>
9
<PAGE>
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
-------------------------------------------------------------------
AIC has agreed to provide Mr. Sylla or his beneficiary a basic retirement or
death benefit if his employment is terminated within 5 years of July 26, 1995
(Mr. Sylla's date of hire) for any reason other than termination pursuant to
AIC's written policy. The amount of the benefit would be calculated under the
Allstate retirement plan, assuming Mr. Sylla had 5 years of service under the
plan, and would be reduced by Mr. Sylla's actual years of service. The
agreement terminates no later than July 26, 2000.
In general, (i) Allstate may terminate options granted under Allstate's
Employees Replacement Stock Plan in the event of an "extraordinary corporate
transaction" (a merger, consolidation, reorganization, sale or exchange of
substantially all assets, or dissolution of Allstate). In the case of certain
options affected by an extraordinary corporate transaction, the Board may
provide adjustments to the optionee, and in the case of certain other options
which have been outstanding for at least six months Allstate is required to
make adjustments by one of the following means: (a) acceleration of all
outstanding rights prior to the extraordinary corporate transaction, (b)
appropriate and equitable provision for the continuation and adjustment of all
outstanding rights, or (c) payment in cash of the value of all outstanding
rights.
In the event of a "change in control" of Allstate, all rights under certain
options under the Employees Replacement Stock Plan which have been outstanding
for at least six months will immediately become exercisable. A change in
control means, in general, any acquisition of 20% or more of Allstate's
outstanding common shares, a change in the majority of the directors of
Allstate which is not approved by a majority of the incumbent directors, or
approval by the stockholders of an extraordinary corporate transaction. In
addition, some options granted under Allstate's Employees Replacement Stock
Plan include limited stock appreciation rights exercisable during the period of
sixty days following a change in control of Allstate (but not less than six
months after the date of grant).
CERTAIN TRANSACTIONS
The Northern Trust Company maintains banking relationships, including credit
lines, with Allstate and various of its subsidiaries, in addition to performing
services for the Profit Sharing Plan. In 1997, revenues received by Northern
Trust for cash management activities, trustee, custodian, credit lines and
other services for all such entities were approximately $934,300.
10
<PAGE>
Report of the Compensation and Nominating Committee
-------------------------------------------------------------------
Allstate's Compensation and Nominating Committee, which is composed entirely
of independent, non-employee directors, administers Allstate's executive
compensation program. The purposes of the program are to:
. Link executives' goals with stockholders' interests.
. Attract and retain talented management.
. Reward annual and long-term performance
In 1996 the Committee created stock ownership goals for executives at the
vice president level and above. The goals are for these executives to own
within five years common stock worth a multiple of base salary, ranging from
one times salary to up to three times salary for the Chairman and Chief
Executive Officer and the President and Chief Operating Officer. In 1997 the
Committee weighted the compensation opportunities for executive officers,
including each of the Named Executives, more heavily towards compensation
payable upon the attainment of specified performance objectives and
compensation in the form of Allstate common stock.
TYPES OF COMPENSATION
Allstate executives can receive three types of compensation:
. Annual cash compensation. This includes base salary and annual incentive
awards. The incentive awards are made only if performance targets for the
year under Allstate's Annual Executive Incentive Compensation Plan are
met or exceeded.
. Long-term cash compensation. Incentive awards which are paid only if
performance targets over a 3-year period under Allstate's Long-Term
Executive Incentive Compensation Plan are met or exceeded.
. Long-term equity compensation. This includes stock options and other
long-term incentive awards based on common stock. The value of these
awards depends on Allstate's performance and future stock value.
ANNUAL COMPENSATION
Base Salary
The Committee fixes base salaries of Allstate executives at a level designed
to be competitive in the U.S. insurance industry. The Committee reviews at
least annually a report based on data prepared by independent compensation
consultants comparing Allstate's base salary levels for its executives with
base salaries paid to executives in comparable positions at other large U.S.
public insurance companies (the "Peer Group"). The Committee attempts to set
Allstate base salaries at the median level of the Peer Group.
Annual Incentive Compensation Plan Opportunities
The Annual Plan is designed to provide participants, including each of the
Named Executives, with a potential cash award based on the achievement of
annual performance objectives. These objectives are approved by the Committee
prior to the end of the first quarter of the performance year. Threshold,
target and maximum benchmarks are set for each performance objective. Each
participant's award opportunity is based on that individual's potential
contribution to the achievement of a particular performance objective and is
stated as a specified percentage of base salary for the year. No award is
payable with respect to a performance objective if the threshold level of
performance is not attained. No award is payable to any participant if Allstate
sustains a net loss for the year, and awards for all participants are reduced
by 50% if Allstate's return on average equity for the year is less than the
rate of return on 10-year U.S. Treasury notes.
Payment of awards is made in March of the following year, after the Committee
has certified attainment of the performance objectives in the Annual Plan. The
Committee has the authority to adjust the amount of awards, but has no
authority to increase an award payable under the terms of the Plan for any year
to the Chief Executive Officer or to any of the other Named Executives.
Award opportunities under the 1997 Plan for Messrs. Choate and Liddy were
based on Allstate's degree of achievement of targeted amounts of 1997 operating
earnings per share (the "Allstate Goal"). The 1997 performance goals for each
of the other Named Executives and for other participants were based 50% on the
Allstate Goal and 50% on one or more performance objectives for business units
related to a participant's job responsibilities. In 1997 the maximum level of
the Allstate Goal was achieved and business unit performance objectives on
average reached the target level of achievement. The amounts of 1997 Annual
Plan awards for the Named Executives are included under the "Bonus" column of
the Summary Compensation Table.
11
<PAGE>
LONG-TERM COMPENSATION
Long-Term Incentive Compensation Plan Opportunities
The Long Term Plan provides award opportunities for Allstate's executive
officers, including each of the Named Executives, based on achievement of
Allstate performance objectives over a three year period. The performance
objectives for each cycle are established by the Committee at the beginning of
the cycle. Threshold, target and maximum levels of performance are established
on which individual award opportunities are based, stated as a specified
percentage of aggregate base salary over the period. A new cycle commences
every two years. In years in which performance cycles overlap, 50% of
participants' salaries are applied to each cycle. The awards based on
Allstate's performance objectives will be increased or decreased by up to 50%,
depending on the performance of Allstate in relation to the performance of the
Peer Group toward the same objective over the same period. The Committee must
certify in writing that the goals have been met before awards may be paid.
Awards are payable in March of the year following the end of the cycle.
The current completed cycle under the Long Term Plan covers the years 1995-
1997 and the performance objectives for all participants, including each of the
Named Executives, for this cycle were based upon (i) Company achievement of a
specified return on average equity over the 1995-1997 period, and (ii)
Allstate's return on average equity over this period compared with the return
on average equity of the Peer Group over the same period. The maximum level of
1995-1997 Long Term Plan payout was achieved based on the degree of achievement
of each of these goals. Payments to each of the Named Executives under the
1995-1997 Long Term Plan are set forth under the "LTIP Payouts" column of the
Summary Compensation Table.
Equity Incentive Plan Opportunities
The Equity Incentive Plan provides for the grant of stock options and
restricted or unrestricted common stock of Allstate to plan participants.
After a review of Allstate's financial performance in 1996 and the financial
performance of its insurance competition and other non-insurance corporations
of size similar to Allstate's, on April 25, 1997 the Committee made grants of
restricted stock to each of its elected officers, including each of the Named
Executives. The amount of each restricted stock grant was based partly on each
officer's Annual Plan award for 1996 and partly on the Committee's judgment as
to the impact which the officer's achievements in 1996 had on Allstate's 1996
financial performance. No particular weight was assigned to either factor.
Stock options were granted under the Equity Incentive Plan on August 14, 1997
to a number of key employees of Allstate and its subsidiaries, including each
of the Named Executives. The size of each grant to a Named Executive was
determined based on a target stock option incentive opportunity, expressed as a
percentage of base salary. All stock option grants under this plan have been
made in the form of nonqualified stock options at exercise prices equal to 100%
of the fair market value of Allstate's common stock on the date of grant.
Options which have been granted are not fully exercisable until 3 years after
the date of grant, and expire in 10 years. The vested portions of options may
be transferred to family members or to trusts for the benefit of family
members.
CHIEF EXECUTIVE OFFICER COMPENSATION
Approximately 24% of Mr. Choate's total compensation opportunity is base
salary. The remaining 76% is variable compensation that is at risk and tied to
Allstate's business results.
Mr. Choate's base salary was increased by 10% from $770,000 to $850,000 in
March 1997. In determining this increase the Committee reviewed the levels of
base salaries paid in 1996 to chief executives of similarly sized members of
the Peer Group and considered Mr. Choate's individual performance and
Allstate's financial performance in 1996. No particular weight was applied to
any of these factors.
Mr. Choate's 1997 Annual Plan award and 1995-1997 Long Term Plan award were
based on Allstate's achievement of maximum levels of performance objectives set
forth in each plan.
Mr. Choate received an award of restricted common stock under Allstate's
Equity Incentive Plan on April 25, 1997 for 14,362 shares, of which 1,273
shares became unrestricted on December 31, 1997, and the remaining 13,089
shares will become unrestricted on April 1, 1998. The amount of Mr. Choate's
restricted stock award was based on the Committee's judgment as to the impact
of Mr. Choate's performance on achievement of Allstate's 1996 financial goals.
12
<PAGE>
Mr. Choate received a stock option under Allstate's Equity Incentive Plan on
August 14, 1997 for 64,647 shares of Company common stock. The amount of the
grant was determined under a Black-Scholes valuation formula to be equal to a
specified percentage of Mr. Choate's 1997 base salary. Details of Mr. Choate's
grant, and those of all the Named Executives, are disclosed in the Option/SAR
Grants in 1997 Table.
Mr. Choate's 1997 base salary, Annual Plan award, Long Term Plan award,
restricted stock grant and stock option grant follow the policies and plan
provisions described in this report. Amounts paid and granted under these
policies and plans are disclosed in the Summary Compensation Table.
LIMIT ON TAX DEDUCTIBLE COMPENSATION
The Internal Revenue Code limits to $1,000,000 the deductibility for any year
of compensation paid by a public corporation such as Allstate to its chief
executive officer or to any of its next four most highly compensated executive
officers. The Committee intends to continue to utilize performance-based
compensation in order to minimize the effect of the limits imposed by Section
162(m) of the Internal Revenue Code, and seeks to assure the maximum tax
deductibility of all compensation it authorizes. However, the Committee
believes that its primary responsibility is to provide a compensation program
that will attract, retain and reward the executive talent necessary to
Allstate's success. Consequently, the Committee recognizes that the loss of a
tax deduction may be unavoidable in some circumstances.
COMPENSATION AND NOMINATING COMMITTEE
Warren L. Batts (Chairman) Edward A. Brennan
James G. Andress
13
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of Allstate's common
stock since its initial public offering on June 2, 1993 through December 31,
1997 with the performance of the S&P 500 index and the S&P Property-Casualty
Insurance Index. The graph plots the changes in value of an initial $100
investment over the indicated time periods, assuming all dividends are
reinvested quarterly.
COMPARISON OF TOTAL RETURN
JUNE 2, 1993 TO DECEMBER 31, 1997
ALLSTATE V. PUBLISHED INDICES
LOGO
<TABLE>
<CAPTION>
6/2/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Allstate 100.00 110.55 91.72 162.65 233.09 369.28
S&P 500 100.00 104.95 106.34 146.16 179.72 239.66
S&P Prop./Cas. 100.00 94.66 96.89 131.09 160.06 228.26
</TABLE>
14
<PAGE>
Compensation Committee Interlocks and Insider Participation
-------------------------------------------------------------------
During 1997, Allstate's Compensation and Nominating Committee consisted of
Warren L. Batts, Chairman, James G. Andress, Edward A. Brennan and Christopher
F. Edley. Mr. Edley retired from the Committee and the Board of Directors on
January 1, 1998. There were no committee interlocks with other companies in
1997 within the meaning of the Securities and Exchange Commission's proxy
rules.
Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------------------
, a director of the Company, made a late filing of an amended
Form 3 report required by Section 16(a) of the Securities Exchange Act of 1934,
to report an additional 100 shares received as part of the special dividend in
connection with the spin off of Allstate from Sears, Roebuck and Co.
Item 2: Approval of Auditors
-------------------------------------------------------------------
Item 2 concerns the recommendation of the Audit Committee and the Board of
Directors that Deloitte & Touche LLP be appointed auditors for 1998, which is
being presented to stockholders for approval. Representatives of Deloitte &
Touche LLP will be present at the meeting, will be available to respond to
questions and may make a statement if they so desire.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS AUDITORS FOR 1998 AS PROPOSED IN ITEM 2.
Item 3: Increase in Number of Authorized Shares of Common Stock from
1,000,000,000 to 2,000,000,000
-------------------------------------------------------------------
The Board of Directors has unanimously adopted a resolution to amend ARTICLE
FOURTH of Allstate's Restated Certificate of Incorporation (the "Certificate
Amendment") to increase the number of shares of stock that the Company is
authorized to issue from 1,025,000,000 (1,000,000,000 shares of common stock
and 25,000,000 shares of various classes of preferred stock) to 2,025,000,000
(2,000,000,000 shares of common stock and 25,000,000 shares of various classes
of preferred stock). The full text of the first paragraph of ARTICLE FOURTH of
the Certificate of Incorporation reflecting the proposed Certificate Amendment
is set forth below:
"The total number of shares which the corporation shall have authority to
issue shall be 2,025,000,000, divided into two classes, namely: 25,000,000
shares of Preferred Stock, par value $1.00 per share ("Preferred Stock"), and
2,000,000,000 shares of Common Stock, par value $.01 per share ("Common
Stock")."
If the proposed Amendment is adopted by the stockholders, Allstate plans to
file a Certificate of Amendment to the Restated Certificate of Incorporation to
be effective as soon as practicable following the annual meeting of
stockholders.
On March 20, 1998, of the 1,000,000,000 of currently authorized shares of
Allstate common stock, xxx,xxx,xxx shares were outstanding, xx,xxx,xxx shares
were held in Allstate's treasury and a total of xx,xxx,xxx shares were reserved
for issuance under Allstate's Equity Incentive Plan, the Employees Replacement
Stock Plan, the Equity Incentive Plan for Non-Employee Directors and the
Exclusive Agent Independent Contractors Stock Bonus Plan. The remainder of
shares of authorized common stock were not issued or subject to reservation.
The Board of Directors believes it is desirable to authorize additional
shares of common stock so that there will be sufficient shares available for
issuance for purposes that the Board may hereafter determine to be in the best
interests of Allstate and its stockholders. Such purposes could include the
declaration of stock splits and stock dividends, mergers and acquisitions, the
offer of shares for financing purposes, and other general corporate purposes.
In many situations, prompt action may be required which would not permit
seeking stockholders approval to authorize additional shares for a specific
transaction on a timely basis. The Board of Directors believes it should have
the flexibility to act promptly in the best interests of stockholders. The
terms of any future issuance of shares of common stock will be dependent
largely on market and financial conditions and other factors existing at the
time of issuance.
15
<PAGE>
Although there are no present plans or commitments for their use, authorized
shares, including the additional shares which would be authorized if
stockholders approve the Certificate Amendment, would be available for issuance
without further action by stockholders except as required by law or applicable
stock exchange requirements. The current Rules of the New York Stock Exchange
would require stockholder approval if the number of shares of common stock to
be issued would equal or exceed 20% of the number of shares of common stock
outstanding immediately prior to such issuance. Allstate's Restated Certificate
of Incorporation does not provide preemptive rights for holders of common stock
if Allstate issues additional shares. Also, the issuance of additional shares
could be used to create impediments to or otherwise discourage persons
attempting to gain control of Allstate.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE INCREASE IN
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 1,000,000,000 TO
2,000,000,000 AS PROPOSED IN ITEM 3.
Item 4: Stockholder Proposal
-------------------------------------------------------------------
Mr. William E. Parker and Terri K. Parker, 544 Ygnacio Valley Road, Suite B,
Walnut Creek, California 94596, holders of 314 shares of Allstate common stock,
have given notice of their intention to propose the following resolution at the
Annual Meeting:
"RESOLVED: That the stockholders of the Allstate Corporation assembled at
the annual meeting in person and by proxy, hereby request the Board of
Directors to take the steps necessary to provide for cumulative voting in
the election of directors which means, each stockholder shall be entitled
to as many votes as shall equal the number of shares he or she owns
multiplied by the number of directors to be elected, and he or she may cast
all of such votes for a single candidate, or any two or more of them as he
or she may see fit."
The following statement has been submitted in support of the resolution:
"In the American system of corporate governance, the election of
corporate directors is the primary vehicle for shareholders to influence
corporate affairs and exert accountability on management.
"We believe that the company's financial performance is directly related
to its corporate governance procedures and policies and the level of
accountability they impose. Cumulative voting increases the possibility of
electing independent-minded directors that will enforce management's
accountability to shareholders.
"Corporations that have independent-minded directors can have an
invigorating effect on the Board of Directors, fostering improved financial
performance and greater stockholder wealth. Management nominees to the
board often bow to the chairman's desires on business issues and executive
pay without question.
"Currently, the company's Board of Directors is composed entirely of
management nominees. Cumulative voting would aid in placing a check and
balance on management nominees by creating more competitive elections.
"The National Bank Act provides for cumulative voting for bank company
boards. A California law provides that all state pension holdings and state
college funds, invested in shares must be voted in favor of cumulative
voting proposals, showing increased recognition of the importance of
cumulative voting.
"Sears, Roebuck and Company, the company that founded the Allstate
Insurance Company in 1931 adopted cumulative voting on June 13, 1906.
"The standard argument that the adoption of cumulative voting will lead
to the election of dissidents to the Board of Directors who will only
represent special interests is misleading. The standards of fiduciary duty
compel all directors to act in the best interest of all shareholders. Any
director who fails to respect the duties of loyalty and/or care exposes
himself or herself to significant liability.
"We also do not believe that honest differences of opinion are
necessarily bad for a corporation. Dissent stimulates debate, which leads
to thoughtful action and deters complacency on the Board of Directors.
"If you agree, please mark your proxy for this resolution, otherwise it
is automatically cast against it, unless you have marked to abstain from
voting."
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST THIS PROPOSAL
FOR THE FOLLOWING REASONS:
Under cumulative voting for election of directors, each stockholder is
entitled to cast a number of votes for such election equal to the number of
shares held by such stockholder multiplied by the number of directors to be
elected,
16
<PAGE>
and may cast all votes for one nominee or distribute the votes among nominees.
The General Corporation Law of Delaware (the "Corporation Law"), the state in
which Allstate is incorporated, allows cumulative voting only if it is provided
for in a corporation's certificate of incorporation. Allstate's certificate of
incorporation does not provide for cumulative voting. Consequently, each
director of Allstate must be elected by a plurality of the votes of all shares
present in person or represented by proxy.
At present, the Allstate's entire Board of Directors must stand for election
each year, and Allstate's By-Laws permit stockholders to nominate candidates to
serve as directors, subject to compliance with the procedures provided in the
By-Laws. The Board of Directors believes that a change in the method of
stockholder voting would be appropriate only if another method would better
serve the interests of the stockholders as a whole. To the contrary, the Board
believes that cumulative voting would give stockholders who seek to support a
special interest group the potential to elect one or more directors
representing primarily the interests of that group. The Board believes that any
directors so elected may view themselves as representatives of the group that
elected them and may feel that they are obligated to represent that group's
interests, regardless of whether the furtherance of those interests would
benefit all stockholders generally. This could tend to promote narrow interests
rather than those of stockholders at large, whereas the election of directors
by plurality vote of all voted shares is designed to produce a board of
directors that views its accountability as being to all stockholders generally.
The Board believes that cumulative voting introduces the possibility of
partisanship among Board members representing particular groups of
stockholders, which could destroy the ability of the Board to work together.
These factors could operate to the disadvantage of Allstate and its
stockholders.
The present method of electing directors, where each director is elected by a
plurality vote of the shares held by all stockholders, encourages the directors
to administer the affairs of Allstate for the benefit of all stockholders. The
Board believes that each director should serve on the Board only if a plurality
of shares held by all voting stockholders elect the director to hold that
position.
An examination of the past performance and the achievements of the management
team selected by the Board of Directors supports the present method of electing
the Board, and the Board of Directors is confident that this method will
continue to work successfully in the future, for the benefit of all
stockholders.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST ITEM 4.
Stockholder Proposals for 1999 Annual Meeting
-------------------------------------------------------------------
Proposals which stockholders intend to be included in Allstate's proxy
material for presentation at the 1999 annual meeting of stockholders must be
received by the Secretary of Allstate, Robert W. Pike, The Allstate
Corporation, 2775 Sanders Road (F8), Northbrook, Illinois 60062 by November 27,
1998, and must otherwise comply with rules promulgated by the Securities and
Exchange Commission in order to be eligible for inclusion in the proxy material
for the 1999 annual meeting.
If a stockholder desires to bring business before the meeting which is not
the subject of a proposal meeting the SEC proxy rule requirements for inclusion
in the proxy statement, the stockholder must follow procedures outlined in
Allstate's By-Laws in order to personally present the proposal at the meeting.
A copy of these procedures is available upon request from the Secretary of
Allstate. One of the procedural requirements in the By-Laws is timely notice in
writing of the business the stockholder proposes to bring before the meeting.
Notice of business proposed to be brought before the 1999 annual meeting must
be received by the Secretary of Allstate no earlier than January 19, 1999 and
no later than February 18, 1999 to be presented at the meeting. The notice must
describe the business proposed to be brought before the meeting, the reasons
for bringing it, any material interest of the stockholder in the business, the
stockholder's name and address and the number of shares of Company stock
beneficially owned by the stockholder. It should be noted that these By-Law
procedures govern proper submission of business to be put before a stockholder
vote at the Annual Meeting and do not preclude discussion by any stockholder of
any matters properly brought before the Annual Meeting.
Other Matters
-------------------------------------------------------------------
Officers and other employees of Allstate and its subsidiaries may solicit
proxies by personal interview, telephone and telegram, in addition to the use
of the mails. None of these individuals will receive special compensation for
17
<PAGE>
these services which will be performed in addition to their regular duties, and
some of them may not necessarily solicit proxies. Allstate has also made
arrangements with brokerage firms, banks, nominees and other fiduciaries to
forward proxy solicitation materials for shares held of record by them to the
beneficial owners of such shares. Allstate will reimburse them for reasonable
out-of-pocket expenses. Corporate Investors' Communications, Inc., 111 Commerce
Road, Carlstadt, New Jersey 07072 will assist in the distribution of proxy
solicitation materials, for a fee estimated at $7,500, plus out-of-pocket
expenses. Allstate will pay the cost of all proxy solicitation.
By order of the Board of Directors,
LOGO
Robert W. Pike
Secretary
Dated: March 27, 1998
18
<PAGE>
Preliminary Copy
THE ALLSTATE CORPORATION
This Proxy is Solicited on behalf of the Board of Directors
for the Annual Meeting to be Held May 19, 1998
The undersigned hereby appoints JAMES G. ANDRESS, WARREN L. BATTS, and EDWARD A.
BRENNAN, and each of them, or if more than one is present and acting then a
majority thereof, proxies, with full power of substitution and revocation, to
vote the shares of The Allstate Corporation which the undersigned is entitled to
vote at the annual meeting of stockholders, and at any adjournment thereof, with
all the powers the undersigned would possess if personally present, including
authority to vote on the matters shown on the reverse in the manner directed,
and upon any other matter which may properly come before the meeting. This card
also constitutes voting instructions by the undersigned to The Northern Trust
Company (the "Trustee"), trustee of the trust maintained under The Savings and
Profit Sharing Fund of Allstate Employees (the "Fund") for all shares votable by
the undersigned and held of record by the Trustee. If there are any Fund shares
votable for which instructions are not timely received, and as respects all
unallocated shares held in the Fund, the Trustee will vote such shares as
follows: if the Trustee receives timely voting instructions for at least 50% of
the votable shares, then all such nonvoted shares and unallocated shares shall
be voted in the same proportion and in the same manner as the shares for which
timely instructions have been received, unless to do so would be inconsistent
with the Trustee's duties. If the Trustee receives voting instructions with
regard to less than 50% of the votable shares, the Trustee shall vote all
unvoted and unallocated shares in its sole discretion. Discretionary authority
will not be used in connection with voting on adjournment of the meeting in
order to solicit further proxies. The undersigned hereby revokes any proxy
previously given to vote such shares at the meeting or at any adjournment.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY/VOTING INSTRUCTION CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
(Continued and to be signed on reverse side.)
<PAGE>
Preliminary Copy
The Board of Directors recommends a vote FOR all nominees listed.
1. Election of Directors -- Nominees: James G. Andress, Warren L. Batts,
Edward A. Brennan, Jerry D. Choate, James M. Denny, Michael A. Miles,
Joshua I. Smith and Mary A. Taylor. (INSTRUCTION: To withhold authority for
one or more nominees write the nominee(s) name on the space provided
below.)
<TABLE>
<CAPTION>
FOR ALL
FOR WITHHOLD EXCEPT
___________________________________________________________ 0 0 0
<S> <C> <C> <C>
</TABLE>
The Board of Directors recommends a vote FOR
Proposals 2 and 3.
For Against Abstain
2. Approval of Deloitte & Touche LLP as independent
auditors for 1998. 0 0 0
For Against Abstain
3. Increase authorized common stock to 2,000,000,000
shares. 0 0 0
The Board of Directors recommends a vote AGAINST
Proposal 4.
For Against Abstain
4. Provide cumulative voting for Board of Directors. 0 0 0
The proxies are directed to vote as specified above and in their discretion on
all other matters coming before the meeting. Except as specified to the contrary
above, the shares represented by this proxy will be voted FOR all nominees
listed above, FOR Proposals 2 and 3 and AGAINST Proposal 4.
Dated: _________________, 1998
Signature(s): ____________________________________
______________________________________
Please sign exactly as name appears
hereon. Joint Owners should each sign.
Where applicable, indicate official
position or representative capacity.
