Exhibit 10.6

 

Long-Term Executive Incentive Plan – Performance Goals and Target Awards
for Current Performance Cycles

 

The registrant maintains a shareholder-approved Long-Term Executive Incentive
Compensation Plan to provide certain executives, including the executive
officers, the opportunity to receive a cash award based on the achievement of
performance objectives over a three-year cycle.  The Compensation and Succession
Committee of the Board of Directors establishes performance goals for each cycle
and sets threshold, target and maximum levels of performance.  Awards are
calculated on an executive’s annual salary as of the beginning of the cycle. 
The amount of each executive’s payout is dependent on the achievement of the
performance goals.  The Committee has the authority to adjust the amount of
awards payable under the plan, but has no authority to increase the amount of an
award otherwise payable to a “covered employee” as defined in Section 162(m)(3)
of the Internal Revenue Code.  Payments are made in March of the year following
the end of the respective cycle, after the Committee has certified in writing
the degree of attainment of the cycle’s performance goals.

 

The current cycles under the plan cover the following three-year periods: 
2002-2004, 2003-2005, 2004-2006 and 2005-2007.

 

2002-2004 Cycle

 

The performance goal for the 2002-2004 cycle is an adjusted return on equity
measure as compared to that of a peer group of companies in the S&P 500
property/casualty index over the same three-year period.  No payout is made for
this cycle unless adjusted return on equity exceeds the average rate on
three-year treasury notes over the cycle, plus 200 basis points.  Award
opportunities range from 0% to 250% of an executive officer’s target award,
depending on adjusted return on equity performance relative to the peer group. 
An executive officer’s target award generally ranges from 40% to 155% of salary.

 

2003-2005 Cycle

 

The performance goal for the 2003-2005 cycle is adjusted return on equity as
compared to a select peer group of companies representing both the
property/casualty and financial services industries.  Similar to the 2002-2004
cycle, no payout is made unless adjusted return on equity exceeds the average
rate on three-year treasury notes over the cycle, plus 200 basis points.  Award
opportunities range from 0% to 300% of an executive officer’s target award,
depending on adjusted return on equity performance relative to the peer group. 
An executive officer’s target award generally ranges from 70% to 155% of salary.

 

2004-2006 Cycle

 

For the 2004-2006 cycle there are three performance goals.  Fifty percent of the
award opportunity is based on the same adjusted return on equity performance
goal approved

 

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for the 2003-2005 cycle.  No payment based on adjusted return on equity is made
unless that return exceeds the average rate on three-year Treasury notes over
the cycle, plus 200 basis points.  Twenty-five percent of the award opportunity
is based on Allstate Protection (property and casualty) policy growth over the
cycle and the remaining 25% is based on Allstate Financial growth in premium and
deposits over the cycle.  Awards range from 0% to 300% of an executive officer’s
target award, depending on the level of performance achieved for the cycle.  An
executive officer’s target award generally ranges from 70% to 155% of salary.

 

2005-2007 Cycle

 

On November 9, 2004 the Committee approved performance goals and target awards
for the three-year performance cycle beginning with 2005 and concluding in 2007
that are identical to the goals and award opportunities approved for the
2004-2006 cycle as described above.

 

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