Document:

Exhibit
10.3

THE ALLSTATE CORPORATION

 

ANNUAL EXECUTIVE INCENTIVE COMPENSATION PLAN

 

As Amended and Restated November 13, 2007

 

 

1.             Purposes.

 

                                                The purposes of the Annual Executive
Incentive Compensation Plan (the “Plan”) are to:

 

	
   

  	
   

  	
  a.

  	
   

  	
  attract and
  retain talented employees;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.

  	
   

  	
  provide
  Participants with added incentives to promote various short-term performance
  goals, while taking into account the varying objectives and conditions of the
  different businesses engaged in by The Allstate Corporation and its
  Subsidiaries;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c.

  	
   

  	
  link
  compensation to performance by tying a portion of annual pay to reaching
  annual financial goals;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  d.

  	
   

  	
  compensate
  executives at competitive levels when competitive performance is achieved,
  and at superior levels when performance exceeds competitors’, and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  e.

  	
   

  	
  encourage
  teamwork among top executives.

  

 

2.             Definitions.

 

                                                The following terms when used in the Plan
shall, for the purposes of the Plan, have the following meanings:

 

                                                a.   “Award”
means the cash amount payable to a Participant for a fiscal year pursuant to
the terms of the Plan.

 

                                                b. 
 “Board” means the Board of
Directors of The Allstate Corporation.

 

c.   “Business
Unit” means any operating unit of The Allstate Corporation or any of its Subsidiaries,
including but not limited to, the property and casualty business, the life
business, the investments business, or the international business.

 

                                                d. 
 “Committee” means at least two
members of the Board who have been appointed by the Board to administer the
Plan.

 

                                                e.   “Company” means The Allstate Corporation.

 

 

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f.     “Fiscal Year” means the calendar year.

 

g.    “Participant” means an elected officer of
the Company, or of any Subsidiary, selected by the Committee to participate in
the Plan for the fiscal year.

 

                                                h.    “Plan”
means the Annual Executive Incentive Compensation Plan.

 

                                                 i.
    “Subsidiary” means any corporation of which
the Company owns directly or indirectly 
a majority of the outstanding shares of voting stock.

 

3.             Administration of the
Plan.

 

                                                a. 
The Plan shall be administered by the Committee.

 

                                                b. 
The Committee shall have the authority to make all determinations it
deems necessary or advisable for the administration of the Plan, including the
selection of Participants, the determination of the timing and amount of Awards
made to each Participant, and the establishment of performance standards (“performance
goals”) for earning Awards.

 

                                                c. 
The Committee shall have the authority to exercise discretion in
determining the amounts of the Awards otherwise payable under the terms of the
Plan, and may increase or decrease such Awards.

 

4.             Awards.

 

                                                a. 
Awards under the Plan shall consist of annual cash bonuses based upon
the degree of attainment of performance goals of the Company and/or its
Subsidiaries and/or Business Units thereof, where applicable, over the fiscal
year.  Awards to Participants who are “Covered
Employees” as defined in Section 162(m) of the Internal Revenue Code shall be
payable solely for attainment of performance priority goals set forth in
Section 4.d., below.

 

                                                b. 
The Committee shall establish performance goals for each fiscal year at
a time while the outcome of the performance goals is substantially
uncertain.  Such performance goals may be
expressed in terms of annual financial, operating or other criteria, or any
combination thereof, using such measures of performance as the Committee
selects solely in its own discretion.   The
Committee may establish performance priority as a performance goal, the
attainment of which may result in the increase or decrease of an Award to any
Participant.

 

                                                c. 
A target Award shall be established for each fiscal year based upon the
Participant’s position held with the Company or any of its Subsidiaries.  The target Award will be determined as a
percentage of each Participant’s base salary, and shall be payable as an Award
based upon attainment of performance goals for such year.  A maximum Award opportunity shall also be
established for each Participant.

 

 

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d.  Awards under
the Plan for Covered Employees shall be granted solely on the basis of their
achievement of performance priority goals.  
Performance priority goals shall be strategic in nature, and designed to
further Company goals which are assigned to specific Participants to
accomplish.  Performance priority goals
shall be based on business criteria separate and distinct from any criteria applicable
to such Covered Employee under the Annual Covered Employee Incentive
Compensation Plan for the fiscal year.

 

5.                                       Payment of Awards.

 

                                                a. 
Awards under the Plan shall be paid to Participants as soon as
practicable after the end of the fiscal year to which performance relates, and
after the Committee has approved the Awards, but notwithstanding any other
provision in this Plan to the contrary, in no event before January 1 or after
March 15 of the year following the fiscal year in which the Award was earned.  Awards deferred at the Participant’s election
shall be paid in accordance with the terms and conditions of any deferred
compensation plan in which the Participant is eligible to participate.

 

                                                b. 
Awards shall be paid in cash, less required withholding, or for those
eligible, may be deferred at the Participant’s election, subject to the terms
and conditions of any deferred compensation plan in which the Participant is
eligible to participate.

 

                                                c. 
Unless the Committee has taken action under subsection 3.c. hereof prior
to payment of an Award, each Participant selected by the Committee for a fiscal
year who remains actively employed by the Company or a Subsidiary thereof at
the end of the fiscal year shall be entitled to receive a payment of an Award
earned pursuant to the terms of the Plan with respect to such year.

 

                                                d. 
If a Participant’s employment is terminated prior to completion of a
fiscal year for any reason other than as described in subsection 5.e. below,
the Participant will forfeit any Award otherwise payable for such fiscal year.

 

e.  If a
Participant dies, retires or is disabled during the fiscal year, and the
Committee has not taken action under Section 3.c. hereof, the Participant’s
Award will be prorated based on the number of 
Participant’s half months the Participant was eligible to participate
during the fiscal year as an elected officer of the Company or any of its
Subsidiaries.  If a Participant dies
before receipt of an Award, the Award will be paid to the Participant’s estate.

 

                                                f. 
Prorated Awards will be paid at the same time as regular Awards.

 

6.             Miscellaneous.

 

                                                a. 
All amounts payable hereunder shall be payable only to the Participant
or his or her beneficiaries.  The rights
and interests of a Participant under the Plan may not be assigned, encumbered,
or transferred, voluntarily or involuntarily, other than by will or the laws of
descent and distribution.

 

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                                                b. 
No individual shall have any claim or right to be a Participant in the
Plan at any time, and any individual’s participation in the Plan may be
terminated at any time with or without notice, cause or regard to past
practices.

 

                                                c. 
Neither the Plan nor any action hereunder shall confer on any person any
right to remain in the employ of the Company or any of its Subsidiaries or
shall affect an employee’s compensation not arising under the Plan.  Neither the adoption of the Plan nor its
operation shall in any way affect the right and power of the Company or any
Subsidiary to dismiss or discharge any employee at any time.

 

                                                d. 
The Company and its Subsidiaries shall have the right to deduct from any
Award, prior to payment, the amount of any taxes required to be withheld by any
federal, state or local government with respect to such payments.

 

                                                e. 
The Committee may rely upon any information supplied to it by any
officer of the Company or any Subsidiary or by any independent accountant for
the Company and may rely upon the advice of counsel in connection with the
administration of the Plan and shall be fully protected in relying upon such
information or advice.

 

                                                f. 
All expenses and costs in connection with the administration of the Plan
shall be borne by the Company.

 

                                                g. 
The Plan and any agreements entered into thereunder shall be governed by
and construed in accordance with the laws of the state of Illinois.

 

7.             Amendment or Termination
of the Plan.

 

                                                The Board may suspend, terminate, modify
or amend the Plan.

 

8.             Effective Date.

 

                                                The Plan was adopted by the Board on
March 8, 1994, and was approved by the Company’s stockholders on May 19,
1994.  The Plan, as amended and restated,
was adopted by the Board on March 9, 1999. 
The Plan was amended and restated by the Board on March 9, 2004.  The Plan was further amended and restated by
the Board on November 13, 2007 to comply with Internal
Revenue Code §409A.

 

4Exhibit 10.5

 

 

Annual Incentive Plans

Performance Goals and Target Awards
for 2008

 

The registrant
maintains two shareholder-approved plans under which executive officers have
the opportunity to receive an annual cash award based on the achievement of performance
goals over a one-year period.  The Annual Covered Employee Incentive
Compensation Plan (“Covered Employee Plan”) governs awards to those executive
officers who are considered “covered employees” as defined in Section 162(m)(3) of
the Internal Revenue Code.  Annual incentive awards to all other executive
officers are governed by and made under the Annual Executive Incentive
Compensation Plan (“Executive Plan”).  The Compensation and Succession
Committee of the Board of Directors establishes performance goals for each
fiscal year and sets threshold, target and maximum award opportunities. 
The Committee has the authority to adjust the amount of awards, but has no
authority to increase the amount of an award otherwise payable under the
Covered Employee Plan.  Payments are made after the Committee has
certified in writing the degree of attainment of the performance goals.

 

On February 26,
2008, the Committee approved performance measures and target awards under the
plans for 2008.  The same performance measures apply to both the Covered
Employee Plan and Executive Plan.

 

Corporate
Functions.  For the chairman, chief executive officer,
chief financial officer and other executive officers in corporate functions,
there are four primary performance measures, weighted as follows:  50% based on an adjusted operating income per
diluted share measure; 35% based on the first three Allstate Protection
measures described in the next paragraph; 10% based on the first four Allstate
Financial measures described below; and 5% based on the first three Investments
measures described below.

 

Allstate
Protection.  For all but one of the Allstate
Protection executive officers, their award opportunity is based on four
performance measures, weighted as follows:  45% based on a matrix used by
management to emphasize a balanced approach to premium growth and profit; 15%
based on a measure of sales and related profitability of proprietary and
non-proprietary  financial products by
Allstate Exclusive Agencies; 20% based on a measure of customer loyalty; and
20% based on the corporate adjusted operating income per diluted share measure.

 

                                                For the Senior Vice President of Claims
in Allstate Protection, the award opportunity is based on four performance
measures, weighted as follows: 45% based on a matrix used by management to
emphasize a balanced approach to premium growth and profit; 15% based on an
adjusted claims expense ratio; 20% based on a customer requirement index; and
20% based on the corporate adjusted operating income per diluted share measure.

 

 

 

 

 

Allstate
Financial. For
the Allstate Financial executive officers, there are five performance measures,
weighted as follows:  15% based on Allstate Financial adjusted operating
income; 15% based on Allstate Financial adjusted net income; 20% based on a
measure of sales and related profitability of proprietary and non-proprietary
financial products by Allstate exclusive agencies; 30% based on a matrix used
by management that balances growth and profit; and 20% based on the corporate
adjusted operating income per diluted share measure.

 

Investments. 
For the executive officer in the Investments business unit, there are
four primary performance measures, weighted as follows:  50% based on a
set of five relative returns measures of Allstate’s investment portfolios; 15%
based on a measure of Allstate Financial yield on purchases of fixed income
securities relative to a benchmark; 15% based on adjusted net investment income
of certain subsidiaries; and 20% based on the corporate adjusted operating
income per diluted share measure.

 

Threshold, target and
maximum levels of performance are established for each performance
measure.  If the maximum level of performance is achieved, the award would
be three times the executive officer’s target award, with target awards
generally ranging from 50% to 120% of annual salary for the fiscal year.

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