Allstate (ALL)

Annual cash compensation—salary and annual incentive bonus

        We annually review the base salaries for the Chief Executive Officer and other senior executive officers, having considered the materials provided by our outside compensation consultant. Individual salary determinations are subject to approval by the entire Board. During the year, we also consider internally developed analyses of short and long-term components of the compensation elements, computed at a target level of performance for both the Chief Executive Officer and senior executives to

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assist us with our salary review process. Using these materials helps with our comparative and competitive review of salaries. We set the base salaries for Allstate's executive officers at a level designed to be competitive in the U.S. insurance industry.

        After considering all relevant data and analysis, we determined the Chief Executive Officer's base salary should be set at 12% of the total target compensation and the remaining 88% of his compensation tied to Allstate's annual and long-term performance. The target total compensation for Allstate's named executive officers is set at 17-19% for base salary with the remaining 81-83% tied to Allstate's annual and long-term performance.

        Annual cash incentive bonus awards are designed to provide management-level employees and officers, including the named executive officers, with a cash award based on the achievement of corporate performance goals, business unit performance goals, or a combination thereof. Each year prior to the end of the first quarter, we approve financial and other objectives that take into account revenue and profit goals as well as brand loyalty, expense management and investment return goals that are designed to reward the current and future profitable growth of Allstate. We set threshold, target and maximum goals for each objective. Target annual incentive bonus opportunities are set as a specified percentage of annual salary ranging from 15% for management-level employees, 80-100% for named executive officers and 120% for the Chief Executive Officer. If the maximum level of performance is achieved, the award would be three times the executive's target award, and two times the management employee's target award.

        Annual incentive bonuses are paid in March of the year following the year of performance, after we determine the extent to which the performance goals were met. We have the authority to adjust the amount of awards payable to executives generally; however, we have no authority to increase the amount of an award payable to the Chief Executive Officer and the other named executive officers.

Annual cash compensation—salary and annual incentive bonus

        We annually review the base salaries for the Chief Executive Officer and other senior executive officers with individual salary determinations subject to approval by the entire Board. We set the base salaries for Allstate's executive officers at a level designed to be competitive in the U.S. insurance industry. Only 12% of the total target compensation for the Chief Executive Officer is base salary with the remaining 88% tied to Allstate's annual and long-term performance. The total target compensation for Allstate's named executive officers is set at 17-19% for base salary with the remaining 81-83% tied to Allstate's annual and long-term performance.

        Annual cash incentive bonus awards are designed to provide management-level employees, including the named executive officers, with a cash award based on the achievement of corporate performance goals, business unit performance goals, or a combination thereof. Each year, we approve financial objectives that take into account revenue and profit measures designed to reward the current

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and future profitable growth of Allstate. These objectives are approved prior to the end of the first quarter. We set threshold, target and maximum goals for each objective. Target annual incentive bonus opportunities are set as a specified percentage of annual salary ranging from 15% for management-level employees, 80-90% for named executive officers and 120% for the Chief Executive Officer. If the maximum level of performance is achieved, the award would be three times the executive's target award, and two times the management employee's target award.

        Annual incentive bonuses are paid in March of the year following the year of performance, after we certify the achievement of the performance goals. We have authority to adjust the amount of awards made to executives generally, except with respect to the Chief Executive Officer and the other named executive officers. For these individuals, we cannot increase the amount of any annual incentive bonus above the amount specified for the level of performance achieved.