Allstate (ALL)

The Board unanimously recommends that stockholders vote for the approval of the material terms of the Annual Executive Incentive Plan. The text of the entire Plan is set forth in Appendix B.

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Item 4
Approval of
2009 Equity Incentive Plan

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        We are asking stockholders to approve The Allstate Corporation 2009 Equity Incentive Plan, as amended and restated, (formerly The Allstate Corporation 2001 Equity Incentive Plan) which was approved by the Board on March 10, 2009, subject to approval by stockholders at the 2009 Annual Meeting of Stockholders. The Board considers equity compensation to be a significant component of total compensation for our officers and other employees and the officers and other employees of our subsidiaries. The Board unanimously recommends that stockholders vote for the approval of the Plan, as amended and restated.

        Awards may be in the form of stock options, stock appreciation rights, unrestricted stock, restricted stock, restricted stock units, performance units, performance stock, and other awards including the payment of stock in lieu of cash under our other incentive or bonus programs or otherwise and payment of cash based on attainment of performance goals. Share-based awards relate to shares of our common stock. To date, only nonqualified stock options, restricted stock, and restricted stock units have been granted under the Plan. Thirty-seven million shares of common stock, in addition to 6,096,378 unused shares that were then available for awards under the predecessor plan, The Allstate Corporation Equity Incentive Plan, were initially authorized for awards under the Plan. An additional 12,000,000 shares were authorized on May 16, 2006.

        As of March 12, 2009, 15,157,803 shares have been issued under the Plan and 38,934,242 shares are subject to outstanding awards under the Plan. Outstanding awards include 3,389,849 restricted stock units that have not yet been converted into common stock and outstanding, unexercised options to purchase 35,544,393 shares of common stock. As of March 12, 2009, 1,311,764 shares (plus any shares that might in the future be added back to the Plan reserve as a result of cancellations, forfeitures, or expiration of awards, or shares that are settled in cash or otherwise settled without delivery of shares) remained available for future awards under the Plan. The Plan Administrator may use either authorized but unissued shares or treasury shares to provide common stock for awards. As of March 12, 2009, the closing price of our common stock as reported on the New York Stock Exchange Composite Tape was $16.63.

        Among the amendments approved by the Board on March 10, 2009, is an increase to the number of shares of common stock authorized for issuance under the Plan by 21.38 million shares. The Board believes the amendment is necessary to ensure that a sufficient number of shares are available for issuance under the Plan to allow us to continue to attract and retain employees by providing a means by which such employees can acquire and maintain equity ownership, aligning their interests with those of the stockholders. Stockholders must approve the Plan for this increase to become effective.

        The other material amendments made to the Plan were to do the following:

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Enhance the provision that prohibits repricings to clarify that, except in connection with certain corporate transactions involving Allstate, outstanding options or stock appreciation rights may not be amended to reduce the exercise price or base value of the award, or to cancel the award in exchange for other awards or for options or stock appreciation rights with a lower exercise price or base value, without first obtaining stockholder approval;



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Expand the group of employees eligible to be selected to receive an award from "key" employees to all employees who are not subject to a collective bargaining agreement and are classified on the payroll system as regular full-time or part-time employees;



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Provide for recoupment or cancellation of awards granted:



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To an officer subject to Section 16 of the Securities Exchange Act of 1934, if the Board or a committee of the Board determines that such officer has engaged in fraud or misconduct that contributes to an obligation to restate our financial statements; and



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To a participant, if the Board or a committee of the Board determines that such participant violated a nonsolicitation covenant;

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Eliminate a provision that authorized the Plan Administrator to allow employees to defer payment of amounts owed to us with respect to an award or to cause us to guarantee a loan from a third party to the employee in an amount equal to amounts owed to us with respect to an award;



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Eliminate the dividend equivalent rights feature for any option or stock appreciation right granted under the Plan;



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Remove a provision that set forth the terms and conditions upon which awards could be substituted with new awards;



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Expand the list of performance measures that may be used for performance-based awards;



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Provide that the base value of a stock appreciation right may not be less than 100% of the fair market value of a share of our common stock on the date of grant;



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Replace the specific limitation on the number of shares that may be granted as "full value" awards, which are awards other than options and stock appreciation rights, with a "fungible pool" method of calculating the number of shares available for issuance under the Plan, whereby shares issued pursuant to full value awards granted on or after May 19, 2009 reduce the Plan's share limit by 2.1 shares and shares issued pursuant to all other awards reduce the share limit by one share;



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Revise the limitation on incentive stock options to provide that no more than 5,500,000 shares may be issued pursuant to incentive stock options;



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Provide for immediate vesting of Options upon death after Normal Retirement or Health Retirement; and



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Change the limitation on the maximum amount of performance units that may be granted in any one year to a participant from a share limit to a dollar limit.

        In addition to satisfying New York Stock Exchange stockholder approval requirements and stockholder approval requirements under the Internal Revenue Code relating to incentive stock options, stockholder approval of the Plan, as amended and restated, will also constitute reapproval of the performance goals and other material terms of the Plan for purposes of Section 162(m) of the Internal Revenue Code.

        The following is a summary of the material features of the Plan. The Plan was amended and restated by the Board on March 10, 2009. This summary is qualified in its entirety by reference to Appendix C, which contains the complete text of the Plan.

Summary of the Amended and Restated 2009 Equity Incentive Plan

Administration

        The Plan provides that the Compensation and Succession Committee or another committee appointed by the Board consisting solely of two or more non-employee members of the Board ("Plan Administrator") shall administer the Plan. The Plan Administrator has full and final authority under the Plan to determine eligibility, types, and terms of awards and to interpret and administer the Plan. The Compensation and Succession Committee, as Plan Administrator, appointed a subcommittee, currently comprised solely of the Committee chairman. This subcommittee has the authority to grant restricted stock and restricted stock units to eligible employees who are not subject to Section 16 of the Securities Exchange Act of 1934, in certain new hire situations that occur between regularly scheduled Committee meetings. In addition, in 2008 the Board delegated to the Equity Award Committee, consisting of the person who at any time holds the office of chief executive officer provided such person is a director of the Corporation, the authority to grant restricted stock units and nonqualified stock options to eligible employees who are not subject to Section 16 of the Securities Exchange Act of 1934, in certain new hire situations, in connection with promotions, and to recognize key contributions that occur between regularly scheduled Committee meetings.

Prohibition on Repricing of Options and Stock Appreciation Rights

        Except in connection with a corporate transaction involving Allstate, including, for example, a stock dividend, stock split, large, nonrecurring cash dividend, recapitalization, reorganization, merger, consolidation, spin-off, or other transaction or event described in the Plan's award adjustment provisions, the Plan Administrator may not amend outstanding options or stock appreciation rights to reduce the exercise price or base value of the award or to cancel options or stock appreciation rights in exchange for other awards or options or stock appreciation rights

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with an exercise price or base value that is less than the exercise price or base value of the original options or stock appreciation rights, without shareholder approval.

Eligibility

        Awards may be made to any of our employees or employees of any of our subsidiaries, approximately 39,000 people, except those who are not classified on the payroll system as a regular full-time or part-time employees and those who are covered by a collective bargaining agreement. In determining which employees will receive awards, the Plan Administrator will consider such factors as it deems relevant in order to promote the purposes of the Plan. In 2009, we anticipate that approximately 1,600 employees will receive awards under the Plan.

Types of Awards