Allstate (ALL)

2005 Long-Term Cash Incentive Bonuses

        The long-term cash incentive bonuses for the 2003-2005 cycle were paid in March of 2006 and are shown in the "LTIP Payouts" column in the Summary Compensation Table. Based on the three-year average adjusted return on equity, Allstate placed sixth out of the eleven companies that comprise the peer group of companies and thereby achieved the target level of the performance objective.

Long-term cash incentive bonuses

        Long-term cash incentive bonuses are designed to focus our executives on balancing the long-term performance objectives and goals of Allstate with its annual performance goals. To reinforce this balance, long-term cash incentive bonuses are awarded for positive performance achieved over a three-year cycle. Our long-term incentive bonus component is provided to executives at the vice president level and above, including the named executive officers. We set the performance goals at the beginning of each three-year cycle so that any compensation paid is intended to qualify as performance-based compensation that is deductible under Section 162(m) of the Internal Revenue Code. Threshold, target and maximum benchmarks are set for each performance goal. Each year, before any bonus awards are paid at the end of a cycle, we determine the extent to which the performance goals are met. We have the authority to adjust the amount of awards payable; however, we have no authority to increase the amount of an award otherwise payable to a "covered employee" as defined in the Code. Long-term incentive bonuses are paid in March of the year following the end of each respective three-year cycle.