Exhibit 10.12
THE ALLSTATE CORPORATION
DEFERRED COMPENSATION PLAN
ARTICLE I
DESIGNATION OF PLAN AND DEFINITIONS
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1.1 TITLE
This Plan shall be known as "The Allstate Corporation Deferred
Compensation Plan." The Plan was adopted by Allstate Insurance Company
effective January 1, 1995 . The Plan was amended and restated by the
Company, effective January 1, 1996 and November 11, 1997.
1.2 DEFINITIONS
The following definitions will apply:
(a) "Accounts" shall mean Deferred Compensation Accounts.
(b) "Beneficiary" or "Contingent Beneficiary" (collectively,
"Beneficiary" or "Beneficiaries"), shall mean the person or
persons last designated in writing by the Participant to the
Committee, in accordance with Section 8.5 of this Plan.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Bonus" shall mean amounts awarded to an Employee under the
following compensation plans of the Controlled Group: Annual
Executive Incentive Compensation Plan, the Long-Term Executive
Incentive Compensation Plan, the Annual Incentive Compensation
Plan, the Pay-For-Performance Plan or the Market Success Bonus
Plan.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
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(f) "Compensation" shall mean "Annual Compensation" as that term is
defined in the Allstate Insurance Company Retirement Plan
without regard to the annual compensation limit imposed by
Section 401(a)(17) of the Code, but shall in no event include
any salary continuation payments made to an Employee who has
elected the Special Retirement Opportunity offered to a class of
Employees in 1994.
(g) "Compensation Floor" shall be the compensation limit in effect
for a year pursuant to Section 401(a)(17) of the Code, as
amended, or any higher limitation expressly imposed by the
Committee.
(h) "Committee" shall mean the Committee appointed by the Board of
Directors pursuant to Article VI of this Plan.
(i) "Company" shall mean The Allstate Corporation.
(j) "Controlled Group" shall mean any corporation or other business
entity which is included in a controlled group of corporations,
within the meaning of section 1563(a)(i) of the Code, within
which the Company is also included.
(k) "Current Year Compensation" for any year shall mean the sum of
the Employee's Eligible Salary and Target Bonus for such year,
but shall in no event include any salary continuation payments
made to an Employee who has elected the Special Retirement
Opportunity offered to a class of Employees in 1994.
(l) "Deferred Compensation Account" shall mean the balance of all
Compensation deferred by a Participant (including amounts
transferred
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pursuant to Section 4.2 hereof), plus all accruals and
adjustments pursuant to Article IV of the Plan.
(m) "Eligible Employee" shall mean any Employee who is eligible to
participate under Article II of this Plan.
(n) "Employee" shall mean any regular, full-time employee of (i) the
Company, (ii) of Allstate Insurance Company or (iii) of any
affiliate in the Controlled Group which adopts the Plan with the
written consent of the Chairman and Chief Executive Officer of
the Company; but shall in no event include persons classified as
agents.
(o) "Hardship" shall mean severe financial hardship to the
Participant resulting from a sudden and unexpected illness or
accident of the Participant or of a dependent, or loss of the
Participant's property due to extraordinary and unforeseeable
circumstances arising as a result of events beyond the control
of the Participant.
(p) "Eligible Salary", for any Employee not classified as Agency
Manager, shall mean salary paid for the month of October of a
year, multiplied by 12. "Eligible Salary" shall mean, for any
Employee classified as Agency Manager, Compensation paid through
October 31 of a year, less any awards under the Market Success
Plan during such year, multiplied by the fraction 12/10.
(q) "Participant" shall mean an Eligible Employee participating in
the Plan in accordance with Article II hereof.
(r) "Plan" shall mean The Allstate Corporation Deferred Compensation
Plan as set forth herein, and as amended from time to time in
accordance with Article VII hereof.
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(s) "Plan Year" shall mean the fiscal year of the Company.
(t) "Separation from Service" means the termination of a
Participant's employment with the Controlled Group for any
reason whatsoever, including retirement, resignation, dismissal
or death, but does not include a transfer to status as an
employee insurance agent or as an exclusive agent independent
contractor for a member of the Controlled Group which has
adopted the Plan with the written consent of the Company's
Chairman and Chief Executive Officer.
(u) "Target Bonus" shall mean the amount targeted to be paid to an
Employee in any Plan Year pursuant to the Annual Executive
Incentive Compensation Plan, the Long-Term Executive Incentive
Compensation Plan, the Annual Incentive Compensation Plan, the
Pay-For-Performance Plan or the Market Success Bonus Plan.
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ARTICLE II
PARTICIPATION
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2.1 ELIGIBILITY
All Employees with Current Year Compensation in excess of the
Compensation Floor for the next Plan Year, shall be Eligible Employees
and may be Participants for the next Plan Year. The Committee may
change the requirements in this Section 2.1 for eligibility, provided,
however, that the Committee shall not decrease said income eligibility
requirement.
2.2 NOTICE OF ELIGIBILITY
The Committee or its appointed representative shall notify each
Eligible Employee no later than 30 days prior to the first business day
of any Plan Year or as soon thereafter as practicable, that he/she is
entitled to become a Participant in the Plan for such Plan Year.
2.3 PARTICIPATION ELECTION
Each Eligible Employee shall elect in accordance with procedures
established by the Committee or its representative, to become a
Participant in the Plan for any Plan Year, no later than the last
business day of the preceding Plan Year. Such election shall specify
the deferral percentages or amount to be deferred during such Plan
Year, as set forth in Article III of the Plan. If an Eligible Employee
fails to make such election, such failure will be deemed an election
not to become a Participant for such Plan Year. A Participant may not
change his deferral election for the Plan Year after the Plan Year has
commenced. However, a Participant may, at any time, irrevocably elect
to suspend participation in the Plan for the remainder of a Plan Year
as to deferrals of the salary component of Compensation, and deferrals
of said salary under the Plan for that Plan Year will discontinue,
starting with salary earned in the month following the receipt by the
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Committee or its appointed representative of such suspension election.
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ARTICLE III
DEFERRALS
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3.1 CATEGORIES OF PERMITTED DEFERRALS
(a) Bonus Only: A Participant whose Eligible Salary is less than or
equal to the Compensation Floor for the next Plan Year shall be
eligible to make a deferral election only with respect to the
Participant's Bonus earned for the succeeding Plan Year, subject
to the limit imposed by Section 3.2.
(b) Salary and Bonuses: A Participant whose Eligible Salary is
greater than the Compensation Floor for the next Plan Year shall
be eligible to make a deferral election with respect to both
salary and Bonus earned for the succeeding Plan Year, subject to
the provisions of Section 3.2.
(c) Recognition of Deferrals: Deferrals elected for any Plan Year
shall be recognized only after all other deductions required by
federal or state law or elected by the Participant have been
deducted.
3.2 AMOUNT OF DEFERRAL
(a) Each Participant eligible to make a deferral election with
respect to salary may specify that portion of the Participant's
salary to be deferred in whole dollar amounts. The amount of
salary the Participant elects to defer may not exceed the
difference between (1) and (2) below:
(1) The Participant's Eligible Salary for the Plan Year
preceding the Plan Year for which the deferral election
is being made; and
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(2) The Compensation Floor for the Plan Year for which the
deferral election is being made.
(b) Each Participant may specify that portion of the Participant's
Bonus to be deferred in whole number percentages. The amount of
the Participant's Bonus actually deferred shall not exceed the
difference between (1) and (2):
(1) The sum of the Participant's salary for the month in
which such Bonus is paid multiplied by twelve (12), plus
(ii) the amount of such Bonus; and
(2) The Compensation Floor for the Plan Year in which the
Bonus is paid.
(c) Except as provided in Section 3.2(d) hereof, to the extent that
a Participant has elected to defer Compensation for a Plan Year
which would otherwise be includible in the calculation of the
Participant's pension benefit under the Allstate Retirement Plan
or the Agents Pension Plan for such Plan Year (the "Excess
Deferral"), the Company shall, prior to the end of such Plan
Year, refund such Excess Deferral to the Participant.
(d) To the extent a Participant is on leave of absence for all or
part of the Plan Year, and the Participant's Compensation less
any amounts deferred pursuant to Section 3.2 is less than the
Compensation Floor for such year, the Company shall, prior to
the end of such Plan Year, pay the Participant the lesser of:
(1) The amount deferred during the year; or
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(2) The difference between (i) the Compensation Floor and
(ii) the amount of the Participant's Compensation less
the amount the Participant deferred pursuant to Section
3.2.
3.3 EFFECTIVE DATE OF DEFERRAL
Compensation deferred shall be credited to a Participant's Account as
set forth in Section 4.2.
3.4 USE OF AMOUNTS DEFERRED
Amounts credited to Deferred Compensation Accounts hereunder shall be a
part of the general funds of the Company, shall be subject to all the
risks of the Company's business, and may be deposited, invested or
expended in any manner whatsoever by the Company.
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ARTICLE IV
DEFERRED COMPENSATION ACCOUNTS AND VESTING
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4.1 ESTABLISHMENT OF ACCOUNT
The Committee shall establish, by bookkeeping entry on the books of the
Company, a Deferred Compensation Account for each Participant. Such
Account shall be established as of the first day of the Plan Year for
which the Eligible Employee first becomes a Participant. Accounts shall
not be funded in any manner.
4.2 CONTRIBUTIONS TO ACCOUNT
The Committee shall cause deferred Compensation to be credited by
bookkeeping entry to each Participant's Account as of the last day of
the month in which such Compensation otherwise would have been payable
to the Participant. In addition, the Participant's Account shall be
credited with the balance of his/her account in the Sears, Roebuck and
Co. Deferred Compensation Plan as and when such balance is transferred
to the Plan. Any irrevocable elections made with respect to amounts
accrued under the Sears plan by such Participant shall remain
irrevocable under this Plan.
4.3 MAINTENANCE OF ACCOUNT BALANCES - SUBACCOUNT ELECTIONS
(a) Each Participant shall elect to invest his/her Account balance
among one or more of the Subaccounts described in Section
4.3(b). Each such election shall be made in accordance with
procedures established by the Committee and shall specify that
portion of the Participant's Account balance on the date of such
election to be invested in each Subaccount. In its sole
discretion, the Committee may withhold one or more of the
Subaccounts from election by
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Participants for a Plan Year or Years. Investments of existing
Account balances and of future contributions to Subaccounts must
be made in whole percentage increments of such Account balance
or future contributions. Changes in the Account balances
invested in the specified Subaccounts due to earnings and losses
shall not require reallocation of the Account balances in the
specified proportions.
Each Subaccount balance shall be adjusted, as applicable, to
apply credits for contributions, interest, Dividend Equivalents
and other earnings and to apply debits for distributions or
transfers from the Subaccount and any losses in the Subaccount.
All such adjustments shall be bookkeeping entries reflecting
hypothetical experience for the pertinent Subaccounts as
described in Section 4.3(b).
(b) The Subaccount in which Account balances and future
contributions shall be invested are:
(1) Subaccount #1 - Commercial Paper Index
Account balances in Subaccount #1 for an entire month
shall be credited on the last day of such month with
interest at a rate equal to one-twelfth of the per annum
interest rate as reported for Dealer Commercial Paper C
90 day in The Wall Street Journal for the first day of
such month or, if such day is not a business day, on the
first business day of such month.
(2) Subaccount #2 - Corporate Bond Index
Account balances in Subaccount #2 for an entire month
shall be adjusted on the last day of such month or, if
such day is not a business day, on the last business day
of such month (the
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"Accrual Date") by a percentage factor equal to the
percentage change in the Merrill Lynch Corporate Bond
Index since the preceding Accrual Date.
(3) Subaccount #3 - S&P 500 Index
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Account balances in Subaccount #3 for an entire month
shall be credited on the last day of such month or, if
such day is not a business day, on the last business day
of such month (the "Accrual Date") with an amount equal
to dividends paid during such month on securities
included in the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500 Index"), and Account balances
in Subaccount #4 shall be adjusted on each Accrual Date
by a percentage factor equal to the percentage change in
the S&P 500 Index since the preceding Accrual Date.
(4) Subaccount #4 - S&P Midcap 400 Index
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Account balances in Subaccount #4 for an entire month
shall be credited on the last day of such month or, if
such day is not a business day, on the last business day
of such month (the "Accrual Date") with an amount equal
to dividends paid during such month on securities
included in the Standard & Poor's Midcap 400 Composite
Stock Price Index (the "S&P Midcap 400 Index"), and
Account balances in Subaccount #5 shall be adjusted on
each Accrual Date by a percentage factor equal to the
percentage change in the S&P Midcap 400 Index since the
preceding Accrual Date.
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(c) A Participant may, in accordance with the procedures established
by the Committee, change his Subaccount investment elections
regarding existing Account balances and future contributions
once each month. Such election shall be effective as of the
first day of the next month.
4.4 VESTING
A Participant shall be fully vested in his/her Deferred Compensation
Account at all times, subject to Sections 3.4 and 8.2.
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ARTICLE V
PAYMENTS
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5.1 EVENTS CAUSING ACCOUNTS TO BECOME DISTRIBUTABLE
(a) A Participant's Account shall become distributable on the date
of his/her Separation from Service or, at the election of the
Participant, in one of the first through fifth years after
Separation from Service. In either event, the Participant may
elect to receive payment in a lump sum or in annual installments
as provided in Section 5.3.
(b) That portion of a Participant's Account determined by the
Committee to be necessary to alleviate a demonstrated Hardship
shall become distributable on the date of such determination.
(c) A Participant may make an irrevocable election to receive a
distribution as of the first day of any Plan Year prior to
Separation from Service, provided such date occurs subsequent to
the Plan Year in which the Participant first participates in
this Plan and at least three years after the date the
Participant makes an election pursuant to this Section 5.1(d).
In such case, that portion of the Participant's Account
attributable to Compensation deferred, and accruals thereon,
after the Committee receives such election shall become
distributable on the date elected. Any balance in the
Participant's Account remaining after any payment under this
paragraph and any balance in the Account attributable to
participation in the Plan in any year subsequent to the year in
which a payout on such date certain occurs, shall be paid to the
Participant as provided in paragraphs (a) or (b) above.
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(d) Notwithstanding any contrary election by a Participant, any
payment or portion thereof under this Section 5.1 which would be
made at a time when a Participant is a "covered employee" as
defined in Section 162(m) of the Internal Revenue Code of 1986,
as amended, and which the Company would be prohibited by said
Section 162(m) from claiming as a deduction on any tax return
shall continue to be deferred hereunder until the first date on
which the Company can claim such deduction, unless further
deferred as provided in Section 5.1(b).
5.2 NOTICE OF ACCOUNT PAYMENT AND COMMENCEMENT OF DISTRIBUTION
The Committee or its appointed representative shall notify a
Participant or Beneficiary, as the case may be, that he/she is entitled
to receive payment from an Account, no later than the first day of the
month succeeding the date on which the Account becomes distributable,
or as soon thereafter as practicable. Distribution of Account balances
shall commence on the first day of the month coincident with or next
following the date elected by the Participant pursuant to Section 5.4,
or as soon thereafter as practicable.
5.3 FORM OF PAYMENT
(a) Except as provided in paragraphs (c) and (d) of this Section 5.3
and Article VIII hereof, payments of Account balances to a
Participant shall be in the form of one lump sum payment or
annual cash installment payments over a period of from 2 to 10
years, at the election of the Participant.
(b) The following formula shall be used to determine each annual
installment payment to a Participant who has elected to receive
installment payments:
remaining Account balance
as of the current payment date
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number of remaining payments, including the current one
Annual payments shall be made on the day payments commence
pursuant to Section 5.2 and on each January 1 thereafter.
Interest accruals and other adjustments shall continue with
respect to the entire unpaid Account balance, as provided in
Section 4.3.
(c) In the event of a Participant's death prior to full distribution
of his/her Account, the remaining Account balance shall be paid
in a lump-sum to the Beneficiary or Beneficiaries designated by
the Participant, as soon as practicable after a Participant's
death.
(d) Notwithstanding the provisions of paragraph (b) above, if the
remaining unpaid Account balance is $5,000 or less on any date
an annual installment payment is to be made to a Participant,
the payment shall be the remaining unpaid Account balance.
5.4 DISTRIBUTION ELECTION
(a) Each Participant shall elect his/her desired form of payment, in
accordance with procedures established by the Committee, at the
time of his/her initial participation election set forth in
Section 2.3.
(b) Except for distribution elections under Section 5.1(c), each
Participant may from time to time revise the terms of
distribution of the Participants Accounts, in accordance with
the procedures established by the Committee, provided that (i)
the revised notice of the desired form of payment shall be made
by the Participant no less than twelve months prior to the date
on which payment is
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to commence, but in any event no later than the day before the
date of the Participant's Separation from Service and (ii) in
any event, distribution of the Participant's Account shall not
commence earlier than twelve months after the Participant's
revised notice of the desired form of payment is made.
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ARTICLE VI
ADMINISTRATION
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6.1 GENERAL ADMINISTRATION; RIGHTS AND DUTIES
The Board shall appoint the Committee, which, subject to the express
limitations of the Plan, shall be charged with the general
administration of the Plan on behalf of the Participants. The Committee
shall also be responsible for carrying out its provisions, and shall
have all powers necessary to accomplish those purposes, including, but
not by way of limitation, the following:
(a) To construe and interpret the Plan;
(b) To compute the amount of benefits payable to Participants;
(c) To authorize all disbursements by the Company of Account
balances pursuant to the Plan;
(d) To maintain all the necessary records for the administration of
the Plan;
(e) To make and publish rules for administration and interpretation
of the Plan and the transaction of its business;
(f) To inform each Participant as soon as practicable after the end
of each calendar quarter of the value of the Participant's
Deferred Compensation Account as of the end of such calendar
quarter;
(g) To appoint (i) officers or employees of the Company or of
Allstate Insurance
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Company whom the Committee believes to be reliable and
competent; and (ii) legal counsel (who may be employees of the
Company or of Allstate Insurance Company and Plan Participants),
independent accountants and other persons to assist the
Committee in administering the Plan; and
(h) To refuse to accept the deferral of amounts the Committee, in
its sole discretion, considers too small to be administratively
feasible.
The determination of the Committee as to any disputed question or
controversy shall be conclusive.
Any member of the Committee may resign by delivering a written resignation
to the Board.
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ARTICLE VII
PLAN AMENDMENTS AND TERMINATION
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7.1 AMENDMENTS
The Company shall have the right to amend this Plan from time to time
by resolutions of the Board or by the Committee, and to amend or
rescind any such amendments; provided, however, that no action under
this Section 7.1 shall in any way reduce the amount of Compensation
deferred or any accruals or other adjustments provided in section 4.3
up to and including the end of the month in which such action is taken.
Interest will continue to accrue as provided in Section 4.3. All
amendments shall be in writing and shall be effective as provided
subject to the limitations in this Section 7.1. The Committee shall
inform each Participant as soon as practicable following the enactment
of any such amendment.
7.2 TERMINATION OF PLAN
Although the Company expects that this Plan will continue indefinitely,
continuance of this Plan is not a contractual or other obligation of
the Company, and the Company expressly reserves its right to
discontinue this plan at any time by resolutions of the Board,
effective as provided by the Board in such resolutions. However, no
such action shall in any way reduce the amount of Compensation deferred
or any accruals thereon, up to and including the end of the month in
which such action is taken. Accruals to Accounts shall continue until
distribution as provided in Section 4.3.
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ARTICLE VIII
MISCELLANEOUS
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8.1 NOTIFICATION TO COMMITTEE
Any election made or notification given by a Participant pursuant to
this Plan shall be made in accordance with procedures established by
the Committee or its designated representative, and shall be deemed to
have been made or given on the date received by the Committee or such
representative.
8.2 PARTICIPANT'S EMPLOYMENT
Participation in this Plan shall not give any Participant the right to
be retained in the employ of the Company, Allstate Insurance Company of
any member of the Controlled Group, or any right or interest other than
as herein provided. No Participant or Employee shall have any right to
any payment or benefit hereunder except to the extent provided in this
Plan. The members of the Controlled Group expressly reserve the right
to dismiss any Participant without any liability for any claim against
them, except to the extent expressly provided herein.
8.3 STATUS OF PARTICIPANTS
This Plan shall create only a contractual obligation on the part of the
Company and shall not be construed as creating a trust or other
fiduciary relationship with Participants. Participants will have only
the rights of general unsecured creditors of the Company with respect
to Compensation deferred and interest credited to their Accounts.
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8.4 OTHER PLANS
This Plan shall not affect the right of any Employee or Participant to
participate in and receive benefits under and in accordance with the
provisions of any other Company plans which are now or may hereafter be
in existence.
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8.5 BENEFICIARIES AND CONTINGENT BENEFICIARIES
Each Participant shall, in accordance with procedures established by
the Committee, designate one or more persons or entities (including a
trust or trusts or his/her estate) to receive any balance in his/her
Deferred Compensation Account, including accruals thereon, payable to
him/her under this Plan in the event of his/her death prior to full
payment thereof. The Participant may also designate a person or persons
as a Contingent Beneficiary or Contingent Beneficiaries who shall
succeed to the rights of the person or persons originally designated as
Beneficiary or Beneficiaries, in case the latter should die. He/she may
from time to time change any designation of Beneficiary or Contingent
Beneficiary so made, and the last written notice given by him/her to
the Committee shall be controlling. In the event a Participant
designates a person other than his/her spouse as Beneficiary of any
interests under this Plan, the Participant's spouse shall sign a
statement specifically approving such designation and authorizing the
Committee to make payment of such interests in the manner provided in
such designation. In the absence of such designation by the
Participant, or in the absence of spousal approval and authorization as
herein above provided, or in the event of the death prior to or
simultaneous with the death of the Participant, of all Beneficiaries or
Contingent Beneficiaries, as the case may be, to whom payments were to
be made pursuant to a designation by the Participant, such payments or
any balance thereof shall be paid to such Participant's legal
representatives. In the event of the death, subsequent to the death of
the Participant, of all Beneficiaries or Contingent Beneficiaries, as
the case may be, to whom such payments were to be made or were being
made pursuant to a designation under this section, such payments or any
balance thereof shall be paid to the legal representatives of such
Beneficiaries or Contingent Beneficiaries.
8.6 TAXES
To the extent permitted by law, if the whole or any part of a
Participant's Account shall
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become the subject of any estate, inheritance, income or other tax
which the Company shall legally be required to withhold and/or pay, the
Company shall have full power and authority to pay such tax out of any
monies or other property in its hands and charge such amounts paid
against the Account of the Participant whose interest hereunder is
subject to such taxes. Prior to making any such tax payment, the
Company may require such releases or other documents from any lawful
taxing authority as the Company shall deem necessary.
8.7 BENEFITS NOT ASSIGNABLE; OBLIGATIONS BINDING UPON SUCCESSORS
Benefits under this Plan and rights to receive the amounts credited to
the Account of a Participant shall not be assignable or transferable
and any purported transfer, assignment, pledge or other encumbrance or
attachment of any payments or benefits under this Plan, other than by
operation of law, shall not be permitted or recognized. Obligations of
the Company under this Plan shall be binding upon successors of the
Company.
8.8 ILLINOIS LAW GOVERNS; SAVING CLAUSE
The validity of this Plan or any of its provisions shall be construed
and governed in all respects under and by the laws of the State of
Illinois. If any provisions of this Plan shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the remaining
provisions hereof shall continue to be fully effective.
8.9 HEADINGS NOT PART OF PLAN
Headings and subheadings in this Plan are inserted for reference only,
and are not to be considered in the construction of the provisions
hereof.
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