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Allstate boosts CEO Wilson's pay as stock drops a third year
Bloomberg News

Tom Wilson, chairman and chief executive officer of Allstate


Bloomberg News

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Published: 4/2/2010 7:51 AM | Updated: 4/2/2010 8:12 AM

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Allstate Corp., the largest publicly traded U.S. home and auto insurer, said Chief Executive Officer Tom Wilson's compensation rose 31 percent as the company's stock declined for a third straight year.

Wilson's package for 2009 was $10.4 million, compared with $7.96 million a year earlier, the Northbrook-based firm said yesterday in a regulatory filing. His cash incentive compensation more than doubled to $1.71 million. Allstate shares fell 8.3 percent last year, compared with a 26 percent gain in the 24-stock KBW Insurance Index. The stock has dropped each year Wilson has been CEO.

Wilson appointed a marketing head and named new leaders for Allstate's property and life insurance units last year as he worked to improve customer satisfaction and retain policyholders. The company, which cut about 2,000 full-time employees last year, posted an $854 million profit in 2009 compared with a $1.68 billion loss in 2008.

The increase in Wilson's cash incentive award reflects Allstate's improved capital position, wider profit margin from insurance operations and "improving customer loyalty metrics," the insurer said in the filing. "Mr. Wilson continued his strong performance by recruiting three talented new executives to join his senior leadership team."

Allstate's book value per share, a measure of assets minus liabilities, grew 31 percent to $30.84 in the 12 months ended Dec. 31. The insurer recovered after its first unprofitable year as a public company in 2008, when it was hit by losses from mortgage-backed securities and Hurricanes Ike and Gustav, as well as a record number of tornados.

'Unsatisfying' Result

The loss prompted a 37 percent decline in Allstate's stock in 2008, after shares fell 20 percent in 2007, Wilson's first year as CEO. Wilson wrote about Allstate's stock price in a letter to shareholders posted on the insurer's Web site yesterday.

"When the financial markets fell during the first quarter of 2009, the stock tumbled to $13.77," Wilson said in the letter. "Staying focused on our priorities and financial performance coincided with an increase to $30.04 per share by year-end, slightly below where we began the year. The net result for 2009 was unsatisfying."

The insurer's stock closed yesterday at $34.11, an 8.2 percent increase since Dec. 31.

State Farm Mutual Automobile Insurance Co., the only U.S. home and auto insurer larger than Allstate, paid CEO Ed Rust $9.44 million for 2009. State Farm, which is owned by its policyholders, paid Rust $13.7 million in 2008. Dick Luedke, a spokesman for the Bloomington, Illinois-based insurer, said last month that Rust's compensation fell in part because the company lost $542 million in 2008.

The U.S. Securities and Exchange Commission has revised the way companies are required to calculate compensation to weigh more heavily options and grants in the year that they are awarded. Because of the change, some companies' disclosures this year for 2008 pay may not match what the firms reported previously.