Allstate Corp., the biggest publicly traded U.S. home and auto insurer, told a proxy advisory firm that Chief Executive Officer Thomas Wilson’s pay last year was justified as it braced for a vote on compensation.
“Our compensation program is overseen by our independent board members and should be supported,” Northbrook, Illinois-based Allstate said in a letter to Institutional Shareholder Services Inc., disclosed today in a regulatory filing. The methodology used by ISS to value Wilson’s stock options “undermines the credibility of its analysis and vote recommendations and is potentially misleading to investors.”
Allstate is giving shareholders a non-binding vote on executive compensation. The company said it followed accounting guidelines of the Securities and Exchange Commission when disclosing Wilson’s pay for last year at $9.3 million, a 12 percent decline from 2009. According to the ISS methodology, his compensation rose 45 percent to $11.9 million, Allstate said.
Financial companies are giving shareholders a greater voice in executive compensation after the Dodd-Frank Wall Street reform act became law last year. Proxy advisory firms like ISS monitor corporate governance at public companies and make recommendations on how shareholders should vote.
“Investors that rely upon ISS may mistakenly believe an increase occurred in our chief executive officer’s compensation when, in fact, it decreased,” Allstate said.
Ted Allen, a spokesman for ISS, said that the proxy-advisory service was reviewing the letter and that it would consider Allstate’s concerns when producing its final report.
“As a matter of courtesy to any S&P 500 company that wants to review our analysis before it goes out, we will provide them that opportunity,” Allen said in a phone interview. “We generally do this as a means of ensuring factual accuracy.” Allstate is among several companies that requested to see the analysis in advance of publication, he said.