ALLSTATE CORPALL
ALLSTATE CORP Stock Compensation Disclosure
Note 18 | Equity Incentive Plans | ||||
The Company currently has equity incentive plans under which it grants nonqualified stock options, restricted stock units and performance stock awards to certain employees and directors of the Company.
The following table provides the amounts of total compensation expense for the equity incentive plans and the total related tax benefits recognized.
For the year ended December 31, | ||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Compensation expense | $ | 123 | $ | 125 | $ | 73 | ||||||||||||||
| Income tax benefits | 17 | 18 | 12 | |||||||||||||||||
The Company records compensation expense related to awards under these plans over the shorter of the period in which the requisite service is rendered or retirement eligibility is attained. Compensation expense for performance stock awards with no market condition is based on the probable number of awards expected to vest using the performance level most likely to be achieved at the end of the performance period. Compensation expense for performance stock awards with a market condition is based on the number of awards expected to vest as estimated at the grant date and does not change if the market condition is not met.
Nonvested awards as of December 31, 2025 | ||||||||||||||
| ($ in millions) | Unrecognized compensation | Weighted average vesting period | ||||||||||||
| Nonqualified stock options | $ | 15 | 1.58 | |||||||||||
| Restricted stock units | 51 | 1.79 | ||||||||||||
| Performance stock awards | 31 | 1.47 | ||||||||||||
| Total | $ | 97 | ||||||||||||
Since 2001, a total of 110.8 million shares of common stock were authorized to be used for awards under the plans, subject to adjustment in accordance with the plans’ terms. As of December 31, 2025, 9.9 million shares were reserved and remained available for future issuance under these plans. The Company uses its treasury shares for these issuances.
The fair value of each option grant is estimated on the date of grant using a binomial lattice model. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted is derived from the output of the binomial lattice model and represents the period of time that options granted are expected to be outstanding. The expected volatility of the price of the underlying shares is implied based on traded options and historical volatility of the Company’s common stock. The expected dividends are based on the current dividend yield of the Company’s stock as of the date of the grant. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
Options are granted to employees with exercise prices equal to the closing share price of the Company’s common stock on the applicable grant date. Options granted to employees vest ratably over a three-year period. Vesting is subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances. Options may be exercised once vested and will expire no later than ten years after the date of grant.
Option grant assumptions | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Weighted average expected term | 5.9 years | 5.7 years | 5.8 years | |||||||||||||||||
| Expected volatility | 22.3% - 30.4% | 21.2% - 31.6% | 20.0% - 31.6% | |||||||||||||||||
| Weighted average volatility | 25.4 | % | 25.4 | % | 24.9 | % | ||||||||||||||
| Expected dividends | 1.9% - 2.1% | 1.8% - 2.4% | 2.4% - 3.3% | |||||||||||||||||
| Weighted average expected dividends | 2.1 | % | 2.3 | % | 2.6 | % | ||||||||||||||
| Risk-free rate | 3.5% - 4.6% | 3.6% - 5.6% | 3.3% - 5.6% | |||||||||||||||||
Summary of option activity | ||||||||||||||||||||||||||
| For the year ended December 31, 2025 | ||||||||||||||||||||||||||
Number (in thousands) | Weighted average exercise price | Aggregate intrinsic value (in thousands) | Weighted average remaining contractual term (years) | |||||||||||||||||||||||
| Outstanding as of January 1, 2025 | 6,393 | $ | 110.46 | |||||||||||||||||||||||
| Granted | 482 | 189.19 | ||||||||||||||||||||||||
| Exercised | (1,074) | 90.54 | ||||||||||||||||||||||||
| Forfeited | (64) | 161.99 | ||||||||||||||||||||||||
| Expired | (2) | 133.44 | ||||||||||||||||||||||||
| Outstanding as of December 31, 2025 | 5,735 | 120.21 | $ | 504,297 | 4.9 | |||||||||||||||||||||
| Outstanding, net of expected forfeitures | 5,715 | 120.01 | 503,741 | 4.9 | ||||||||||||||||||||||
| Outstanding, exercisable (“vested”) | 4,659 | 109.44 | 459,884 | 4.2 | ||||||||||||||||||||||
The weighted average grant date fair value of options granted was $48.65, $39.61 and $31.45 during 2025, 2024 and 2023, respectively. The intrinsic value, which is the difference between the fair value and the exercise price of options exercised, was $121 million, $170 million and $79 million during 2025, 2024 and 2023, respectively.
The following table provides the amounts of cash received from exercise of options and the related tax benefits realized on options exercised.
For the year ended December 31, | ||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Cash received from exercise of options | $ | 78 | $ | 189 | $ | 103 | ||||||||||||||
Tax benefit realized on options exercised | 24 | 32 | 16 | |||||||||||||||||
Restricted stock units granted to employees vest ratably over a three-year period. Vesting is subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances.
Restricted stock units for directors vest immediately and convert into shares of stock on the earlier of the day of the third anniversary of the grant date or the date the director’s service terminates, unless a deferred period of restriction is elected. Restricted stock units granted to directors prior to June 1, 2016 convert upon leaving the board.
Changes in restricted stock units | ||||||||||||||
| For the year ended December 31, 2025 | ||||||||||||||
Number (in thousands) | Weighted average grant date fair value | |||||||||||||
| Nonvested as of January 1, 2025 | 840 | $ | 131.93 | |||||||||||
| Granted | 331 | 192.37 | ||||||||||||
| Vested | (350) | 137.77 | ||||||||||||
| Forfeited | (55) | 162.40 | ||||||||||||
| Nonvested as of December 31, 2025 | 766 | 153.18 | ||||||||||||
The fair value of restricted stock units is based on the market value of the Company’s stock as of the date of the grant. The market value in part reflects the payment of future dividends expected. The weighted average grant date fair value of restricted stock units granted was $192.37, $160.44 and $132.65 during 2025, 2024 and 2023, respectively. The total fair value of restricted stock units vested was $67 million, $59 million and $49 million during 2025, 2024 and 2023, respectively.
Performance stock awards vest into shares of stock on the third anniversary of the grant date based on achieving established company-specific performance goals.
The number of shares earned upon vesting of the performance stock awards is based on the attainment of performance goals for each of the performance periods, subject to continued service, except for employees who are retirement eligible and in certain other limited circumstances.
Changes in performance stock awards | ||||||||||||||
| For the year ended December 31, 2025 | ||||||||||||||
Number (in thousands) | Weighted average grant date fair value | |||||||||||||
| Nonvested as of January 1, 2025 | 642 | $ | 140.46 | |||||||||||
| Granted | 182 | 189.25 | ||||||||||||
| Adjustment for performance achievement | (75) | 122.81 | ||||||||||||
| Vested | (123) | 122.81 | ||||||||||||
| Forfeited | (23) | 151.57 | ||||||||||||
| Nonvested as of December 31, 2025 | 603 | 160.61 | ||||||||||||
The fair value of performance stock awards includes a component with market-based condition measured on the grant date using a Monte Carlo simulation model. Market-based condition measures the Company’s total shareholder return (“TSR”) relative to the TSR of peer companies, expressed in terms of the Company’s TSR percentile rank among the peer companies, over a three-calendar-year performance
period. The Monte Carlo simulation model uses a risk-neutral framework to model future stock price movements based upon the risk-free rate of return at the time of grant, volatilities of the Company and the peer companies, and expected term assumed to be equal to the remaining measurement period. The market value in part reflects the payment of future dividends expected.
Performance stock awards grant assumptions | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
Expected term | 2.8 years | 2.9 years | 2.9 years | |||||||||||||||||
| Expected volatility | 26.6 | % | 27.2 | % | 24.8 | % | ||||||||||||||
Average peer volatility | 23.5 | % | 23.3 | % | 29.9 | % | ||||||||||||||
| Risk-free rate | 4.1 | % | 4.5 | % | 1.7 | % | ||||||||||||||
The weighted average grant date fair value of performance stock awards granted was $189.25, $159.29 and $136.62 during 2025, 2024 and 2023, respectively. The total fair value of performance stock awards vested was $23 million, $22 million and $41 million during 2025, 2024 and 2023, respectively.
The Company recognizes all tax effects related to share-based payments at settlement or expiration through the income statement.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 22, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 15, 2019 | |
| 2017 | Feb 26, 2018 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.