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Shareholder meeting report – Altria Group CEO Michael Szymanczyk: An artful dodger

May 26th, 2011

By Edward L. Sweda, Jr., Senior Attorney

RICHMOND, VA. – Just eight days before the Altria Group, Inc. 2011 Annual Shareholders Meeting in this historic city,  Altria Group’s former Chief Executive Officer, Louis Camilleri, complicated matters for his successor.  At the Philip Morris International Annual Shareholders Meeting in New York City on May 11, 2011, Camilleri answered a question from a shareholder who is also a nurse who has treated many smokers with serious diseases.  While admitting that smoking is addictive, Camilleri added the comment that “it is not that hard to quit” using tobacco products.  That comment made international headlines after the Associated Press reported it.

So, when Altria Group’s Szymanczyk gave management’s report at the meeting in Richmond on May 19th, he specifically, on page 10 of his prepared remarks stated: “Because tobacco use is addictive and it can be very difficult to quit, our tobacco companies help connect adult tobacco consumers who have decided to quit with cessation information from public health authorities.”

During the question and answer session, shareholder Rev. Michael Crosby of the Interfaith Center for Corporate Responsibility and I both pressed Szymanczyk to state whether, as Altria Group’s CEO, he disagreed with Camilleri’s comment and, if so, why.  Refusing to do so, he stated that “I would simply say that what I said is on our website.  There is nothing new here.”  The juxtaposition between the public statements of two tobacco executives just six days apart was the central focus of the Richmond Times-Dispatch article on the meeting.

I also pressed Szymanczyk on the issue of the ongoing Engle Progeny trials taking place in Florida.  Noting that 30 out of 43 (now, as this report is written, 32 out of 46) such trials resulting in verdicts have seen jurors return plaintiff verdicts, I asked whether Altria Group, for the sake of its shareholders, would abandon its no-settlement policy regarding the thousands of  Engle Progeny cases remaining throughout Florida.  His response was simply to refer shareholders to the company’s 10Q form, which restates its standard policy of refusing to settle these cases.

Virginia shareholder Anne Morrow Donley, citing studies from March 2011 which showed that a fetus subjected to secondhand smoke is at a higher risk of stillbirth, lower birth weight and lower birth length , asked Szymanczyk whether he would publicly advise smokers not to smoke around women of child-bearing age.  His response was to acknowledge that pregnant women should not be exposed to secondhand smoke, but he refused to broaden that recommendation to include women of child-bearing age.

Cathy Rowan, representing shareholder Trinity Group, noted Altria Group’s willingness to address concerns about implementing internally agreed upon code upholding the human rights of tobacco farm workers and about ensuring that the company’s suppliers are enforcing those rules.  Altria Group’s cooperation with shareholders following a 2009 vote of shareholders where 25% supported a resolution to protect the human rights of farm workers stands in contrast to the rigid opposition by the management of Reynolds American, Inc.  to similarly worded resolutions.

In his prepared remarks, Szymanczyk also bragged about Altria Group’s donations to various charitable and civic organizations, including the Boys and Girls Clubs, 4H, as well as the Virginia Museum of Fine Arts, the Kennedy center and the National gallery of Art.  He boasted that “Altria made nearly $50 million in cash and in-kind corporate contributions to non-profit organizations” in 2010, without noting that the $50 million figure represented just 0.205% of the company’s net revenues ($24.363 billion) in 2010.

A shareholder resolution was offered, calling on the Board of Directors to move “to ensure that Altria stops the production of any of its tobacco products with characterizing flavoring added, as well as their distribution and marketing, unless and until it can be proven by independent and evidence-based research that such added characterizing flavors do not contribute significantly to youth initiation of tobacco use.”   That resolution was defeated, with 97.5% of shares voting NO, with 2.5% voting YES.

“]Shareholders

At a Richmond restaurant after the 2011 Altria Group, Inc. Annual Shareholders Meeting. From left to right: Anne Morrow Donley, Rev. Michael Crosby, Cathy Rowan and Edward L. Sweda, Jr.

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