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Posts Tagged ‘Altria’

Altria’s Annual Shareholders Meeting in Richmond, Virginia: Retirement provides no change in the company’s conduct

Thursday, June 7th, 2012

By Edward L. Sweda, Jr.

In January 2012, Altria Group, Inc. announced that CEO Michael E. Szymanczyk  would retire after the completion of the company’s Annual Shareholders Meeting in Richmond, Virginia on May 17.  Mr. Szymancyk worked for the company in various capacities for 23 years.  Michael J. Barrington was named to succeed him as Chairman and CEO, while Dave Beran was selected to take over as President and Chief Operating Officer .

While Mr. Szymancyk can take advantage of generous compensation – a pay package valued at $10.2 million for fiscal year 2011  for his work as the CEO of America’s largest cigarette manufacturer, there are many others who are not in a position to enjoy retirement.   These include the hundreds of thousands of Americans who annually die prematurely due to smoking-caused diseases, as well as from exposure to secondhand smoke.

As usual, the biggest portion of time at the Annual Shareholders Meeting was devoted to the CEO’s business report on the prior year.  During this presentation, Szymanczyk said that Altria had “successfully managed” the external challenges of litigation.

However, during the question-and-answer session, this author noted that, in late March 2012, the U.S. Supreme Court had declined to consider Altria’s appeal in the Campbell case and Reynolds American’s appeal in the Martin case.  In its petition for certiorari filed in December 2011, the attorneys for Reynolds American alleged that “in their conduct of Engle Progeny litigation, the Florida state courts are engaged in serial due process violations that threaten the defendants [including Altria] with literally billions of dollars of liability.”  The attorneys also warned that if the U.S. Supreme Court did not provide “prompt review,” then “the massive liability imposed on the Engle defendants – which currently stands at over $375 million in adverse judgments – will likewise steadily increase as Engle progeny trials continue with no end in sight.”  So, this doomsday scenario outlined by tobacco company attorneys is on track to occur, thanks to the U.S. Supreme Court’s refusal to hear the appeal.  Therefore, I asked Mr. Szymanczyk: “Why shouldn’t investors and shareholders rely on what tobacco company  lawyers said to the U.S. Supreme Court, rather than what you are telling us today?”

In response, Mr. Szymanczyk referred the audience (which included people listening to a webcast of the meeting) to the company’s latest 10-Q report, which contains 32 pages of information on tobacco litigation.

Returning to the theme of retirement, Anne Morrow Donley, a Virginia shareholder, addressed  CEO Szymanczyk directly.  “With your retirement, I’m sure you look to your legacy.  Certainly you and the company have a passion for success.  I’m not sure about satisfying your customers’ and their preferences unless they all have a death wish,” she said.  “One of every two of your tobacco customers dies from using your tobacco products, often from a debilitating illness.   At some point in the future, you and the company may indeed be charged with crimes against humanity – I look forward to that,” she concluded.

After the question-and-answer session, the next order of business was the consideration  of a shareholder resolution, submitted by the Province of St. Joseph of the Capuchin Order in Milwaukee.  The proposal, which dealt with Altria’s lobbying activities, called for on the Board of Directors to prepare a report that would disclose, on an annual basis:

  1. “Company policy and procedures governing the lobbying of legislators and regulators, including that done on our company’s behalf by trade associations.  The disclosure should include both direct and indirect lobbying and grassroots lobbying communications.
  2. A listing of payments (both direct and indirect, including payments to trade associations) used for direct lobbying as well as grassroots lobbying communications, including the amount of the payment and the recipient.
  3. Membership in and payments to any tax-exempt organization that writes and endorses model legislation.
  4. Description of the decision making process and oversight by the management and Board for
    1. Direct and indirect lobbying contribution or expenditure; and
    2. Payment for grassroots lobbying expenditure.”

The key goal of the resolution is transparency.  Father Michael Crosby, a Capuchin Franciscan, endorsed the proposal, noting that his order and “eight other members of the Interfaith Center for Corporate Responsibility have submitted the resolution that has received the support of one of the biggest institutional advisor groups in the United States. ISS, Institutional Shareholder Services.   When they analyzed what we are asking for, and what the company’s response is, they said that it was not adequate enough to support the company, so they are basically supporting us.”

Father Crosby continued, contending that Altria has a “culture of connivance.”  Citing the election battle in California over Proposition 29, a proposition would, for the first time in 14 years, raise the state cigarette excise tax by $1 per pack to help fund cancer research.  Father Crosby noted that Altria “has contributed two thirds of the $40 million trying to undermine” support for the proposition.  On the “main web site  of this group in California that is against” Proposition 29, it says it is supported by small business.  “There is no mention that two thirds of all the money going into this is from a big business like” Altria, Father Crosby said.  [Initial reports on the June 5, 2012 vote in California show a very narrow defeat for the proposition, by a margin of 50.8% against versus  49.2% in favor].

Father Crosby also condemned Altria’s support for the American Legislative Exchange Council, noting that the company has a seat on ALEC’s board of directors.  “It isn’t democracy.  It’s corpocracy, and it’s hypocrisy when there is this connivance,” Father Crosby told the audience.

In seconding the proposal, this author noted that “this modest shareholder proposal comes at a time of unprecedented public concern and pushback about the excessively pervasive and powerful influence that corporations have in the American political system.  In the wake of the January 2010 U.S. Supreme Court decision in the Citizens United case,… in which right-wing judicial activism has transformed the landscape of the American electoral process, certainly this resolution addresses a subject of utmost importance.”

I also noted that Altria had donated $50,000 to ALEC’s annual meeting for drafting legislation for Florida and other states that adopted the so-called “Stand Your Ground” legislation which has garnered international attention after the February 2012 fatal shooting of an unarmed 17-year-old, Trayvon Martin. “ Altria’s association with ALEC should have been disclosed to shareholders” long before now, I concluded.

In its opposition to the proposal, Altria claimed that it “provides extensive information on its website describing its public policy activities” and that the “additional report sought by this proposal is not necessary and would not provide meaningful additional insight into the Company’s activities in this area.”

The proposal was defeated with a preliminary result of 20.5% of shares in favor, with 79.5% of shares opposed.

So, after the meeting, Michael Szymanczyk did indeed retire as Altria’s CEO.  His successor is expected to proceed with business as usual – as deadly as that business will be for untold millions of people.



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

Thursday, 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.

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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.



Philip Morris and RJ Reynolds hit by $40 million verdict in Florida this week

Friday, April 29th, 2011

FOR IMMEDIATE RELEASE

Contact: Edward L. Sweda, Jr. or Mark Gottlieb 617-373-8462 or 617-373-2026

A Jacksonville, Florida jury this week assessed $34 million in punitive damages against tobacco giants Philip Morris and R.J. Reynolds Tobacco Co. for their reprehensible misconduct in the case of Andy Allen v. R.J. Reynolds Tobacco Co., et al.  This award followed a compensatory damages award of $6 million for the family of Patricia Allen, who died of chronic obstructive pulmonary disease (COPD) after having smoked for 36 years. Ms. Allen, who was born in 1948, started smoking in high school at a time when the tobacco companies were targeting teenage girls, according to Allen family attorney Keith Mitnick of Morgan & Morgan.

Edward L. Sweda, Jr., senior Attorney for the Tobacco Products Liability Project (TPLP), a project of the Public Health Advocacy Institute, based at Northeastern University School of Law in Boston, was delighted with the jury’s verdict. Noting that the jury “expressed appropriate and justifiable outrage at the reprehensible misconduct of these tobacco companies,” Sweda applauded the verdict, which was the third highest among the 30 plaintiff verdicts of the 43 Engle Progeny trials that have reached a verdict since February 2009.

It is also significant that this huge plaintiff victory occurred in Jacksonville, since approximately 4000 Engle Progeny cases are pending in state and federal court in Jacksonville.

TPLP Executive Director Mark Gottlieb said, “these trials stemming from the Engle class action suit of the 1990s disrupt business as usual for cigarette companies as juries continually find them liable at an astaunding rate.”



Florida jury Returns multi-million verdict against tobacco companies

Thursday, February 24th, 2011

FOR IMMEDIATE RELEASE –
Contact: Edward L. Sweda (617-373-8462) or
Mark Gottlieb (617-373-2026)

A jury in Gainesville, Florida today assessed punitive damages in the amount of $1.5 million against R.J. Reynolds Tobacco Co. (RJR) and another $1.5 million against Philip Morris (PM) in an Engle Progeny case. The same jury on Tuesday night awarded the family of John Huish $750,000 in compensatory damages, attributing 25% fault to RJR, 25% to Philip Morris and 50% to Mr. Huish. So, The compensatory damages award will be reduced by 50%.

Of the 35 Engle Progeny trials that have reached a jury verdict since February 2009, 24 have been plaintiff verdicts (69%).

Mr. Huish, who died of small-cell lung cancer in 1993 at the age of 64, had started smoking two decades before warning labels appeared on cigarette packs. He started smoking Lucky Strikes, followed by Camel, Chesterfield, Marlboro and then Marlboro Lights. Mr. Huish’s widow, Anna Louise Huish, brought the lawsuit and is represented by the West Palm Beach firm of Searcy, Denney, Scarola, Barnhart & Shipley. Attorney James Gustafson can be reached at 800-780-8607.

Senior Attorney for the Tobacco Products Liability Project at Northeastern University School of Law (TPLP), Edward L. Sweda, Jr. was delighted with the verdict: “This jury was justifiably appalled by what it learned about the tobacco companies’ outrageous misconduct during the decades that John Huish was an addicted customer. Someone who is not addicted would not have smoked two or more packs per day for 46 years, as Mr. Huish did before succumbing to lung cancer.”

TPLP Director Mark Gottlieb noted that, “Jury after jury of ordinary folks have found the way that cigarette makers conduct their business is deserving of punishment. With thousands of these cases in the pipeline in Florida, it’s going to be a long slog for Philip Morris and R.J. Reynolds.”

The Tobacco Products Liability Project is a project of the Public Health Advocacy Institute (PHAI) at Northeastern University School of Law in Boston, MA. PHAI is an independent federally recognized non-profit charity.



New Hampshire Court Grants Class Certification for Plaintiffs in a Light Cigarettes Class Action Lawsuit against Philip Morris

Tuesday, November 23rd, 2010

FOR IMMEDIATE RELEASE : November 23, 2010
Contact: Edward L. Sweda, Jr. 617-373-8462 or 857-753-9560

A New Hampshire state court on Monday granted a motion to certify a class action in a lawsuit brought under that state’s Consumer Protection Act (CPA) in the case of Lawrence et al. v. Philip Morris, USA, Inc.  The ruling makes New Hampshire the third state, after Missouri and Massachusetts, where such a class certification has been approved in a consumer-protection lawsuit against the tobacco industry’s light cigarettes scam.

Merrimack County Superior Court Judge Larry M. Smukler ruled that the plaintiffs had met all of the legal requirements for a class action under New Hampshire law.  Referring to the lawsuit which was filed on March 29, 2002, Judge Smukler ruled that “in this case, common issues of law and fact predominate over individual issues.”
The plaintiffs are represented by Attorney Chuck Douglas, who can be reached at 603-224-1988.

Edward L. Sweda, Jr., Senior Attorney for the Tobacco Products Liability Project, (TPLP) welcomed the court’s ruling.  “Just as courts in Missouri and Massachusetts have determined, a class action is an appropriate type of lawsuit to hold the tobacco companies accountable for their reprehensible misconduct in inflicting their light cigarette scam onto the public,” Sweda said.

In August 2006, U.S. District Judge Gladys Kessler ruled that the tobacco companies had violated federal anti-racketeering law.  She noted that the tobacco industry’s light cigarette scam was one of the examples of misconduct that violated the Racketeer Influenced Corrupt Organizations (RICO) Act.

See the Certification Order here.



Report on Altria Group, Inc.’s Annual Shareholders Meeting – Richmond, Virginia, May 20, 2010

Wednesday, June 2nd, 2010

By Edward L. Sweda, Jr., Senior Attorney- PHAI

DEATH PENALTY

On May 20, 2010, the Commonwealth of Virginia executed Darick Demorris Walker, who had been convicted of murdering Stanley Beale in 1996 and Clarence Elwood Threat in 1997.  Also on May 20, 2010, the Altria Group, Inc. Annual Shareholders Meeting took place in Richmond, Virginia.

During the meeting’s question and answer session, shareholder Anne Morrow Donley asked chairman and chief executive officer, Michael E. Szymanczyk the following question: “Earlier this year, the U.S. Supreme Court made a quite controversial decision, noting that essentially corporations are like people.  Therefore, fair is fair.  There’s a death penalty when murder is committed, so it seems only fair that there should be a corporate death penalty for this company because it admits that it is making a product that kills people.  A corporate death penalty could require Altria to apologize for its weapons of mass destruction and could require Altria to cease and desist from the destruction of life.  So my question is, since the company itself has admitted in legal proceedings that it makes products which kill people, and courts in various states have upheld challenges from the company saying that Altria is legally responsible for the deaths of customers, therefore, why should not Philip Morris, or Altria itself, not be subject to the death penalty?”

His response was to fall back on the tired refrain that cigarettes are a “legal product” and that people, aware of smoking’s risks, still choose to do so.

FLORIDA LAWSUITS

Having noted that Philip Morris had lost jury verdicts in seven “Engle Progeny” cases during a 15-month span, Tobacco Products Liability Project Senior Attorney Edward L. Sweda, Jr. asked Mr. Szymanczyk when his company will change its policy of refusing to settle the “Engle Progeny” cases, which number approximately 9500.  His response was to declare that Altria is “bullish” about the long-term prospects of tobacco litigation in the United States.   He said this even though in recent years, when state legislatures considered bills to put an artificial cap on total awards against tobacco companies in product liability cases, company lobbyists have supported such bills by portraying the company as risking bankruptcy if the caps were not imposed.  Mr. Szymanczyk’s “bullish” comment became the headline in the Richmond Times-Dispatch’s account of the meeting.

ALTRIA’S ATTEMPT TO REMOVE CERTAIN PANELISTS FROM A SCIENTIFIC PANEL DESIGNED TO ADVISE THE U.S. FOOD AND DRUG ADMINISTRATION (FDA)

During his business presentation just prior to the question and answer session, Mr. Szymanczyk cited the company’s “Mission,” which includes a pledge that it will “actively participate in resolving societal concerns that are relevant to our business.”  Shareholder Rev. Michael Crosby of the Interfaith Center for Corporate Responsibility, noted that, according to a report in late April in the Wall Street Journal in March 2010 Altria had attempted to remove four members of an FDA advisory panel because of alleged conflicts of interest.  The FDA rebuffed Altria’s attempt to remove those panelists.  Fr. Crosby said that such a power play by Altria contradicted that pledge.  Mr. Szymanczyk’s response was that the company is “participating in” the FDA’s regulatory process and that “part of participating involves representing shareholder interests.’

SHAREHOLDER RESOLUTIONS

There were two shareholder resolutions considered at the 2010 Shareholders Meeting.  The first, which called on the company to “commission an independent study and issue a resulting report on the affect of our company’s marketing on the purchasing practices of poor people.  Shareholders ask that this report offer ways to alleviate the harm done to innocent children, such as food insecurity, by such adults who smoke.  Shareholders ask that this report include recommendations as to whether our Company should continue marketing its products in census tracts with over 50% poverty.”  Supporters of this resolution noted that families with at least one smoker spend 2% to 20% of their income on tobacco.  In many instances, such spending deprives children of necessities such as food.

Management opposed this resolution, claiming that Philip Morris USA’s “responsible marketing practices, cessation support and the regulatory authority of the United States Food and Drug Administration (‘FDA’) are sufficient to address the concerns raised by this proposal.”

This resolution received 4.3% of the total number of shares and, thus, is not eligible to be refilled for the 2011 Shareholders Meeting.

The second resolution called on the company to create human rights protocols for itself and its suppliers.  Noting that Philip Morris USA contracts with suppliers who employ migrant farm workers, the proponents cited the serious problems of Green Tobacco Sickness (GTS).  GTS occurs when the skin absorbs nicotine from touching tobacco plant; the illness threatens more than 33 million tobacco farm workers globally.  The shareholders supporting this resolution “request the Altria Board of Directors to commit itself to create procedures to implement the internationally agreed-upon core human rights conventions in the countries in which it operates and to find ways to ensure that its suppliers are enforcing these as well.”

Management opposed the resolution, claiming that there are already sufficient practices and programs in place in the United States that “address farm safety and working conditions.”  This resolution received 20.5% support and will therefore be eligible for submission next year.

TPLP’s Edward L. Sweda, Jr. (left), with Rev. Michael Crosby and Anne Morrow Donley of Virginia, on the morning of May 20, 2010, shortly before attending the 2010 Altria Group, Inc. Annual Shareholders Meeting at the Greater Richmond Convention Center



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