Bliley PM
Shareholder Issues
Abstract
Provides questions and answers regarding possible shareholder issues at the Philip Morris 1992 Annual Shareholders Meeting. Covers: Advertising; Compensation: executive; Contributions; Corporate Matters; Environment; Human Resources; Labeling; Legislation; Litigation: actual and threatened; Questions at other companies' annual meetings; Smoking and Health (including animal rights); and Taxes.
Fields
- Type
- Report
- Named Person
- Shipman, F.
- Sarokin, Hadden Lee Judge (Judge (Fed. Dist Court); tried Cipollone case)Judge Hadden Lee Sarokin is a Federal District court judge, United States District Court for the District of New Jersey, Newark, NJ. Tried Cipollone case. Removed from Haines case by the U.S. Third Circuit Court of Appeals. Nominated 5/94? to the U.S. Third Circuit Court of Appeals (The Record 5/8/94). Sarokin later said his comments about the tobacco industry being "the king of concealment and disinformation" may have been unduly strong, "I agree the language was strong, maybe unduly strong"; "If I could take it back, I probably would" (AP 8/4/94).
- Named Organization
- American Medical Association (physicians group)Professional trade group representing American physicians.
- Philip Morris & Co. Ltd. (Cigarette manufacturer, incorporated in U.S. in 1902)Philip Morris & Co. Ltd.., was incorporated in New York in April of 1902; half the shares were held by the parent company in London, and the balance by its U.S. distributor and his American associate. Its overall sales in 1903, its first full year of U.S. operation, were a modest seven million cigarettes. Among the brand offered, besides Philip Morris, were Blues, Cambridge, Derby, and a ladies favorite name for the London street where the home companies factory was located - Marlborough.
- R.J. Reynolds Tobacco Co. (Cigarette manufacturer (Camel, Winston, Doral))Cigarette manufacturer (Camel, Winston, Doral)
- Surgeon General of the United States Public Health Service (U.S. Federal government public health advocate)The U.S. Surgeon General's office has found since 1964 that tobacco use causes disease in humans.
- Region
- Canada
- Germany
- Japan
- Singapore
- United States
- Keyword
- Canadian Tobacco Products Control Act (T.P.C.A.)
- Smoking and Health
- Environmental Tobacco Smoke ETS
- Thesaurus Term
- advertising restriction
- alcoholic beverage
- business activity
- legal activity
- tobacco manufacturer
- Legislation
- warning label
- Brand
- Camel (RJR)
Document Images
~0~3004617
SHAREHOLDER ISSUES
A. Advertising
AMA ban
Directed at specific audiences
"Old Joe" Camel advertisements
EC countries
Canada
B. Com[}ensation, executive
Co
(~ontributi0n~, philanthropic
" political
Corporate Matt@r~;
2.
3.
4.
5.
o
7.
8,
9.
Agreements: Change of Control and Employment
Audit issues
Business with minority groups
Currency
Meetings: Board of Directors
" Shareholders
New York headquarters
Officers, minority and women
Shareholder Proposals
Stock - Divestment
" Dividends
" Ownership
" Repurchase
Environment
1.
o
Policy
ETS
-2-
Fo,
H~man Resources
1. Affirmative Action
2. Testing for unlawful drugs
3. Testing for AI:DS
4. Sexual harassment:
5, Hlarassment
6. Hiandicapped employees
7. Club memberships
8 KGF Management Development and Personnel
9. KGF union relations
10,. KGF safety
11. KGF affirmative action
12. Closure of Hoboken plant
13.. Closure of Evansville, Ind. facility
14. Move of Baker's chocolate to Canada
15. Oscar Mayer plant closings
Go
Tobacco
LGF Products
1. Corporate
2. Tobacco
3. KGF Products
actual and threatened:
1. Corporate
Smoking and health products liability suits
Cipollone
ETS suits
Insurance
Judge Sarokin
Rocco Cappuccitti/OPDI vs Frito-Lay (HFL),
2. Philip Morris USA, suits and issues
3. KGF litigation
4. Human Ressources (class actions)
Questior~ at other companies' annual meetings
(to be developed between April 1 and 16 rehearsals)
K. Smoking and Health (including animal rights)
L. Taxes
1. Tobacco
2. Miller Brewing
~0~3004~
A. ADVERTIISING
1¸.
What iis Philiip Morriis, position, on the American Medical: Association's call for a
complete ban on the advertising and promotion of all tobacco products?
• AMA's proposal directly conflicts with fundamental rights to commercial
free speech u,nder the First Amendment
• We doubt such a ban would have the intended effect. In some countries
smoking actually increased following the imposition of advertising bans
=
Does Philip Morris make special efforts to advertise its cigarette products to
African-Americans, Hlispanic-Ameriicans and women?
• We: advertise our cigarette products to adults, whatever their ethnic and
socio-economic background, who choose to smoke
• As one of the nation's largest advertisers in print media, it is not
surprising that PM advertises in many African,American, Hispanic-
American and women's publications
=
Does Philip Morris target minors in its advertising?
• No.= We participate in programs to discourage the young from smoking
• We have developed a major retail and vending program called "l:t's the
Law" to discourage sales to those under age
• We participate in design and distribution ofi booklet, Helping Youth Say
"No", to enable edu,cators and parents to help mi!nors
-2-
o
The "Old Joe" Camel advertisement; for RJ'R's Camels is receiving much
criticism from the Surgeon General, other government officials and the AMA.
What is Philip Morris' position?
• It~ is not our practice to comment on the advertising of our competitors..
However, we believe that the First Amendment protections which extend
to commercial speech adequately and morally shield this advertising
from such, attacks
How would Philip Morris business be affected by the enactment of any of the
current proposals on non-dedUctibility ofi cigarette advertising expenditures?
• Would adversely affect our ability to advertise our products
o
Are U.S. cigarette manufacturers introducing cigarette advertising to newly
opened international markets, causing more people to smoke?
• Vast~ majority of st:udies show that advertising has no significant influence
on whether or not; to begin to smoke. People begin because of familial
circumstances, societal influences and peer behavior
• This issue was examined at length: during the Constitutional Challenge to
the Tobacco Products Control Act in~ Canada. Matter was litigated for
months, and no. basis was found for allegation that cigarette advertising
is the cause of smoking
What measures restricting advertising have been adopted outside the United
States?
• Most countries have regulations which affect advertising in general and.
cigarette advertising in particular. Countries such, as Singapore have
total bans while nations such as Germany and Japan respect the
importance, ofi commercial free speech
What; is the current situation with respect to advertising in the EC countries?
• A draft Advertising Directive banning all tobacco advertising was
recently approved: by a narrow margin by the European Parliament
• But Directives do not become law unless adopted: by the Council of
Ministers,. The next Council vote will be in May 1992. Currently five of
the 12 EC Member States oppose the Directives. This minority
constitutes a blocking vote under the rules of the European Parliament
el,
What is the status of the constitutional challenge to the advertising ban for
tobacco products in Canada?
• On. July 26, 1991 the Quebec Superior Court struck down Canadian
Tobacco Products Control Act (T.P.C.A.)L Judgement found no basis for
allegation that cigarette advertising is the cause of smoking
• Canadian government filed an appeal! in 1991 which will be heard in
Quebec Court of Appeals in May 1992. It is expected the appeal
judgement will be taken to the Canadian, Supreme Court
~0~3004C~5
PHILIP MORRIS
1992 ANNUAL SHAREHOLDERS MEETING
COMPENSATION OLIESTION & ANSWERS
GENERAL OUESTIQNS
1,. What is Philip Morris Compensation Philosophy?
We provide competitive levels of base pay to attract and retain top talent.
We pay for performance tied to results, and emphasize large variable pay
when, maximizing shareholder value.
Fair, motivating and rewarding.
Consistent with company's culture and organization.
2. How closely tied is the level of our pay programs tO business results?
We believe they are closely aligned.
Our compensation levels are reflective of our strong performance.
Philip Morris pay programs are linked to business results at the corporate,
business unit and individual levels.
Philip Morris pay for performance philosophy links salary increases to
achievement of individ~uaI goals and objectives,
Incentive compensation payouts (annual incentive, stock option and long-
term programs): are based on corporate and business unit measures such as::
- EPS growth
- Revenue growth
- Volume growth
- Market share growth
The quantitative measures vary depending upon the business and may be
combined with a discretionary component.
Do you believe your plans are competitive? Do, you believe that comparing with
competition is a good way to set Compensation Programs?
Yes, our plans are competitive.
We believe that comparisons are appropriate, however, we design our plans to
support our specific needs and: initiatives.
We look at what competitors are doing to remain aware of their practices.
Are Philip Morris pay practices similar around the world/similar across operating
companies ?
Yes, they are similar.
Philip Morris pay philosophy., which is to pay for performance, is uniform aroundl ~,
the worldl and between operating companies. ~
Actual pay practices, are tailored to meet business needs and; will vary as it
makes business sense tO do so.
