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Proxy Statement This proxy statement is furnished in connection with the solicitation by man- agement of proxies for use at the Annual Meeting of Stockholders of P. Lorillard Company to be held on Apri14, 1967. A proxy may be revoked by the stockholder notifying the Secretary in writing prior to the voting of the proxy. The Company will bear the cost of the solicitation of proxies, including the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of stock. In addition to the use of the mails, proxies may be solicited by personal interview, by telephone or by telegraph. The Company has 6,678,254 shares of Common Stock and 98,000 shares of Preferred Stock issued. Each stockholder is entitled to one vote for each share of Common Stock and Preferred Stock registered in his name at the close of business on February 14, 1967. ELECTION OF DIRECTORS Fifteen directors are to be elected, to serve until the next Annual Meeting and until their successors are duly elected and qualified. It is the intention of the persons named in the enclosed form of proxy to vote for the election of the nominees named below. If any of the nominees named below is not a candidate for 2

election as a director at the meeting-an event which the management does not anticipate-the proxies will be voted for a substitute nominee and the other nominees named below. rinciQal Name of occupation or nominee emQloyment J. Edgar Bennett President George O. Davies Executive Vice President, Finance Melvin E. Dawley President and Chief Executive Officer Henry E. Erickson Vice President, Leaf Lewis Gruber Consultant Name o# Year orDanisatson when in wAick 1xcA rst occupation is e ected carricd on director P. Lorillard Company 1960 P. Lorillard Company 1955 Lord & Taylor- 1950 department stores P. Lorillard Company 1961 P. Lorillard Company 1946 Approximate amonnt of each class of securities of the Compan benefcialty orunedydireetly or indirectly as o January 18,196~(1) 11,247 shares of Common Stock (3) (4) 22,607 shares of Common Stock (3) (4) 1,126 shares of Common Stock 1,712 shares of Common Stock (4) 15,392 shares of Common Stock (2) (3) Donald A. Henderson Vice President, Finance Twentieth Century-Fox 1946 Film Corporation 656 shares of Common Stock William A. Jordan Executive Vice P. Lorillard Company 1963 President, Sales 1,845 shares of Common Stock (3) Peter G. Levathes Vice President, Advertising Robert Meyer President William D. Okerson Vice President, Manufacturing P. Lorillard Company 1966 Heintz van Landewyck 1965 s.ar.1.-tobacco products P. Lorillard Company 1964 1,000 shares of Common Stock 400 shares of Common Stock 826 shares of Common Stock (4) Robert Z. Post General Sales P. Lorillard Company 1966 Manager 235 shares of Common Stock Harold X. Schreder President Distributors Group, 1956 Incorporated -investment bankers and Group Securities, Inc. -mutual fund 224 shares of Common Stock 3

ame of nominee rincipal occupation or employment Name of organization in which such occupation is carried on Year when rst e ected director dppro.mtmate amount o f each class of securities of the Company 6eneficially owned directly or indirectly as of January 18, 1967(1) Harold E. Stassen Attorney Stassen & Kephart 1963 1,050 shares of Anna F. Woessner Secretary P. Lorillard Company 1965 Common Stock 524 shares of Manuel Yellen Chairman of P. Lorillard Company 1956 Common Stock (4) 30,046 shares of the Board and Common Stock(2) (3) (4) Chief Executive Officer (1) Shares shown for some nominees include certain shares, 616 in the aggregate, either held by them or their wives as custodians for children or owned by their wives or relatives residing in their homes. Beneficial, ownership of such shares is expressly disclaimed by such nominees. (2) Includes in the case of Mr. Gruber 7,400 shares held in trusts and in the case of Mr. Yellen 2,950 shares held in trusts. (3) Includes shares held in escrow fbr release in instalments, subject to compliance with pre- scribed conditions, over ten and fifteen-year periods following termination of employment. The numbers of shares to be released annually during the ten-year period and, where appli- cable, during the fifteen-year period, are, respectively, as follows: J. E. Bennett, 32 and 174; G. 0. Davies, 437 and 246; L. Gruber, 699; W. A. Jordan, 29; and M. Yellen, 437 and 246. (4) Includes shares of Common Stock purchased on September 1, 1964, or December 1, 1965, under a stock purchase agreement providing for the immediate sale and transfer of shares, with a down payment of $5 per share to be made forthwith; annual instalments of approxi= mately 2%% or 4% of principal to be paid thereafter; the unpaid balance, secured by the shares as collateral, to be paid within five years; and simple interest at 4% on the unpaid balance, with a right of prepayment in full but only as to all shares. The approximate amount of the purchase price remaining unpaid as of February 1, 1967, and, in parentheses, the largest amount outstanding at any time during 1966 were as follows: J. E. Bennett, $18,500 ($19,000) ; G. 0. Davies, $130,000 ($134,000) ; H. E. Erickson, $18,500 ($19,000) ; W. D. Okerson, $18,500 ($19,000) ; A. F. Woessner, $19,000 ($20,000) ; and M. Yellen, $130,000 ($134,000). All of the nominees were elected as directors by the stockholders except for Robert Z. Post, who was elected by the directors of the Company to fill the vacancy created by the resignation of John J. Darby. Mr. Post has served the Company in various sales capacities for more than the last five years and was appointed General Sales Manager effective January 1, 1966. 4 t

REMUNERATION AND OTHER TRANSACTIONS WITH DIRECTORS AND NOMINEES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1966 Set forth below is the remuneration for the year 1966 for the persons there named and for directors and officers of the Company as a group : Name of individual Ca¢acity in m$ich remuneration was recetved alary Current incentsve compensation J. E. Bennett President _ $ 65,000 $ 57,632 J. J. Darby___ - Comptroller __ 28,320 13,978 G. O. Davies Executive Vice President, Finance_ 50,000 29,817 H. E. Erickson__ Vice President, Leaf__ 40,000 40,000 W. A. Jordan__ Executive Vice President and Vice President, Sales 40,301 39,568 P. G. Levathes._-____ Vice President, Advertising 50,000 41,232 W. D. Okerson_____- Vice President, Manufacturing___ 36,250 36,250 A. F. Woessner __ Secretary 20,000 15,000 __ - M. Yellen ____________ Chairman of the Board and Chief Executive Officer ___ 75,000 54,815 Officers and directors as a roup, (31 in number, including those named above)* (1) f2)__ 685 734 428 044 , , * Includes for this purpose all employees having an officer title. (1) The Company has an agreement which, as renewed, terminates on November 30, 1967, with Mr. Gruber, who retired November 30, 1964, and whose retirement payments started as of that date. Under such agreement, payments at the rate of $25,000 per year are being made to Mr. Gruber for consulting services. On retirement, Mr. Gruber commenced to receive contingent compensation awarded over a period of prior years consisting of the annual release of escrowed shares referred to in note 3 on page 4 and the payment of $2,512 a month. (2) In addition, the sum of $33,825 was paid as compensation for legal services in inter- national matters to the law firm of which Harold E. Stassen is a partner. The foregoing table reflects all current awards for 1966 to officers and direc- tors under the Company's incentive compensation plan. Under such plan, incen- tive compensation is paid to key employees currently and as contingent awards. Contingent awards of incentive compensation for 1964 and subsequent years under an amendment to the plan approved by the stockholders in 1966 are con- tingently payable in three equal annual instalments, commencing with the second year following the year for which the awards are made, if earned out by con- 5

tinued services and, in the event of retirement or other approved termination of employment, if requirements as to non-competition and conduct not prejudicial to the Company are complied with. Contingent awards for 1966 to the officers and directors referred to in the foregoing table, payable in annual instalments in each of the years 1968, 1969 and 1970, if earned out, were as follows : J. E. Bennett, $29,976; J. J. Darby, $3,394; G. 0. Davies, $22,065; H. E. Erickson, $25,398; W. A. Jordan, $25,298; P. G. Levathes, $12,077; W. D. Okerson, $26,648; A. F. Woessner, $3,333; M. Yellen, $39,553; and officers and directors as a group, $194,406. Contingent awards for years prior to 1964 were contingently payable following termination of employment over a period of fifteen years (ten years in the case of contingent awards for years prior to 1960). The amounts so contingently payable to the officers and directors referred to in the foregoing table during each of the fifteen years following termination (and, in parentheses, where applicable, any additional amount payable during each of the ten years following termination of employment) are as follows : J. E. Bennett, $4,682 ; J. J. Darby, $1,571 ($500) ; G. 0. Davies, $4,682; H. E. Erickson, $5,015; W. A. Jordan, $1,835 ($388) ; W. D. Okerson, $250; and M. Yellen, $4,682; officers and directors as a group, $45,747 ($9,176). All the remuneration set forth was received by, or is contingently payable to, the persons named in their capacities as officers or employees of the Company. The following table illustrates the estimated normal annual retirement allow- ances payable under the Employees' Retirement Plan of the Company upon retirement at age sixty-five to employees in the earnings classifications and with the years of service shown : Employee's average an u ni l n a ear nps during the highest Total annual benefits consecutive for 5 of the 10 years years of credited•service skow preceding retirement $0 years 25 years 30 years 35 years $ 25,000 $ 6,980 $ 8,680 $10,370 $12,070 50,000__ _ 14,480 18,050 21,620 25,190 75 000 21 980 27 430 32 870 38 320 , ___ , , , , -0 100 000__ 29 480 36 800 44 120 50 000 N , , , , , ~ 125,000 36,980 46,180 50,000 50,000 ~ 150 000 44 480 50 000 50 000 50 000 w , ____ , , , , ~ 6

Mr. Robert Meyer, a director of the Company, is President of Heintz van Landewyck s.ar.l., a Luxembourg tobacco manufacturer, all of the share capital of which is owned by Mr. Meyer and members of his family. P. Lorillard Inter- national S.A., a wholly-owned subsidiary of the Company, and Heintz van Landewyck s.ar.l. each own a one-half interest in P. Lorillard s.ar.l., a Luxem- bourg corporation, which, since April, 1964, has manufactured and sold under license certain of the Company's brands for several of the Common Market countries. ADOPTION OF PROFIT SHARING PLAN FOR EMPLOYEES OF TOBACCO BUSINESS As stated in the Annual Report to shareholders for 1965, unions representing employees in the Company's tobacco business, in the course of collective bargaining negotiations, required a commitment by the Company to adopt a general profit sharing plan for such employees. All of the other major tobacco companies have adopted such plans. As a result, the Company agreed to undertake a com- plete study directed toward the development of a profit sharing plan and to present it to the Board of Directors and thereafter to the stockholders for institution, subject to a favorable tax ruling, not later than January 1, 1968. The profit sharing plan hereafter summarized is the result of that study. The Board of Directors has adopted the plan and has declared it advisable for adoption by the stockholders, with a view to installation of the plan beginning with the calendar year 1968. Generally speaking, the plan follows patterns established by other major tobacco companies, with the added feature that compensation otherwise payable to management will be reduced to the extent of their participation in the plan. Thus, participation in the plan by directors and by all ofi'icers holding the rank of Vice President or higher will result in no additional cost to the Company. SUMMARY OF PLAN Capitalized terms in the text of the summary which follows are contained in the plan and are defined in Exhibit A attached hereto. A copy of the plan will be available for examination by any shareholder during regular business 7

hours at the office of the Secretary of the Company at 200 East 42nd Street, New York, N. Y. 10017, and, in case of any conflict between the plan and the following summary, the former will, of course, govern. Effective Date: The effective date of the Plan will be January 1, 1968. The Plan is subject to receipt of a favorable determination letter from the Internal Revenue Service, as hereinafter more fully stated. Participating Companies: The term "Company", as used in this summary, is the same as the term "Employer" in the Plan and refers to P. Lorillard Company (the parent corporation) and its two subsidiaries, P. Lorillard Pan American, Inc. and P. Lorillard International S.A., the three corporations carrying on the Lorillard tobacco business and which are the only participating companies. In the interests of flexibility, however, the term "Company" may also apply to any other affiliate or subsidiary of the parent corporation which adopts the Plan with the approval of the Board of Directors. Although the Plan so permits, there is no present intention of adding any other such affiliate or subsidiary. Eligibility: All regular and full-time employees and all seasonal employees eligible for benefits under a retirement plan of any of the participating companies, whether such employees are on a salaried, hourly or piecework basis, will be eligible to participate after thirty-six months of Continuous Service with the Company. Other seasonal and part-time employees and aliens employed outside the United States, as well as an employee compensated solely on a commission basis, will not be members unless the Committee administering the Plan otherwise directs by rules and regulations of general application. Company Contributions: Subject to the provisions summarized below, the Company will contribute for each Plan Year a sum equal to the following per- centages of the Company's net income before taxes (more precisely, Net Income of the Employer, which, among other things, excludes capital gains and losses) : 3% per cent of the first $100 million, plus 5 per cent of the next $50 million, plus 6 per cent of any excess. 8

.J No contributions will be made for any Plan Year (a) for which the Net Income of the Lorillard Companies shall not have equaled or exceeded 12 per cent of Net Worth for such Plan Year, (b) in which a cash dividend shall not have been declared and paid on common stock of the parent (P. Lorillard Company) or (c) in excess of the amount deductible from the Company's income for Federal income tax purposes. Under present law, the amount so deductible cannot, in general, exceed 15 per cent of the compensation for the year of all Members of the Plan. Although it is the intention to make contributions in accordance with the foregoing formula, the Company, by action of the Board of Directors, may in its sole discretion discontinue, suspend or reduce such contributions. The Plan may not be amended to increase the amount of such contributions, however, without the approval of the stockholders of the Company. The certification of the Company's independent public accountants as to the amount of the contribution for any Plan Year will be conclusive on the partici- pating companies, the Committee, the Trustee, all Members and Former Members and all persons claiming through a Member or Former Member. Accounts of Members: The Company's contributions for any Plan Year will be apportioned among persons who were Members at the end of such Plan Year or who ceased to be Members during such Plan Year otherwise than by resigna- tion or Discharge for Cause. Such apportionment will be made proportion- ally on the basis of Earnings for the Plan Year. After such apportionment, any amounts forfeited during the Plan Year, under circumstances stated below, or because of inability to locate the distributee, will be apportioned among such persons proportionally on the basis of their account balances. The accounts of Members will be adjusted to reflect changes in the value of the Fund. Distribution of Benefits: Distribution will be made at or commencing with or after termination of employment by death or otherwise. 10 ~ In case of termination either after ten years of membership or by normal 11 or early retirement, disability or death, the entire amount in the Member's account w will be distributed to him (or his beneficiary or legal representatives) in the w 9

manner hereafter described. In case of termination of a Member's employment by resignation or by the Company before he shall have been a Member for ten years, the amount to be distributed to him will be reduced by 10 per cent of the entire amount in the Member's account for each period of twelve full calendar months during which he shall not have completed ten years of Membership and the amount not so distributed to him will be forfeited. However, should a Member be, or if it shall be determined that he was, subject to Discharge for Cause, his account will be forfeited, including amounts theretofore vested. Distribution to a Member will be made in 180 monthly instalments unless the Member, not less than one year before he becomes entitled to payments, elects, with the approval of the Committee administering the Plan, payment in a lesser number of instalments or a single sum. Distribution to beneficiaries or legal representatives will be made in a single sum or otherwise as the Committee directs. In the case of a discharged or resigned Member, distribution will be made within a period of not more than five years. Amounts subject to distribution on a deferred basis will be segregated and invested in obligations issued or guaranteed by the United States or will be deposited in institutions whose deposits are insured by the Federal Deposit Insur- ance Corporation. Benefits are not subject to alienation or assignment of any kind prior to receipt thereof. Administration: General administration of the Plan will be placed in a Committee (which may include Members) appointed by the Board of Directors. The Committee's determination on any question not required by the Plan to be determined by the Board of Directors or the Company's independent public accountants will be conclusive. Members of the Committee are indemnified by the Company against liability for their administration of the Plan except for will- ful misconduct. Any action by the Board of Directors or the Committee with respect to eligi- bility or classification of employees, contributions or benefits must be uniform in nature as applied to all persons similarly situated and without discrimination in 10

favor of employees who are officers, shareholders, persons whose principal duties consist in supervising the work of other employees or highly compensated em- ployees. The Committee may delegate to a subcommittee any of its administrative duties. Trust Fund: All the assets of the Plan will be held in trust for use in accord- ance with the provisions of the Plan in providing benefits for Members, Former Members and their beneficiaries and shall be held in the Fund, except for the segregated accounts referred to above which will be held separately. The Fund will be invested in securities and other property and the Trustee may be author- ized in its discretion to select the same. The Trustee will be a bank or trust company appointed, and subject to removal, by the Board of Directors. The Company will have no liability for payment of the benefits under the Plan nor for administration of the Plan or of the trust, and each interested person will be required to look solely to the trust for the payment of benefits under the Plan. Payment of Administration Costs: The Plan provides that the costs of administration will be paid by the Company and will be in addition to the Company's contribution. Amendment or Termination: The right is reserved, through action of the Board of Directors, to terminate the Plan at any time or amend or modify it, in whole or in part at any time or from time to time, provided that no amendment may be made without the approval of the shareholders of P. Lorillard Company which would increase the amount of contributions by participating companies or alter the allocation of benefits under the Plan as between (i) officers and directors and (ii) other employees; provided, also, that no modification or amendment may be made which would deprive any person, without his consent, of any benefits under the Plan to which he would otherwise be entitled by reason of assets held for his account at the time; and provided, further, that no modification or amend- ment may make it possible for any part of the trust under the Plan to be used for, or diverted to, purposes other than the exclusive benefit of Members or Former Members and the beneficiaries or estates of Members or Former Members and payment of expenses of the Plan. Notwithstanding these restrictions, however, 11