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T!54210369

NOTICE OF MEETING Flemington, N. J., March 1, 1.955 NOTICe. ~s rt~.rtEBr GIVEN that the Annual Meeting of the Preferred and Common Stockholders of THE A~-mCAN TOBACCO COraPANr will be held at No. 34 Court Street, Flemington, New Jersey, at one-thirty o'clock in the afternoon (Eastern Standard Time) on Wednesday, April 6, 3.955, for the following purposes: (1) to elect Directors; (2) to consider and vote upon a proposal (designated Proposal A and set forth in the following proxy statement) made by three stockholders; and (3) to transact such other business as may properly come before the meeting. The Preferred and Common Stock transfer books will not be dosed, but holders of Preferred Stock and Common Stock to be entitled to vote must be holders of record at the dose of business on March 7, 1955. ~[OHN W. H&NLON, Secretary T!54210370

PROXY STATEMENT The enclosed proxy is solicited on behalf of the Management. The proxy may be revoked in writing given to the Secretary at any time before being voted. Proxies in the form enclosed, properly executed by stockholders and duly returned to the Management and not revoked, will be voted and, where a specifi- cation is made on the ballot provided therein, will be voted in accordance with such specification. Attendance at the meeting does not serve to revoke the proxy. The outstanding number of each class of voting securities of the Company is: Preferred, 527,831 shares; Common, 6,512,59.2 shares (1,360 of which Common shares will become entitled to vote at the meeting only if and to the extent that the certificates representing such shares, which certificates prior to the merger with American Cigarette and Cigar Company effective December S1, 1953, represented ---------C-ommon-St~~aeri-~-~ig-a-~-~0mpany, are surrend~ed in exchange for Common Stock certificates of the Company by the close of business on the record date). The Preferred Stock is entitled to four votes per share. The Common Stock is entitled to one vote per share. The record date for the determination of stockholders entitled to vote at the meeting is the close of business March 7, 1955. ELECTION OF DIRECTORS The Board of Directors consists of nineteen members who are elected to hold office until the next Annual Meeting or until their successors are duly elected and qualified. It is intended that proxies in the accompanying form will be voted for the nominees named below. These nominees, with the exception of Virgil D. Hager and Robert B. Walker, are members of the present Board and have served as directors of the Company for the periods commencing with the dates set after their respective names. The Company is informed that these nominees were directly or indlreetly the beneficial owners of outstanding securities of the Company at the close of business on February 1, 1955, as set forth after their respeetiye names. Year First Orpheus D. Baxalys Alfred F. Bowden Richard J. Boylan Thomas P. Connors James R. Coon John A. Crowe John S. Dowd A. Gordon Findlay Other Positions and Offices with Company and Principal Occupation (a) Vice-President and Managing Director, The American Tobacco Company o~ the Orient, Inc. (b) Assistant to the President) The American Tobacco Company Vice-President and Director of Pur- chases, The American Tobacco Com- pany Director of Traffic, The American Tobacco Company Vice-President and Comptroller, The American Tobacco Company Vice-President and Assistant Chief of Manufacture, The American Tobacco Company Executive Vice-President, American Suppliers, Incorporated (b) Vice-President: American Cigarette and Cigar Division of The American Tobacco Company Elected Director Common Preferred 1940 1,561 62 1951 550 1929 8,115 450 1946 200 1936 783 106 1931 800 105 1946 400 1953 2,005 TI54210371

NKme Preston L. Fowler Charles Ganshow Virgil D. Hager Paul M. Hahn Hiram R. Hanmer Harry L. Hilyard John R. Hutehings, Jr. A. LeRoy Jansen William H. Ogsbury James F. Striekland Robert B. Walker Other Positions end Office~ with Company and Principal Occupation Vice-President and Chief of Manu- facture, The American Tobacco Company Vice-President, American Cigarette and Cigar Division of The American Tobacco Company Assistant to the Vice-Presidents in charge of manufacture, The American Tobacco Company President, The American Tobacco Com- pany Director of Research, The American Tnhacco-Company Treasurer, The American Tobacco Com- pany Vice-President, American Suppliers, In- corporated (b) Auditor, The American Tobacco Com- pany Assistant Chief of Manufacture, The American Tobacco Company President, American Suppliers, Ineorpo. rated (h) Executive Sales Manager, The American Tobacco Company Elected Director Common 1961 800 Preferred 100 1953 1,o00 150 1931 4,784 1938 300 1~44 350 1951 500 1948 318 1930 150 1946 620 110 $0 (a) In each instance, the positions and offices with the Company and its subsidiaries listed after the name of a nominee are also his principal occupation. (b) Affdiatcd company engaged in purchase and handling of leaf tobacco. The Company is also informed that none of the nominees was directly or indirectly the beneficial owner on February 3[, 1955, of outstanding securities of subsidiaries of the Company, other than directors' qualifying shares, except William H. Ogsbury, who owned beneficially on that date two shares of Common Stock of Cuban Tobacco Company Inc. Mr. Hager has been employed by the Company for more than 24 years. Since December 1954 he' has served as Assistant to the Vice-Presidents in charge of manufacture, and for the preceding 13 years he was Manager of the Company's cigarette and tobacco factories at Durham, N. C. Mr. Walker has been employed by the Company for more than 17 years. Since October 1, 1953 he has served as Executive Sales Manager. For 2 years prior to October 1953 he was Assistant to the Vice-President in Charge of Sales, and for the preceding 8 years he was Assistant Manager of the Sales Department. Although the Management does not contemplate the possibility, in the event any nominee is not a candidate or is unable to serve as a director at the time of the election, it is intended that the proxies will be voted for any nominee who shall be designated by the present Board of Directors to fill such vacancy. Proposal A The Company is informed that Lewis D. Gilbert, a record holder of 80 shares of Common Stock, whose address is 1165 Park Avenue, New York 28, New York, and/or John J. Gilbert, a record holder T154210372

of 80 shares of Common Stock, whose address is 1165 Park Avenue, New York 28, New York, and/or John Campbell Henry, a record holder of 400 shares of Common Stock, whose address is 5 East 93rd Street, New York, New York, intend to introduce at the forthcoming Annual Meeting the following resolution (designated herein as Proposal A): "RESOLVED: That the stockholders of The American Tobacco Company, assembled in annual meeting in person and by proxy, hereby request that the Board of Directors take the necessary steps to amend the by-laws of the corporation so as to increase the number of directors from nineteen to twenty." The proposers of this resolution, Messrs. Gilbert, Gilbert and Henry, have furnished the following statement setting forth the reasons advanced by them in support of their proposal: "At the present time all of the directors of American Tobacco are employees, with the public shareholders completely unrep- resented. B_y_adding a,othe.r directo.r~cho-is-not--an-employeerthis-situation-can-be-remedied-in-tlre-p~bti~ shareholder interest. Such a step is particularly important in vlhw of the present troubled situation in the tobacco industry." The long-continued record of successful operation of the Company's business by directors giving their entire time and effort to the service of the Company and its subsidiaries indicates, in the opinion of Management, that the directors have managed the business in the interest of all the stockholders and that it would not be in the interest of the Company to initiate this amendment. The Management recommends that you vote AGAINST Proposal A. The Management is not aware at the date hereof of any matter that is intended to be presented at this meeting other than the election of directors and Proposal A. If any matter not known at the date hereof is properly presented for action at the meeting, it is intended that the persons named in the proxies will vote thereon according to their best judgment. REMUNERATION Remuneration o] Directors and Officers. There is set forth in the following tabulation, on an accrual basis, all direct remuneration paid by the Company and its subsidiaries to the following persons for services in all capacities while directors or officers of the Company during its last fiscal year: each director, and each of the three highest paid officers, of the Company whose direct aggregate remuneration exceeded $30,000; and all directors and officers of the Company as a group. Estimated annual retirement benefits to the same individuals at normal retirement date under the Retirement Plan for employees adopted by the stockholders at the 1949 Annual Meeting are stated in Column (5). (D (2) (4) F/sine of individual Capacities in which (3) Participation or identity of group remuneration was received Salaries irt proEts Orpheus D. Baxalys Vice.President and Managing Director, $ 50,000 The American Tobacco Company of the Orient, Inc. (a) Assistant to the President, The American 40,000 Tobacco Company Vice-President and Director of Pur- 50,000 chases, The American Tobacco Com- pany (a) Affiliated company engaged in purchase and handling of leaf tobacco. Alfred F. Bowden Richard J. Boylan $108,402 C5) Estimated annual retirement benefit at normal retirement date $16,127 14,000 17,000 4 T154210373

Name of individual or identity of group Douglas W. Brashear(c) Thomas P. Conners James R. Coon(b) John A. Crowe(h) lohn S. Dowd A. Gordon Findlay(b) Preston L. Fowler (b) Charles Ganshow (b) Paul M. Hahn(b) John R. Hutchings, Jr. A. LeRoy Jansen William H. Ogsbury James F. Strickland (2) (4) Capacitivs in which (3) Panicipadon remuneration was received Salaries in profits Vice-President, American Suppliers, In- $ 32,250 corporated (a); General Manager o~ Stemmeries Director of Traffic, The American To- 3¢,000 $11,434 bacco Company Vice-President and Comptroller, The 50,000 $108,402 17,000 American Tobacco Company Vice-President and Assistant Chief of 50,000 108,402 17,000 Manufacture, The American Tobacco Company , Executive Vice-President, American 60,000 17,842 Suppliers, Incorporated (a) Vice-President, American Cigarette and 35,000 13,250 Cigar Division of The American To- bacco Company Vice-President and Chief of Manufac- 50,000 108,402 14,795 ture, The American Tobacco Company Vice-President, American Cigarette and 40,000 11,143 Cigar Division of The American To- bacco Company President, The American Tobacco Com- pany 120,000 Hiram R. Hantner Director of Research, The American 45,000 o v ~ / ~B Tobacco Company Ec~mund~.~y(d)~> Vice-Presldent tn Charge of Sales, The 50,000 American Tobacco Company Harry L. Hilyard(b) Treasurer, The American Tobacco Com. 50,000 puny Vice-President, American Suppliers, In- 45,000 eorporated (a) Auditor, The American Tobacco Corn- 50,000 pany Assistant Chief of Manufacture, The 50,000 American Tobacco Company President, American Suppliers, Incor- 75,000 porated (a) Directors and Officers Directors and Officers as a group 995,250 as a group (a} Attiliated company engaged in purchase and handling of leaf tobacco. (b) Also officer of alfiliated company or co~mpanies. (c) Deceased September 19, 1954. (d) Retiring April 6, 1955. (5) F~timated retirement benefit atnnrmal retirement date 135,502 108,402 677,511 25,000 14,378 17,000 12,152 11,237 15,528 17,000 16,395 The amounts stated in Column (4) above were accrued as incentive compensation (based on amount of Company profits), under Article XII of the By-Laws, as amended by vote of the stockholders at the 195l Annual Meeting. No amount was set aside or accrued during the Company's last fiscaI year for pension or retirement benefits proposed to be paid under any existing plan by the Company or any of its subsidiaries to any o~cer or director of the Company. 5 T154210374

The Retirement Plan for employees adopted by vote of the stock.holders at the 1949 Annual Meeting covers approximately 18,700 regular full-time employees of the Company and its subsidiaries. The aggregate amount of remuneration for the fiscal year 1954, received from the Company and its subsidiaries, directly or indirectly, on an accrual basis, by all the directors and officers of the Company as a group, was approximately sixteen one-hundredths of 1% of the Company's consolidated net sales. MISCELLANEOUS Any stockholder making written request therefor to the Secretary of the Company will be furnished a summary of the Annual Meeting which will be prepared after the meeting has been held. Messrs. Lyhrand, Ross Bros. & Montgomery have been for many years the independent auditors for the Company, and are appointed by resolution of the Board of Directors. In accordance with the Compan~r's customary practice, a member of the firm of auditors will attend the Annual Meeting and respond to questions which may be asked b3r stockholders. Comments or suggestions by stockholders with regard to the audit are welcomed, as they are with regard to all other matters affecting the Company's interests. Flemington, N. J., is reached by the Lehigh Valley Railroad. The present train schedule, which is subject to change and should be confirmed, is as follows: Leave Pennsylvania Station (33rd Street and Seventh Avenue, New York, N. Y.) 10:55 A. M. Arrive Flemington Junction 12:03 P. M. Leave Flemington Junction 5:22 P. M. Arrive Pennsylvania Station 6:40 P. M. The Company will procure transportation from New York to Flemington by railroad and return by railroad or, if expressly requested, return by bus, at Company expense for any stockholder of record desirous of attending the meeting, on his notifying the Secretary in writing at 111 Fifth Avenue, New York 3, New York, prior to March 31, 1955, that he wishes such transportation obtained. If you do not plan to attend, you are urgently requested to execute the enclosed proxy and mail it to the Company promptly. Expense of Solicitation. The expense of the solicitation of proxies for this meeting, including the cost of mailing, will be borne by the Company. In addition to mailing copies of this material to stockholders, the Company will request persons who hold stock in their names or custody or in the names of nominees for others, to forward copies of such material to those persons for whom they hold stock of the Company and to request authority for the execution of the proxies. To the extent necessary in order to assure sufficient representation at the meeting, officers and some regular employees of the Company and approximately 5 employees of Philip G. Cameron Company will request the return of proxies by telephone, telegram or in person, at an estimated cost of about $13,000. The amount of the expense to be borne by the Company will depend upon the volume of shares represented by the proxies received prqmptly in response to the Notice of Meeting. If proxies are not received promptly, it may be necessary for the Company to send telegraphic solicitation to those stockholders who have not responded. Stockholders who do not intend to be present at the Meeting are urged to send in their Proxies without delay. Prompt response is helpful, and your cooperation will be appreciated. February 14, 1955. 6 T154210375