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PROXY STATEMENT fo ANNUAL MEE G STOCKHOLDERS This Proxy Statement is furnished in connection with a solicitation of proxies by the manage- rnent of Philip Morris Incorporated for use at the annual meeting of stockholders on April 10, 1962 and at any and all adjournments thereof. Record holders'of common stock, $5 par value, at the close of business on March 12, 1962 will be entitled to one vote for each share held. On February 1, 1962 there were outstanding 3,656,194 shares of common stock, $5 par value. A proxy on the enclosed form may be revoked at any time in so far as it has not been exercised and i mless so revoked will be voted. ELECTION OF DIRECTORS Thirteen directors are to be elected to hold office until the next annual meeting of stock- holders and until their respective successors have been elected. The proxy will be voted for the nominees named below. With the exception of Mr. Edward Lasker, all of the nominees were elected directors by the stockholders last year. During the last five years Mr. Lasker has been a member of the law firm of Hastings & Lasker, Beverly Hills, California. Although the manage- ment does not anticipate that any nominee will be unavailable for election, the proxy, in the event of such occurrence, will be voted for such substitute as the Board of Directors may designate. The following information is supplied with respect to the nominees: rineipa upatio Period of Service as Director (Since Year ) Shares of Common Stock Beneficially Owned February 1, 1962 J. F. Cullman, 3rd President and Mr er of )any Exe- cutive Committee 1954 11,254(1) R. W. Dammann Member of Dammann, Blank, Hirsch & Heming, Attorneys, and Secretary of A•S•R Products Company 1959 6,468(2) J. H. Davis President of Stevens Institute of Tech- nology and Member of Company Executive Committee 1956 100 R. N. DuPuis Vice-President of General Foods Cor- 1957 500(3) poration 2 I

Period of Shares of Service as Common Stock Director Beneficialiy Owned Principal Occupations (Since Year) February 1, 1962 I W. II. Hatcher Leaf Tobacco Const it to Coin- 1949 4,300 C. H. Kibbee pany and Member Comr Exe- cutive Committee Executive Vice-President -Finance 1957 2,501 Edward Lasker Member of Hastings & Lasker, Attor- 1961 1,000 T. N. Lawler neys Member of Lawler & Rockwood, Attor- 1959 100 R. P. Roper neys Executive Vice-President - Operations 1957 3,533(3) Arthur Snapper and Member of Company Executive Committee Management Consultant to Milprint, 1957 5,169 Sidney Weil Inc. and Member of Company Execu- tive Committee Management Consultant to A•S•R Prod- 1960 2,753 George Weissman ucts Company Executive Vice-President - International 1958 2,795(3) J. II. Wilkinson, Jr. President of State-Planters Bank of 1957 200 Commerce and Trusts, Richmond, Va. (1) Mr. I. F. Cullman, 3rd, is a director of Cul WBros., hich owned 45,277 shares of the Company's common stock; substantially all of the stock of Cu Bros., ) ~ti~ hichis held by him and his relatives, including Mr. H. S. Cullman, presently a director of the Compa nd a di r and officer of Cullman Bros., Inc., and Mr. Hugh Cullman, a vice-president of the Company. r F. Cull; , 3rd, is a trustee of, and has beneficial interests in, a testamentary trust which owned 4,262 shares of the Company's common stock and 500 ordinary shares (par value k 1) of Philip Morris (Australia) Ltd., a subsidiary. Mr. J. F. Cullman, 3rd, owned 1,000 of such ordinary shares. He also is executor of and has a beneficial interest in an estate which owned 9,145 shares of the Com- pany's common stock. (2) Mr. Dammann has a contingent life interest in a testamentary trust which owned 2,424 shares and a con- tingent remainder interest in a testamentary trust which owned 354 shares of the Company's common stock. (3) Dr. DuPuis owned 500, Mr. Roper 50, and Mr. Weissman 1,000 ordinary shares (par value 1:1) of Philip Nlorris ( Australia ) Ltd. In accordance with the policy of the Board of Directors, Mr. H. S. Cullman, having attained the age of 70, becomes a director emeritus and thus is not a nominee for election. 3 20480i42&8

REMUNERATION OI' DIRECTORS AND OFFICERS The table below sets forth, with respect to the fiscal year ended December 31, 1961, infor- mation concerning each person whose ct ag ate remuneration while a director exceeded $30,000, and all directors and officers as 11oup. ~ three highest paid officers are also directors. Capacities in Which Remuneration Was Received j. F. Cullman, 3rd President, Member of Executive Committee and Retirement Board, Director R W. Dammann Secretary of A•S•R Products Company, Director(2) W. H. Hatcher C. H. Kibbee Senior Vice-President, hfember of Executive Committee, Di- rector Executive Vice-President - Fi- nance, Member of Retirement Board, Director R. P. Roper Executive Vice-President - Op- erations, Member of Execu- tive Committeel?irectorm . Arthur Snapper Chairman of the rd of (- print, Inc., llle oer of o- pany Executive Committee, Director(2) Sidney Weil President of A•S•R Products Company, Management Con- sultant, Director(2) George Weissman Executive Vice-President- International, Director 4 Direct Aggregate Remuneration From Company and Subsidiaries Deferred Profit- Sharing Plan (1) Estimated Annual Benefit Under Retirement Plans $ 97,509 $ 4,540 $ 29,119 30,950(3) - 7,820 80,500 3,783 17,104(4) 70,450 3,279 16,726 73,250 3,405 26,871 50,900 - -(4) 56,250 - 12,918(4) 87,750 3,153 26,360 2448014269

Direct Aggregate •• Deferred Estimated Capacities in Which Remuneration Profit- Annual Benefit Remuneration Was From Company Sharing Under Retirement Received and Subsidiaries Plan (1) Plans All Directors and Officers (33 in number) - $1,133,576 $50,361 (1) 1'urs,.iant to the non-contributory Deferred Profit-Sharing Plan, the Company contributes to a trust fund after the end of each calendar year an amount which, speaking generally, is equal to the lesser of (a) 3% of the Company's earnings from the tobacco business for such year (before taxes and before deduction of the sum to be contributed ) and (b) 15% of the aggregate compensation for such year of the participants among whom such contribution is to be allocated. The Company's contribution for each ycar is allocated among those who were participants on the last business day of such year in the proportion which the compensation for such year of each such participant bears to the aggregate compensation for such year of all such participants. Distribution of an individual's share in the trust fund is made after he ceases to be an employee. The amounts heretofore allocated to the above persons are: Mr. Cullman, $20,113; Mr. Hatcher, $15,796; Mr. Kibbee, $10,521; Mr. Roper, $11,078; Mr. Weissman, $10,425; all directors and officers $171,271. (2) Milprint' Inc. is a subsidiary, and A•S•R Products Company is a division of the Company. (3) Not including the sum of $45,000 paid by the Company for legal services to the firm of Dammann, Roche & Goldberg (now Dammann, Blank, Hirsch & Heming), of which Mr. Dammann is a member. (4) Messrs. Hatcher, Snapper and Weil have retired but it is anticipated that they will continue to serve as consultants. The amounts shown above for Messrs. Hatcher and Weil are their actual annual benefits under retirement plans. Pursuant to Mr. Hatcher's election, after his death his named beneficiary will receive payments for life at the rate of $8,552 annually. During the year 1961, Cullman Brothers, Inc., one of the major companies in the Con- necticut shade-grown cigar leaf industry, supplied $194,803 of Connecticut shade-grown tobacco to Benson & Hedges ( Canada ) Limited, a subsidiary of the Company, for use on its cigar brands; this represented less than 4% of the total I@bpcco sa'@Wf Cullman Brothers, Inc. Pursuant to the Company's Stock OIWi Plan,otions to purchase a total of 69,850 shares of the Company's common stock were granted to 162 employees during 1961, including options to purchase 7,250 shares at $89.25 per share (the last sales price on the New York Stock Exchange on the granting date ) granted on April 28, 1961 to 13 officers of the Company, none of whom was a director. The options are exercisable only in part during the first three years and expire at the end of ten years or three months after the optionee's normal retirement date, whichever is earlier. Each optionee agreed to remain in the employ of the Company for one year from the date of the granting of the option at such rate of compensation (not less than the rate in effect at the date of the granting of the option) as the Company may from time to time determine. 5 2tt48t71427t1

Options to purchase shares of the Company's common stock granted tuider the stock option plans have been exercised since December 31, 1960 and on or before February 1, 1962 to the following extent by the persons referred to in the table on pages 4 and 5: Option O Price att umber tl Shares Exercise Date Market Price on Exercise Date J. F. Cullman, 3rd $45.50 3,000 March 14, 1961 $ 88.88 45.50 4,500 July 12, 1961 98.50 C. H. Kibbee 45.50 1,000 Sept. 25, 1961 104.50 49.75 1,000 Sept. 25, 1961 104.50 Sidney Weil 70.75 500 Nov. 28, 1961 120.00 George Weissman 45.50 1,000 Dec. 18, 1961 111.75 49.75 1,000 Dec. 18, 1961 111.75 Options have been exercised during the same period to the extent of 22,700 shares of common stock by all present off cers and directors, including the persons named above, as follows: Market Range Option Price for Period $45.50 $49.75 $63.875 $70.75 1961-1st Quarter 5,000 683 650 - 8 78.50 -$ 94.00 2nd Quarter 1,000 2,167 300 - 88.25 - 102.00 3rd Quarter 6,900 2,000 - - 93.00 - 109.38 4th Quarter 2,500 1,000 - 500 104.00 - 125.00 1962 - to Feb. 1 - 19~- - - 99.50 - 112.50 Total 15,400 0 -, 950 500 SELECTION OF AUDITORS The stockholders are to take action with respect to the selection of Messrs. Lybrand, Ross Bros. & Montgomery as auditors of the Company for the fiscal year ending December 31, 1962. The firm has been employed in that capacity since 1933. The Company has been informed that the firm has no direct financial interest or any material indirect financial interest in the Com- pany or any of its subsidiaries. 6 2048014271

~OTIII?R MATTERS The management knows of no other'business which will be presented to the meeting. If other matters properly come before the me ' g, the 1 ns named as proxies will vote on them in accordance with their best judgment. The cost of this solicitation of In~oxics be bo by the Company. In addition to the use of the mails, some of the officials and regular employees of the Company may solicit proxies by telephone and telegraph, and may reqiiest brokerage houses and other custodians, nominees and fiduciaries to forward soliciting material to the beneficial owners of the stock held of record by such persons. The Company will reimburse such persons for expenses incurred in forwarding such soliciting material. It is contemplated that additional solicitation of proxies will be made in the same manner under the engagement and direction of Dudley F. King & Co., Inc. of New York. N. Y., at an anticipated cost to the Company of $15,000. The niailing to stockholders of the annual report of the Company, including financial state- ments, for the year ended December 31, 1961 was begun on February 27, 1962. The report is not to be considered proxy soliciting material or as a communication by means of which any solici- tation is to ~ he made. BY ORDER OF THE BOARD OF DIRECTORS, THORiAS F. AImENSFELD, Secretary. I)ated, March 5, 1962 I1 7 I 2048014=72