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RAReynolds Industries, Inc. Winston-Salem, N.C: 27102 March 15, 1983 PROXY STATEMENT GENERAL INFORMATION The accompanying proxy is solicited by the Board of Directors of the Company. All shares represented by duly furnished proxies will be voted in accordance therewith. A stockholder furnishing the accompanying proxy may revoke it any time prior to the voting of the proxy. Solicitation may be made personally, by telephone, by telegraph or by mail by officers and employees of the Company who will not be additionally compensated therefor. The Company will request persons, such as brokers, nominees and fiduciaries, holding stock In their names for others, or holding stock for others who have the right to give voting Instructions, to forward proxy material to their principals and request authority for the execution of the proxy and will reimburse such persons for their expenses in so doing. Georgeson & Co. has been retained to assist in the solicitation of proxies at a cost not expected to exceed $14,500. The total cost of soliciting proxies will be borne by the Company. As of the close of business on February 28, 1983 there were outstanding and entitled to vote 112,604,089 shares of Common Stock, 7,053,478 shares of Series A CurrQative Preferred Stock and 2,881,912 shares of Series B Cumulative Preferred Stock. Holders of Common Stock, Series A Cumulative Preferred Stock and Series B Cumulative Preferred Stock of record as of the close of business on February 28, 1983 will be entitled to vote on all matters submitted to a vote at the meeting. Each share of Common Stock and Series B Cumulative Preferred Stock is entitled to one vote on all matters submitted at the meeting. Each share of Series A Cumulative Preferred Stock is entitled to three-fourths vote on all matters submitted at the meeting. 1

TABLE OF CONTENTS Paga General Information ........................................................................................... 1 Item 1-ELECTION OF DIRECTORS ................................................................. 2 Certain Information Concerning the Board of Directors ...................... 9 Remuneration ....................................................................................... 10 Transactions with Management and Others ........................................ 11 Stock Option and Other Plans ............................................................. 12 Retirement Pians .................................................................................. 16 Ownership of the Company's Securities .............................................. 18 Item 2-RATIFICATION OF APPOINTMENT OF AUDITORS ............................ 18 Item 3-AMENDMENTS TO RJR EMPLOYEES' SAVINGS AND INVEST- MENT PLAN :.......................................... :......................................... 18 .,,., General .......................................................... '........................................ 19 Member Contributions ..................................:..:................................... 19 Member Savings Plus Contributions .:................................................. 19 Company Contributions ....................................................................... 19 Special Rules on Contributions ............................................................ 19 Investment of Contributions ................................................................ 20 Withdrawals and Distributions ............................................................. 20 Termination and Amendment .............................................................. 20 Tax Consequences ............................................................................... 20 Item 4-STOCKHOLDER PROPOSAL CONCERNING PREEMPTIVE RIGHTS ............................................................................................ 20 Item 5-STOCKHOLDER PROPOSAL CONCERNING STOCK OPTION PLANS .............................................................................................. 21 Item 6-STOCKHOLDER PROPOSAL CONCERNING REPORT ON CIGA- RETTE PROMOTIONS IN THIRD WORLD NATIONS ....................... 23 M isceiianeous .................................................................................................... . 24 EXHIBIT A-RJR Employees' Savings and Investment Pian ............................. A-1

VERNON E. JORDAN, JR., 47, Partner, Akin, Gump, Strauss, Hauer & Feid. Mr. Jordan joined the law firm of Akin, Gump, Strauss, Hauer & Feld of Washington, D. C., and Dallas, Texas, as a Partner on January 1, 1982. Prior to this association, he served for ten years as President of the National Urban League, Inc., a non-profit community service organization. Mr. Jordan is a Director of American Express Company, Bankers Trust Company, Bankers Trust New York Corporation, Celanese Corporation, J. C. Penney Company, Inc., Xerox Corporation and Dow Jones & Co. He also serves on the Board of Directors of Atlanta University Center Corporation, Clark College, the John Hay Whitney Foundation, the Rockefeller Foundation and the Taconic Foundation. He has served as a member of the National Advisory Commission on Selective Service, the American Revolution Bi-Centennial Commission, the Presidential Clemency Board and the Advisory Council on Social Security. Mr. Jordan is a graduate of DePauw University and Howard University Law School. He is a member of the bar of the States of Arkansas and Georgia and is a member of the American Bar Association and the National Bar Association. Member: Audit Committee First became a Director: 1980 Public Policy Committee Shares owned: Common, 100 JUANITA M. KREPS, 62, former Secretary of Commerce. Dr. Kreps, who served as Secretary of Commerce from January 1977 to October 1979, was elected a Director of the Company on November 15, 1979. She previously served as a Director of the Company from April 1975 to January 1977, when she resigned to join the President's Cabinet. Dr. Kreps was Vice President of Duke University from 1973 to 1977 and James B. Duke Professor of Economics at Duke University from 1972 to 1977. She is the author of several leading books and articles in the field of economics. Dr. Kreps serves on the Board of Directors of American Telephone & Telegraph Company, Armco, Inc., Citicorp, Deere & Company, Eastman Kodak Company, J. C. Penney Company, Inc., UAL, Inc. and Zurn Industries. She also serves as a Trustee of the Duke Endowment. Dr. Kreps holds a Ph.D. degree from Duke University. Member: Executive Committee Public Policy Committee _ 0 First became: a Director: 1975 Shares owned: Common, 284 JOHN D. MACOMBER, 55, Chairman of the Board and Chief Executive Officer, Celanese Corporation. In 1973 Mr. Macomber was elected President and Director of Celanese Corporation, a diversified chemical company. He was named its Chief Executive Officer in 1977 and its Chairman of the Board in 1980. Before joining Celanese, Mr. Macomber had been associated for 20 years with McKinsey & Company, management consultants, serving as a Director from 1964 to 1973 and as a member of its Managing Committee. He is a Director of The Chase Manhattan Bank, N.A. and Bristol-Myers Company. He is a Trustee of the Carnegie Institution of Washington, the Whitehead Institute at M.I.T. and The Rockefeller University. Mr. Macomber is Vice Chairman of The Americas Society and a member of The Business Roundtable and the Council on Foreign Relations. Mr. Macomber is a graduate of Yale University and of Harvard Graduate School of Business Administration. Member: Compensation Committee First became a Director: 1975 Finance Committee Shares owned: Common, 1,666 Nominating Committee 5

HICKS B. WALDRON, 59, Executive Vice President, R. J. Reynolds Industries, Inc. and Chairman, President and Chief Executive Officer of Heublein, Inc. Mr. Waldron joined Heublein, Inc. as President and Chief Operating Officer In 1973 and served as Chief Executive Officer from 1975 through 1977 and from 1980 to present. He was elected Chairman in 1982. Mr. Waldron serves on the Board of Directors of CIGNA Corporation, CBT Corporation and Avon Products, Inc. He is also a Director of The Greater Hartford Arts Council, the Hartford Hospital, the Citizens Crime Commission of Connecticut and the Connecticut Business and Industry Association and is Vice Chairman and a member of the Executive Committee of National Junior Achievement, Inc. He is a member of The Conference Board. He is a Trustee of Green Mountain College, Western New England College and The Hartford Graduate Center. First became a Director: 1982 Shares owned6: Common, 11,051 Series B Preferred, 3,471 STUART D. WATSON, 66, Consultant and Former Chairman of the Board, Heublein, Inc. Mr. Watson joined Heublein, Inc. as President in 1966 and was elected Chairman In 1973. He retired as Chairman in 1982. Mr. Watson serves on the Board of Directors of Allied-Lyons PLC (London), Connecticut Mutual Life Insurance Company, Harte-Hanks Communications, Inc., Richardson-Vicks Inc., Mohasco Corporation, Nashua Corporation and The Stanley Works. He is a Trustee of DePauw University, the Institute of Living and Trinity College. He Is Chairman of the Finance Committee of The Advertising Council, Inc. and a senior member of The Conference Board. First became a Director: 1982 Shares owned5: Common, 31,127 Series B Preferred, 12,400 J. TYLEE WILSON, 51, President, R. J. Reynolds Industries, Inc. Mr. Wilson joined the Company in 1974 as President of RJR Foods, Inc. He was elected President of R. J. Reynolds Tobacco International, Inc. in January 1976 and became Chairman of the Board and Chief Executive Officer in May 1976, serving in that position until July 1978. Mr. Wilson was elected Executive Vice President of the Company in 1976 and was elected President in 1979. Before joining the Company, Mr. Wilson was with Chesebrough-Pond's Inc., where he served in various management positions, ultimately leading to his election as Group Vice President and Director. Before joining Chesebrough-Pond's, Mr. Wilson spent his professional career in sales management with The Procter & Gamble Company and Scott Paper Company. He is a Director of The Firestone Tire & Rubber Company, Sonoco Products Company, The Wachovia Corporation, Wachovia Bank & Trust Company, N.A., the Research Triangle Foundation of North Carolina, the Metropolitan YMCA of Winston-Salem and Forsyth County, and Reynolda House. He is a Trustee of the United States Council for International Business and of The Summit School, a member of the Board of Visitors of Wake Forest University and The University of North Carolina at Chapel Hill, and Chairman of the Governor's Business Council on the Arts and Humanities. He is also Chairman of the International Trade Subcommittee and a member of the International Policy Committee of the United States Chamber of Commerce. Mr. Wilson is a graduate of Lafayette College. Member: Executive Committee First became a Director: 1976 Finance Committee Shares owneds: Common, 9,8492 ~ ~ ~ 7 Z, e~

6 Includes 7,521 shares of Common Stock and 2,101 shares of Series B Cumulative Preferred Stock that are restricted and subject to forfeiture pursuant to the Heublein, Inc. Long-Term Growth Incentive Plan and the R. J. Reynolds Industries, Inc. 1982 Long Term Incentive Plan. Certain Information Concerning the Board of Directors During 1982 fifteen meetings of the Board of Directors were held. Each Director attended more than 75% of the meetings of the Board of Directors and the committees on which he or she served combined, except for Mrs. Wilson, who attended 73% of the combined total of such meetings. Among the standing committees of the Board of Directors of the Company are the Audit, Compensation and Nominating Committees. The duties performed by the Audit Committee include recommending to the Board of Directors the independent auditors to be employed by the Company; conferring with the independent auditors and the internal auditors concerning the scope of their examination of the books and records of the Company and its subsidiaries; reviewing with the independent and internai auditors, on completion of their audits, their findings and recommendations; reviewing the range and cost of audit and non-audit services performed by the independent auditors; reviewing the independent auditors' opinion rendered with respect to the annual financial statements; reviewing the adequacy of the Company's, system of internal accounting controls; reviewing and approving budgeted and actual audit costs of the independent auditors; and reviewing, when appropriate, investigations of matters within the scope of its duties. The Audit Committee held three meetings during 1982. The duties of the Compensation Committee inciude approving the salaries of officers of the Company and the Chairmen and Presidents of the Company's significant subsidiaries; reviewing the Company's wage and salary administration policies; reviewing, administering interpreting executive incentive compensation plans and granting bonuses, options and benefits under suc plans; approving individual transactions between the Company and executives or prospective executives that significantly affect the executive's benefits or remuneration; and reviewing and administering certain aspects of the Company's retirement and stock purchase plans. The Compensation Committee held six meetings during 1982. The duties of the Nominating Committee include reviewing and recommending changes in the size and composition of the Company's Board of Directors and recommending candidates for election to the Board. The Nominating Committee considers recommendations from all sources, including stockholders, regarding possible candidates. A stockholder who desires to propose a candidate to the Nominating Committee should submit a written recommendation, together with sufficient biographical information concerning the recom- mended individual, including age, employment and board memberships, if any, to the Secretary of the Company, R. J. Reynolds Industries, Inc., Reynolds Boulevard, Winston-Salem, North Carolina 27102. Although letters of recommendation may be submitted for consideration at any time, recommendations must be received prior to December 15 in any year for consideration in connection with the nomination and election of Directors at the Company's next annual meeting. The Nominating Committee held three meetings during 1982. Each Director who is not an employee of the Company or a subsidiary is compensat3d at the rate of $1,500 per month. In addition, each is paid a fee of $500 for a regular or annual meeting of the Board, $600 for a special meeting of the Board or for a committee meeting not held on the same day as a Board meeting, and $500 for a committee meeting held on the same day as a Board meeting or for any stockholder meeting. Committee chairmen are paid an additional $200 for attendance at committee meetings. The Company pays no additional remuneration to employees of the Company or its subsidiaries who are Directors. 9

Item 1-ELECTION OF DIRECTORS A board of eighteen Directors, to hold office until their successors have been elected and qualified, is to be elected at the meeting. It is intended that, unless authorization to do so is withheld, the proxies will be voted for the election of the nominees named below. If any nominee shall become unable to stand for election as a Director at the meeting, an event not now anticipated by the Board of Directors, the proxy may be voted for a substitute designated by the Board of Directors. The Board of Directors' nominees for election as Directors are listed on the following pages with brief statements of their principal occupations and other Information. If the year given in which a nominee first became a Director is prior to 1970, it is the year in which the nominee first became a Director of R. J. Reynolds Tobacco Company, of which the Company became the parent in a reorganization in 1970. All of the Board of -Directors' nominees were elected by the stockholders to their present terms at the annual meeting in 1982 except Messrs. Waldron and Watson. They are nominees for the first time and became Directors on October 21, 1982. Nominees for Directors, JOSEPH F. ABELY, JR., 54, Vice Chairman of the Board and Chairman of the Finance Committee, R. J. Reynolds Industries, Inc. Mr. Abely joined the Company in 1977. Previously, he was Vice Chairman and a Director of General Foods Corporation and also served that company as President of Its Food Service Products Division. Prior to 1963, Mr. Abely held various operating and financial positions with W. R. Grace & Co. He currently serves on the Board of Directors of Burlington Industries, Inc., Stauffer Chemical Company, Richardson-Vicks Inc., NCNB Corporation and NCNB National Bank of North Carolina. Mr. Abely also serves as a Governor of the National American Red Cross and is a member of its executive committee. He is a member of the Council on Foreign Relations and the Emergency Committee for American Trade. He is President of the Southeastern Center for Contemporary Art and a member of the National Business Committee for the Arts. Mr. Abely is a member of the Board of Visitors of the Fuqua School of Business at Duke University and a Trustee of Boston College and the James G. Hanes Memorial Fund/Foundation. He is a graduate of Boston College and holds a Master of Business Administration degree from Harvard Graduate School of Business Administration and a Juris Doctor from Harvard Law School. He is a member of the bar of the Commonwealth of Massachusetts. Member: Executive Committee Finance Committee First became a Director: 1977 Shares owned: Common, 5,5912 WILLIAM S. ANDERSON, 63, Chairman of the Board, NCR Corporation. Mr. Anderson has served since 1972 as a Director of NCR Corporation, which Is primarily engaged in the development, manufacturing, marketing and servicing of business equipment. Mr. Anderson has had a long career with NCR, beginning as Manager of its Hong Kong operation in 1946. He was elected Corporate President in 1972, Chief Executive Officer In 1973, Chairman and President in 1974, and Chairman of the Board in 1976. He is a Director of Consolidated Natural Gas Co., Chairman of the National Foreign Trade Council, an honorary member and past Chairman of the National Board of the Smithsonian Associates, and Vice Chairman of the Advisory Council on Japan-U.S. Economic Relations. He is a Trustee of The Conference Board and the University of Dayton, and a graduate member of The Business Council. He also serves on the International Council of Morgan Guaranty Trust Company of New York. Mr. Anderson is a graduate of Public and Thomas Hanbury School, Shanghai. Member: Compensation Committee First became a Director: 1977 Finance Committee Shares owned: Common, 200 Nominating Committee 2

any retirement allowance from previous employers. In the event the individual retires prior to age 65, the 70% retirement allowance is reduced by a lower percent of his primary Social Security benefit, by any retirement allowance from any previous employers and by 5% for each year or portion thereof remaining before he attains age 65. Upon his death while an employee, the individual's wife during her lifetime will receive an allowance equal to one-half of the retirement allowance to which he was entitled at the time of his death, actuarially reduced to recognize this survivorship benefit. In addition, a survivor's benefit may be elected by either individual upon retirement which, if elected, will reduce actuarially the benefits paid during his life. The 70% retirement allowance does not take effect until the individual attains age 55. Before that date, the annual retirement allowance payable upon termination of employment is $50,000. The agreements also provide for a severance allowance equal to one year's current base salary, but not less than $380,000 in Mr. Abely's case and $410,000 in Mr. Wilson's case, if the Company terminates their employment. The Company has entered into an agreement with Mr. Horrigan pursuant to which, if he remains an employee of the Company or its subsidiaries until July 1, 1988, he will receive upon retirement, benefits equivalent to those he would receive under the Company's retirement plan had he been a'n employee of the Company since October 1, 1964. The benefits under this agreement will be reduced by benefits payable to Mr. Horrigan or his contingent annuitant under any retirement plans of the Company and its subsidiaries or under plans of Mr. Horrigan's previous employers. The agreement also provides for a severance allowance equal to one year's current base salary, if the Company terminates his employment. 30n June 30, 1982, Mr. Watson, a nominee for Director, retired from Heublein, Inc., which has engaged him as a consultant through September 30, 1986 at a monthly fee of $16,667 through December 31, 1984, $10,417 through December 31, 1985, and $8,333 thereafter. Pursuant to Mr. Watson's original employment agreement with Heublein, Inc., $63,924'of compensation was set aside during the period October 20, 1966 through December 31, 1969 for deferred payment upon Mr. Watson's retirement or any time after his termination of employment. This amount, plus interest at the prime rate in effect from time to time, accruing from the respective dates of deferral, will be paid to him over a five-year period commencing July 1, 1985. 0 Transactions with Management and Others In 1982 two of the Company's subsidiaries, in the ordinary course of their business, made purchases (principally of cigarette filter tow) from Celanese Corporation or its subsidiaries aggregating approximately $29,668,000. These subsidiaries also made purchases (principally of cigarette filter tow) during 1982 from affiliates of Eastman Kodak Company aggregating approximately $60,476,000. Celanese and Eastman are the only domestic manufacturers of filter tow and such purchases were made at prevailing market prices. Dr. Kreps is a Director of Eastman Kodak Company, Mr. Macomber is Chairman of the Board and a Director of Celanese Corporation, and Mr. Sticht and Mr. Jordan are Directors of Celanese Corporation. Sea-Land Industries (Bermuda) Ltd., a subsidiary of Sea-Land Industries Investments, Inc., made payments of approximately $7,837,400 during 1982 to Paringer Investments, Ltd. and proposes to make payments of approximately $8,162,300 during 1983 pursuant to long-term charters of three vessels owned by Paringer. Mr. Cudd is Chairman of the Board of Directors of Paringer Investments, Ltd. The Company and its subsidiaries, in the ordinary course of business, made purchases of approximately $321,070 from Monsanto Company and its subsidiaries during 1982. It is anticipated that purchases of at least this amount will be made during 1983. Mr. Hanley is Chairman of the Board and Chief Executive Officer of Monsanto Company. The law firm of Akin, Gump, Strauss, Hauer & Feld of Washington, D. C. and Dallas, Texas, of which Mr. Jordan is a partner, has been retained by one of the Company's subsidiaries to represent it in certain litigation. During 1982 S. G. Warburg & Co. Ltd., of which Mr. Grierson is a Director, and Shearson/American Express Inc., a wholly-owned subsidiary of American Express Company, of which Mr. Jordan is a Director, prov~ded investment advisory services to the Company. 11

reason within one year of the date of grant will cause forfeiture. The performance shares granted have a payment value per share at the end of an award cycle equal to the fair market value of a share of the Company's Common Stock at that time. The award cycle in effect for the performance shares granted to Heublein employees under the LTIP is from January 1, 1983 to June 30, 1985. A portion of the performance shares may be forfeited based upon the Company's performance during the award cycle using compound growth in earnings per share as the performance criterion. Mr. Waldron has been granted 2,107 restricted shares of the Company's Common Stock and 2,107 performance shares under the LTIP. Based on the fair market value of the Company's Common Stock on March 1, 1983, the potential (unrealized) value of these performance shares granted was $98,766. The table below shows for the individuals named under "Remuneration" and for all Directors and officers as a group, the following information with respect to ISOs, other stock options and related SARs: (i) the aggregate amount of Common Stock subject to ISOs granted from January 1, 1978 through March 1, 1983, ( ii ) the aggregate amount of Common Stock subject to options with related SARs granted from January 1, 1978 through March 1, 1983, (iii) the average per share option exercise price thereof, (iv) the net value (market value less option exercise price) of shares of Common Stock or cash realized during such period upon the exercise of such options or related rights during such period, (v) the sales of Common Stock from January 1, 1978 through March 1, 1983, (vi) the number of shares of Common Stock subject to ISOs outstanding as of March 1, 1983, (vii) the number of shares of Common Stock subject to options with related SARs outstanding as of March 1, 1983, (viii) the potential (unrealized) value (market value less option exercise price) of outstanding options and rights as of March 1, 1983, and (ix) the potential (unrealized) value (market value less option exercise price) of currently exercisable options and rights as of March 1, 1983. In addition, during the period employees were granted options with SARs for a total of 2,192,753 shares at an average option exercise price per share of $37.55, and ISOs without SARs for a total of 234,300 shares at an average option exercise price per share of $46.19. c 0 Stock Option,17 Granted-January 1, 1978 to March 1, 1983: Number of Incentive Stock Options Granted ............................................. Number of options granted with stock appreciation rights ............................ Average per share option exercise price .................................................. Exercised-January 1, 1978 to March 1. 1983: Net value (market value less option exercise price) realized in shares or cash ..............................................••••• Sales-January 1, 1978 to March 1, 1983: Number of shares ................................. Outstanding at March 1, 1983: Number of Incentive Stock Options ..... Number of options with stock appre- ciation rights ..................................... Potential ( unrealized ) value (market value less option exercise price) ...... Potential ( unrealized ) value (market value less option exercise price) currently exercisable ......................... J. F. Abely E. A. Horrigan R. G. Landis J. P. Sticht J. T. Wilson All Directors and officers as a group 1,500 1,500 1,250 0 1,750 10,600 17,145 26,642 8,479 80,500 18,590 239,435 $35.51 $41.00 $40.55 $30.82 $35.97 $35.13 $304,722 $ 0 $ 0 $1,194,220 $479,126 $3,651,639 0 0 0 0 0 6,725 1,500 1,500 1,250 0 1,750 10,600 22,598 26,642 8,479 74,000 16,590 214,212 $242,146 $174,994 $61,577 $1,186,125 $167,588 $2,467,412 $214,853 $149,948 $51,255 $1,186,125 $134,619 $2,190,741 13

H. C. ROEMER, 58, Senior Vice President, General Counsel and Secretary, R. J. Reynolds Industries, Inc. Mr. Roemer joined R. J. Reynolds Tobacco Company in 1958 as Associate Counsel. He was made Assistant General Counsel in 1968, and in 1970 he was elected Secretary and a Director. He was elected a Vice President and General Counsel of the Company In 1970 and Senior Vice President and Secretary in 1979. Prior to joining R. J. Reynolds Tobacco Company, Mr. Roemer was associated with the law firm of Davis Polk & Wardwell of New York. He is a member of the Board of Governors of the North Carolina Bar Association and of its Corporate Counsel and Finance committees. Mr. Roemer is also a member of The American Law Institute, the Association of General Counsel, the American Bar Association, the Committee on Transnational Corporations of the World Association of Lawyers and the Advisory Board of the International & Comparative Law Center of the Southwestern Legal Foundation. He serves on the Board of Visitors of Wake Forest University School of Law and Is a Trustee of Salem Academy and College. Mr. Roemer Is a graduate of Harvard College and Columbia University Law School. He is a member of the bar of the States of New York and North Carolina. Member: Executive Committee First became a Director: 1970 Shares owned5: Common, 2,3362 J. PAUL STICHT, 65, Chairman of the Board and Chief Executive Officer, R. J. Reynolds Industries, Inc. Mr. Sticht became a Director of the Company in 1968 and was elected Chairman of the Executive Committee In 1972. in 1973 he became President and Chief Operating Officer and In 1978 he was elected Chief Executive Officer of the Company. Mr. Sticht was elected Chairman of the Board in April 1979. Before joining the Company, Mr. Sticht was President of Federated Department Stores, Inc. He joined Federated In 1960 as an Executive Vice President and Director and became President in 1967. Previously, he was a Vice President of Campbell Soup Company and President of Campbell's international subsidiary. Earlier in his career he held various positions with United States Steel Corporation and Trans World Airlines, Inc. Mr. Sticht is a member of the Board of Directors of Celanese Corporation, The Wachovia Corporation, Wachovia Bank & Trust Company, N.A., Textron Inc., S. C. Johnson & Son, Inc. and The Chrysler Corporation. He is a member of The Rockefeller University Board of Trustees and of the Massachusetts Institute of Technology Corporation. Mr. Sticht Is a member of the Board of Governors of the Corporate Fund for the Performing Arts at the Kennedy Center, the Council on Foreign Relations, the Chamber of Commerce of the United States and The Business Roundtable. He also serves as Chairman of the North Carolina Council of Management and Development. Mr. Sticht is a graduate of Grove City College, from which he also holds an honorary doctor's degree. He serves on the College's Board of Trustees. Member: Executive Committee First became a Director: 1968 Finance Committee Shares owned5: Common, 32,8392, 3 Nominating Committee COLIN STOKES, 68, Retired Chairman of the Board, R. J. Reynolds Industries, Inc. Mr. Stokes joined R. J. Reynolds Tobacco Company in 1935 where he rose through successive supervisory and management positions to the office of Chairman of the Board in 1970. He was elected President of the Company in 1972 and Chairman and Chief Executive Officer in 1973, serving in the latter position until 1978. Mr. Stokes retired as Chairman of the Board in 1979. Mr. Stokes is a Director of NCNB Corporation, NCNB National Bank of North Carolina and 1st Home Federal Savings and Loan Association. He is a senior member of The Conference Board and a member of the Rockefeller University Council. He is Vice Chairman of the North Carolina State Ports Authority. Mr. Stokes serves on the University of North Carolina at Chapel Hill Institutional Development Foundation, the Medical Foundation and Board of Visitors of the Medical Center of the Bowman Gray School of Medicine, the Board of Trustees of Wake Forest University and the Tanglewood Park Board of Trustees. Mr. Stokes is a graduate of the University of North Carolina and holds an honorary Doctor of Laws degree from Wake Forest University. Member: Compensation Committee First became a Director: 1957 C~ Executive Committee Shares owned5: Co mon 39 0254 ~ , , m .~, Public Policy Committee .~ 6 '~ -4 ~

The Company maintains a Management Incentive Plan for selected key employees. Under this Plan, participants may be awarded bonuses based upon both individuai and corporate performance during each year. The amount of the award is determined by an evaluation of performance in light of various financial and nonfinancial goals established annually. The maximum potential bonus award is limited on the basis of an individual's position. The bonus awards for officers of the Company are approved by the Compensation Committee of the Board of Directors. The average annual bonus awarded to the individuals named under "Remuneration," to all Directors and officers as a group, and to all eligible employees during the five-year period from January 1, 1978 to March 1, 1983s was as follows: Mr. Abely, $115,360; Mr. Horrigan, $95,600; Mr. Landis, $85,165; Mr. Sticht, $285,400; Mr. Wilson, $134,580; all Directors and officers as a group, $1,073,072; and all eligible employees, $4,995,880. The Company also maintains a Performance Unit Plan for selected key employees of the Company and its subsidiaries. Under this Plan, participants are granted performance units, the value of which is equal to the average market price of the Company's Common Stock during the month of December of the year prior to the year in which the performance units are granted. The Compensation Committee determines which employees will participate in the Plan and the number of performance units each participant is awarded. The number of performance units Initially granted to an Individual Is based principally on his or her position. The ultimate number of the performance units awarded to a participant-is+determined at the end of an award cycle of not more than four years by reference to Company performanoe ~ criteria established by the Compensation Committee at the beginning of the award cycle. Three four-year award cycles ending December 31, 1983, December 31, 1984 and December 31, 1985, respectively, are now In effect. The performance criterion used to determine the ultimate number of performance units awarded for all of the award cycles now in effect Is compounded growth in average earnings per share during the cycle. The ultimate number of performance units paid at the end of an award cycle may range from 0% to 120% of the initial number of the units granted, depending upon earnings growth. The base earnings per share from which growth is measured is the average of the actual'earnings per share for the three-year period Immediately preceding the start of each award cycle. The average annual performance unit award, based upon the initiai number of units granted, made during the three-year period from January 1, 1980 to March 1, 1983 to the individuais named under "Remuneration," to all Directors and officers as a group, and to all eligible employees was as follows: Mr. Abely, $116,800; Mr. Horrigan, $110,267; Mr. Landis, $132,933; Mr. Sticht, $236,750; Mr. Wilson, $141,533; all Directors and officers as a group, $1,038,908; and all eligible employees, $2,307,886. The Initial four-year award cycle under the Plan ended December 31, 1982. Awards paid for this cycle to the eligible individuals named under "Remuneration," to all Directors and officers as a group, and to all eligible employees were as follows: Mr. Abely, $115,362; Mr. Horrigan, $74,646; Mr. Landis, none; Mr. Sticht, $237,510; Mr. Wilson, $128,934; all Directors and officers as a group, $556,452; and all eligible employees, $693,869. Under the Management Incentive Plan, the Performance Unit Plan and the Deferred Compensation Plan for Directors, a participant may elect to defer payment of all or a portion of any award or fees. Deferred amounts are credited on the books of the Company to an account in the name of the participant as a cash credit, a phantom Common Stock credit, or a combination as elected by the participant. Cash credit accounts are credited quarterly with an interest equivalent at a rate based upon the yield on long-term U.S. government bonds, but not less than 6%. The phantom share accounts are credited with a Common Stock dividend equivalent at the time dividends are paid on Common Stock. Deferred amounts are distributed when a participant's employment or service as a Director terminates. The table that follows shows for the individuals named under "Remuneration" who have phantom share accounts, for all Directors and officers as a group, and for all eligible employees, the following information for phantom share accounts under the Plans: (i) the aggregate amount of phantom shares acquired from January 1, 1978 through March 1, 1983, (ii) the average base price per share thereof, (iii) the net value (market value less base price) of shares or cash realized during such period, (iv) the aggregate amount of phantom shares in the Individual's account as of March 1, 1983, and (v) the potential (unrealized) value (market value less base price) of the phantom shares as of March 1, 1983. The table also includes phantom shares previously allocated to Mr. Landis while he was an active participant in deferred compensation plans of Del Monte Corporation, which are similar to the Company's plans. 14