Tobacco Documents Online

STATE OF WISCONSIN INVESTMENT BOARD May 17, 1991 MAILING ADDRESS~ 1.0. BOZ 7612 MADISON. WI 53707 121 EAST WILSON ST. MADISON, WI 53702 (808128b29l1 N NAr i99i ~ EOUIs Y. CERSTNER, pt E.CEC V Louis V. Gerstner, Jr. Chairman and CEO RJR Nabisco, Inc. 1301 Ave of the Americac 34th Floor New York, NY 10019 Dear Mr. Gerstner: ry~28 29 3p3j \ dy~ # U ~e 4 rIYtOrrlM ~ N vy 0~~8~<<9L 9141E~~~~O The State of Wisconsin Investment Board (SWIB) participated in the leveraged buyout of RJR Nabisco. SWIIi invested approximately $100 million in this transaction. SWIB is the independent investment manager for the Wisconsin Retirement System. As the fiduciary for these funds, SWIB has responsibilities not only for overall investment policy and investment returns, but also as an investor. We participated in the leveraged buyout because we believe that RJR Nabisco will generate superior long-run results. The Wisconsin Investment Board invests with the expectation that a company will maximize long-run performance. SWIB believes that a company that is unresponsive to the public's concerns will in the long-run suffer in its economic performance. For this reason, SWIB takes an interest not only in your immediate financial performance, but also in the firm's long run performance as affected by both economic and social forces. The frame of reference that we use in evaluating such issues is two-fold: First, what is the viewpoint of our constituents on issues that affect corporations and SWIB's investment returns? Second, is there a long run impact from an issue that is underemphasized in a corporation because of the responsibility felt for short-term profits.

Louis V. Gerstner, Jr. Page 2 May 17, 1991 AU this bears directly on the issues surrounding the production and distribution of tobacco. In SWIB's opinion, the evidence on tobacco consumption is reasonably clear - long-run injurious effects result from the consumption of tobacco. This opinion is shared by the U.S. Surgeon General, the American Cancer Society, the American Lung Association, the American Medical Association, the World Health Organization, and the Federal Center for Disease Control. We recognize that this opinion is challenged by the tobacco industry generally which argues that statistical findings do not provide proof that smoking alone causes illness and disease. SWIB's policy toward tobacco manufacture and distribution is premised on allowing individuals to decide for themselves the merits of the health risk arguments. It also recognizes, however, that the ability of an individual to evaluate these sophisticated arguments, varies widely with age, education and background. Furthermore, most people in Third World or Eastern Bloc countries may be unaware of the arguments entirely. Taking all this into account, SWIB recommends that companies we fnvest in make every possible effort to (a) cease all advertising and promotion of tobacco products which might sway individuals unable to decide carefully for themselves; (b) limit distribution to those persons who are clearly able to evaluate the conflicting information and choose for themselves whether or not to consume tobacco products. This would suggest not making tobacco available to minors and not undertaking distribution in foreign countries where full information on health risks is not available. At a minimum, we expect strict adherence to the industry's Cigarette Advertising Code. Indeed, SWIB would hope that you would assume a leadership effort in this program. We•appreciate your cooperation on this very important issue. SWIB continues to support free choice for those who are able to make an informed decision. Consistent with this posidon, however, we request that you make every effort to insure that the unknowledgeable are not drawn unwittingly into tobacco consumption which may injure their long-term health. Sincerely, Patricia Upton Executive Director t\-A-+&\-+\e-k.\roet.w \ '

RECEIVED JUN 13'91 ti. E.O,.