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NOTICE OF 2016 ANNUAL MEETING OF

SHAREHOLDERS OF ALTRIA GROUP, INC.

2) To ratify the selection of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for the fiscal year ending December 31, 2016.

VOTING:

We urge you to participate in the meeting, either by attending and voting in person or by voting through other acceptable means as promptly as possible. You may vote by telephone, through the Internet or by mailing your completed and signed proxy card (or voting instruction form, if you hold your shares through a broker, bank or other nominee). Each share is entitled to one vote on each matter to be voted upon at the annual meeting. Your vote is important and we urge you to vote.

MEETING ADMISSION:

If you plan to attend the meeting, you must request an admission ticket in advance. To request an admission ticket, please follow the instructions on page 9 in response to Question 16 of the accompanying Proxy Statement.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 19, 2016

The Companys Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K

for the fiscal year ended December 31, 2015 are available, free of charge, at www.altria.com/proxy.

PROXY STATEMENT SUMMARY

1

QUESTIONS AND ANSWERS ABOUT THE 2016 ANNUAL MEETING AND VOTING

6

BOARD AND GOVERNANCE MATTERS

11

Board Responsibility

11

Board Meetings and Attendance

11

Board Composition

11

Board Leadership Structure and Governance

12

Board and Committee Self-Evaluations

12

Advancement Planning and CEO Succession

13

Governance Guidelines, Policies and Codes

13

Committees of the Board of Directors

13

The Boards Risk Oversight Role

15

Directors

16

Process for Nominating Directors

16

Director Qualifications and Board Diversity

16

Director Independence Determinations

17

Director Compensation

19

Stock Ownership Guidelines for Non-Employee Directors and Prohibition on Hedging

20

AUDIT COMMITTEE MATTERS

21

Audit Committee Report for the Year Ended December 31, 2015

21

Independent Registered Public Accounting Firms Fees

22

Pre-Approval Policy

22

COMPENSATION COMMITTEE MATTERS

23

Introduction

23

Compensation Committee Interlocks and Insider Participation

23

Compensation Committee Procedures

23

Compensation Committee Report for the Year Ended December 31, 2015

24

EXECUTIVE COMPENSATION

25

Compensation Discussion and Analysis

26

Introduction

26

Executive Summary

26

Compensation Philosophy

26

Say on Pay

26

Shareholder Engagement

26

Company Financial Performance

26

Pay For Performance

29

2015 Performance of NEOs

29

Executive Compensation Design

31

Decision-Making Process

35

2015 Executive Compensation Program Decisions

37

Other Considerations

42

Stock Ownership Guidelines and Prohibition on Hedging

42

Clawback Policy Regarding the Adjustment or Recovery of Compensation

42

Tax and Accounting Considerations

42

Compensation Tables

43

Summary Compensation Table

43

Grants of Plan-Based Awards during 2015

45

Outstanding Equity Awards as of December 31, 2015

46

Stock Option Exercises and Stock Vested during 2015

47

Pension Benefits

48

Non-Qualified Deferred Compensation

51

Payments upon Change in Control or Termination of Employment

52

PROPOSALS REQUIRING YOUR VOTE

56

Proposal 1 Election of Directors

56

Proposal 2 Ratification of the Selection of Independent Registered Public Accounting Firm

62

Proposal 3 Non-Binding Advisory Vote to Approve the Compensation of the Companys Named Executive Officers

63

Proposal 4 Shareholder Proposal Regarding a Report on Tobacco Product Constituents and Ingredients and Their Potential Health Consequences

64

Proposal 5 Shareholder Proposal Regarding Participation in Mediation of Any Alleged Human Rights Violations Involving Altrias Operations

66

OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY

68

Directors and Executive Officers

68

Certain Other Beneficial Owners

69

Section 16(a) Beneficial Ownership Reporting Compliance

69

RELATED PERSON TRANSACTIONS AND CODE OF CONDUCT

70

QUESTIONS AND ANSWERS ABOUT COMMUNICATIONS, COMPANY DOCUMENTS AND SHAREHOLDER PROPOSALS

71

OTHER BUSINESS

73

ANNEX A ALTRIA GROUP, INC. NON-GAAP FINANCIAL MEASURES

A-1

PRE-REGISTRATION FORM FOR 2016 ANNUAL MEETING OF SHAREHOLDERS

PROXY STATEMENT SUMMARY

This summary highlights information about Altria Group, Inc. (the Company, Altria, we, our or us) and certain information contained elsewhere in this proxy statement (Proxy Statement) for Altrias 2016 Annual Meeting of Shareholders (the 2016 Annual Meeting or the meeting). This summary does not contain all of the information that you should consider in voting your shares. You should read the entire Proxy Statement carefully before voting.

VOTING MATTERS AND BOARD RECOMMENDATIONS

Proposal

Board Vote

Recommendation

Page

Reference

Proposal 1

Election of Directors

FOR each nominee

56

Proposal 2

Ratification of the Selection of Independent Registered Public Accounting Firm

FOR

62

Proposal 3

Non-Binding Advisory Vote to Approve the Compensation of the Companys Named Executive Officers

FOR

63

Proposal 4

Shareholder Proposal Regarding a Report on Tobacco Product Constituents and Ingredients and Their Potential Health Consequences

AGAINST

64

Proposal 5

Shareholder Proposal Regarding Participation in Mediation of Any Alleged Human Rights Violations Involving Altrias Operations

AGAINST

66

CASTING YOUR VOTE

How to Vote
www.investorvote.com/altria www.proxyvote.com
1-800-652-VOTE (8683)

Complete, sign and mail your proxy card or voting instruction form in the self-addressed envelope

For instructions on attending the 2016 Annual Meeting in person, please see Question 16 on page 9.

PROXY STATEMENT SUMMARY

BOARD NOMINEES

You are being asked to vote on the following 11 nominees for director. All directors are elected annually by a majority of the votes cast. Information about each directors experiences, qualifications and skills can be found beginning on page 56.

Name Age

Director

Since

Principal Occupation Independent

Board

Committee

Membership*

Gerald L. Baliles

75

2008

Retired Director and Chief Executive Officer, Miller Center of Public Affairs

Yes

CC, EC, IC, NC

Martin J. Barrington

62

2012

Chairman, Chief Executive Officer and President, Altria Group, Inc.

No

EC

John T. Casteen III

72

2010

President Emeritus, University of Virginia

Yes

AC, IC, NC

Dinyar S. Devitre

68

2008

Special Advisor, General Atlantic LLC

Yes

FC, IC

Thomas F. Farrell II

61

2008

Chairman, President and Chief Executive Officer, Dominion Resources, Inc.

Yes

CC, EC, NC

Thomas W. Jones

66

2002

Senior Partner, TWJ Capital LLC

Yes

AC, CC, EC, FC

Debra J. Kelly-Ennis

59

2013

Retired President and Chief Executive Officer, Diageo Canada, Inc.

Yes

AC, IC, NC

W. Leo Kiely III

69

2011

Retired Chief Executive Officer, MillerCoors LLC

Yes

CC, EC, FC, IC

Kathryn B. McQuade

59

2012

Retired Executive Vice President and Chief Financial Officer, Canadian Pacific Railway Limited

Yes

AC, CC, FC

George Muñoz

64

2004

Principal, Muñoz Investment Banking Group, LLC and Partner, Tobin & Muñoz

Yes

AC, EC, FC, NC

Nabil Y. Sakkab

68

2008

Retired Senior Vice President, Corporate Research and Development, The Procter & Gamble Company

Yes

EC, FC, IC, NC

* AC Audit Committee

CC Compensation Committee

EC Executive Committee

FC Finance Committee

IC Innovation Committee

NC Nominating, Corporate Governance & Social Responsibility Committee

CORPORATE GOVERNANCE HIGHLIGHTS

PROXY STATEMENT SUMMARY

PROXY ACCESS

Understanding that many shareholders view proxy access as an important issue, we conducted outreach with various stakeholders as we thoughtfully considered the issue. In December 2015, our Board adopted a proxy access bylaw reflecting its commitment to strong corporate governance and acknowledging the important role our shareholders play in Altrias corporate governance process. The bylaw allows a shareholder or group of shareholders to include in our annual meeting proxy materials director candidates that they have nominated. The proxy access bylaw provides, among other things, that a shareholder or group of up to 20 shareholders owning 3% or more of our outstanding common stock continuously for at least the previous three years may seek to include director candidates in our annual meeting proxy materials. These shareholders may nominate the greater of two or up to 20% of the number of directors then serving on the Board. Please refer to our By-Laws for additional requirements relating to proxy access.

SHAREHOLDER ENGAGEMENT

We value our shareholders perspective on our businesses and each year interact with shareholders through numerous engagement activities. In 2015, these included our investor day, three investor road shows, five investor conferences, individual investor meetings and our 2015 Annual Meeting of Shareholders (2015 Annual Meeting). Our Investor Relations department is the contact point for shareholder interaction with the Company. Shareholders may also access investor information about the Company through our website at www.altria.com/investors. For questions concerning Investor Relations, please call 804-484-8222 or e-mail us from the Contact Us section available on our website (www.altria.com/ContactUs).

2015 BUSINESS HIGHLIGHTS

Altria delivered yet another year of excellent business results and outstanding returns for its shareholders in 2015. Highlights from 2015 include the following:

¡ Altrias total shareholder return (TSR) of 23.1% far outpaced Altrias Peer Group, the S&P Food, Beverage & Tobacco Index and the S&P 500 Index, marking the third consecutive year that TSR has exceeded 20%.
¡ Altria continued to deliver against our two long-term financial goals of growing adjusted diluted earnings per share (EPS) (2) at an average annual rate of 7% to 9%, and maintaining a target dividend payout ratio of approximately 80% of adjusted diluted EPS.
(1) For 2015, Altrias Peer Group included The Kraft Heinz Company in addition to the other companies identified in the 2015 Altria Peer Group table on page 36.
(2) Adjusted diluted EPS is a financial measure that is not consistent with generally accepted accounting principles in the United States (GAAP). See Annex A to this Proxy Statement for information regarding non-GAAP financial measures used in this Proxy Statement and reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures.

PROXY STATEMENT SUMMARY

¡ Altria paid nearly $4.2 billion in dividends in 2015, consistent with our goal of paying out approximately 80% of adjusted diluted EPS.
¡ In August 2015, Altrias Board of Directors increased the regular quarterly dividend by 8.7%, which was Altrias 49th dividend increase in the last 46 years.
¡ Also, during 2015, Altria purchased 10.7 million shares of its common stock at an average price of $51.83 for a total cost of approximately $554 million.
¡ Altrias core businesses generated impressive and consistent income growth during the year behind the strength of their premium brands.
¡ The smokeable products segment grew adjusted operating companies income (OCI) (3) by 10.9%, and Philip Morris USA Inc. (PM USA) grew the retail share of Marlboro by 0.2 share points to 44.0%.
¡ The smokeless products segment grew adjusted OCI by 4.9% and U.S. Smokeless Tobacco Company LLC (USSTC) grew the combined retail share of Copenhagen and Skoal by 0.3 share points to 51.3%.
¡ Ste. Michelle Wine Estates Ltd. (Ste. Michelle) grew adjusted OCI by 13.4% and is one of the fastest growing premium wine companies in the United States.
¡ In November 2015, Anheuser-Busch InBev SA/NV (AB InBev) and SABMiller plc (SABMiller) jointly announced that they had reached an agreement on the terms of AB InBevs offer to effect a business combination with SABMiller. If the transaction is completed, Altria expects to receive an approximate 10.5% stake in the new, combined company and approximately $2.5 billion in pre-tax cash, have two seats on the new companys board of directors, continue the use of equity accounting for the assets contribution to Altrias earnings and achieve continued tax efficiency. (4)
(3) Adjusted OCI is a financial measure that is not consistent with GAAP. See Annex A to this Proxy Statement for information regarding non-GAAP financial measures used in this Proxy Statement and reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures.
(4) Certain anticipated benefits are subject to proration, as described in our 2015 Annual Report on Form 10-K.

PROXY STATEMENT SUMMARY

For more information regarding Altrias 2015 performance, please review our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (2015 Annual Report on Form 10-K).

COMPENSATION PROGRAM HIGHLIGHTS

¡ Annual incentive awards for the executive officers named in the Summary Compensation Table on page 43 (named executive officers or NEOs) reflect Altrias excellent 2015 business performance and are consistent with or slightly higher than last years awards. Stock awards reflected in the Summary Compensation Table were granted in January 2015 and reflect 2014 performance.
¡ 96% of the votes cast approved, on an advisory basis, the compensation of our NEOs, demonstrating strong alignment of shareholder interests with our executive compensation program and philosophy; and
¡ 95% of the votes cast approved our new five-year 2015 Performance Incentive Plan, which includes changes from the prior plan that we believe reflect good governance practices and further align our executive compensation program with shareholder interests. For more information on the changes, please see page 62 of the proxy statement for our 2015 Annual Meeting (2015 Proxy Statement).

Key Governance Features of Our Executive Compensation Program

The following summary highlights our commitment to executive compensation practices that align the interests of our executives and shareholders:

What We Do

What We Dont Do

ü

Pay for Performance - A significant portion of our NEOs compensation is at-risk variable compensation.

û

No Excessive Perquisites - Perquisites represent less than 2% of our NEOs compensation.

ü

Double-Trigger Change in Control - Our shareholder-approved 2015 Performance Incentive Plan includes a double-trigger change in control provision.

û

No Individual Supplemental Executive Retirement Plans

ü

Multiple Performance Metrics - Variable compensation is based on more than one measure to encourage balanced incentives.

û

No Hedging - Our policy prohibits our executive officers from engaging in hedging activities with Altria stock.

ü

Stock Ownership Guidelines - All NEOs exceed Altrias robust stock ownership requirements.

û

No Pledging - Our NEOs do not pledge their Altria shares.

ü

Clawback Provisions - Our policy provides for the adjustment or recovery of compensation in certain circumstances.

û

No Employment Agreements - All of our NEOs are employed on an at-will basis.

ü

Award Caps - All our variable compensation plans have caps on plan formulas.

û

No Tax Gross-Ups

ü

Below Average Share Utilization - The Company has below average run rates for equity compensation, as compared to S&P 500 companies.

û

No Share Recycling

ü

Tally Sheets - The Compensation Committee reviews compensation tally sheets at least annually as part of making individual compensation decisions for our NEOs.

ü

Confidentiality & Non-Compete Agreements - All NEOs are subject to confidentiality and non-compete agreements.

QUESTIONS AND ANSWERS

ABOUT THE 2016 ANNUAL MEETING AND VOTING

Our Board of Directors (Board of Directors or Board) is furnishing to you this Proxy Statement to solicit proxies on its behalf to be voted at the 2016 Annual Meeting on May 19, 2016 at 9:00 a.m., Eastern Time, at the Greater Richmond Convention Center, 403 North 3rd Street, Richmond, Virginia 23219. The proxies also may be voted at any adjournments or postponements of the meeting.

All properly executed written proxies, and all properly completed proxies submitted by telephone or by the Internet, that are delivered pursuant to this solicitation will be voted at the meeting in accordance with the directions given in the proxy, unless the proxy is revoked before the completion of voting at the meeting.

It is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card.

Each shareholder of record on the record date is entitled to one vote for each share of common stock held. On the record date, there were 1,956,882,046 shares of common stock outstanding.

If your shares of stock are registered in your name on the books and records of our transfer agent, Computershare Trust Company, N.A., you are a shareholder of record.

If your shares of stock are held for you in the name of your broker, bank or other nominee, your shares are held in street name. The answer to Question 12 describes brokers discretionary voting authority and when your broker, bank or

other nominee is permitted to vote your shares of stock without instructions from you.

It is important that you vote your shares if you are a shareholder of record and, if you hold shares in street name, that you provide appropriate voting instructions to your broker, bank or other nominee as discussed in the answer to Question 12.

By Telephone or Internet : All shareholders of record may vote their shares of common stock by telephone (within the United States, U.S. territories and Canada, there is no charge for the call) or by the Internet, using the procedures and instructions described on the proxy card and other enclosures. Street name holders may vote by telephone or the Internet if their brokers, banks or other nominees make those methods available. If that is the case, each broker, bank or other nominee will enclose instructions with the Proxy Statement. The telephone and Internet voting procedures, including the use of control numbers, are designed to authenticate shareholders identities, to allow shareholders to vote their shares and to confirm that their instructions have been properly recorded.

In Writing : All shareholders also may vote by mailing their completed and signed proxy card (in the case of shareholders of record) or their completed and signed voting instruction form (in the case of street name holders).

In Person : All shareholders of record may vote in person at the meeting. Street name holders must obtain a legal proxy from their broker, bank or other nominee and bring the legal proxy to the meeting in order to vote in person at the meeting.

See also Proxy Statement Summary Casting Your Vote on page 1.

Proposal Voting Choices, Board Recommendation and Voting Requirement

Proposal 1

Election of Directors

(pages 56 61)

Voting Choices

Vote for a nominee;

Vote against a nominee; or

Abstain from voting on a nominee.

Board Recommendation

The Board recommends a vote FOR each of the nominees named in the Proxy Statement.

Voting Requirement

Directors will be elected by a majority of the votes cast. A majority of the votes cast means that the number of votes FOR a nominee must exceed the number of votes AGAINST that nominee.

Any director who receives a greater number of votes AGAINST his or her election than votes FOR such election is required to offer promptly in writing to submit his or her resignation to the Board in accordance with the Companys Corporate Governance Guidelines. The Nominating, Corporate Governance and Social Responsibility Committee will consider the offer and recommend to the Board whether to accept the offer. The full Board will consider all factors it deems relevant to the best interests of the Company, make a determination and publicly disclose its decision and rationale within 90 days after confirmation of the election results.

Proposal 2

Ratification of the

Selection of Independent

Registered Public

Accounting Firm

(page 62)

Voting Choices

Vote for the ratification;

Vote against the ratification; or

Abstain from voting.

Board Recommendation

The Board recommends a vote FOR this proposal.

Voting Requirement

The selection of the independent registered public accounting firm will be ratified if the votes cast FOR exceed the votes cast AGAINST.

Proposal 3

Non-Binding Advisory

Vote to Approve

the Compensation of the

Companys Named

Executive Officers

(page 63)

Voting Choices

Vote for the compensation of the Companys named executive officers;

Vote against the compensation of the Companys named executive officers; or

Abstain from voting.

Board Recommendation

The Board recommends a vote FOR this proposal.

Voting Requirement

The compensation of the Companys named executive officers will be approved on an advisory basis if the votes cast FOR exceed the votes cast AGAINST.

This vote is not binding upon the Company, the Board or the Compensation Committee. Nevertheless, the Compensation Committee values the opinions expressed by shareholders through their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for the Companys named executive officers.

Proposal Voting Choices, Board Recommendation and Voting Requirement

Proposal 4

Shareholder Proposal

Regarding a Report on

Tobacco Product

Constituents and Ingredients

and Their Potential Health

Consequences

(pages 64 65)

Voting Choices

Vote for the proposal;

Vote against the proposal; or

Abstain from voting.

Board Recommendation

The Board recommends a vote AGAINST this shareholder proposal.

Voting Requirement

The shareholder proposal will be approved if the votes cast FOR exceed the votes cast AGAINST.

Proposal 5

Shareholder Proposal

Regarding Participation in

Mediation of Any Alleged

Human Rights Violations

Involving Altrias

Operations

(pages 66 67)

Voting Choices

Vote for the proposal;

Vote against the proposal; or

Abstain from voting.

Board Recommendation

The Board recommends a vote AGAINST this shareholder proposal.

Voting Requirement

The shareholder proposal will be approved if the votes cast FOR exceed the votes cast AGAINST.

It is our long-standing practice to hold the votes of each shareholder in confidence from directors, officers and employees, except: (a) as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company; (b) in the case of a contested proxy solicitation;

(c) if a shareholder makes a written comment on the proxy card or otherwise communicates his or her vote to the Company; or (d) to allow the independent inspectors of election to certify the results of the vote.

As we have for many years, we retain an independent tabulator to receive and tabulate the proxies and appoint

Shareholders should specify their voting choice for each matter on the accompanying proxy. If you sign and return your proxy, yet you do not make a specific choice for one or more matters, unvoted matters will be voted FOR the election of each of the nominees for director, FOR the proposal to ratify the selection of PricewaterhouseCoopers

LLP (PricewaterhouseCoopers), FOR the non-binding advisory vote to approve the compensation of the Companys named executive officers and AGAINST each of the two shareholder proposals, as applicable.

It means that you have multiple accounts with brokers and/or our transfer agent. Please vote all of these shares represented by each proxy card. We recommend that you contact your broker or our transfer agent to consolidate as many accounts as possible under the same name and address.

Our transfer agent is Computershare Trust Company, N.A. Computershares address is P.O. Box 43078, Providence, Rhode Island 02940-3078; you can reach Computershare at 1-800-442-0077 (from within the United States or Canada) or 1-781-575-3572 (from outside the United States or Canada).

Shareholders of Record : If you are a shareholder of record (see Question 4), your shares will not be voted if you do not provide your proxy unless you vote in person at the meeting. It is, therefore, important that you vote your shares.

Street Name Holders : If your shares are held in street name (see Question 4) and you do not provide your voting instructions to your bank, broker or other nominee, your shares may be voted by your broker, bank or other nominee but only under certain circumstances. Specifically, under the New York Stock Exchange (NYSE) rules, shares held in the name of your broker, bank or other nominee may be voted by your broker, bank or other nominee on certain routine matters if you do not provide voting instructions.

Only the ratification of the selection of PricewaterhouseCoopers as the Companys independent registered public accounting firm is considered a routine matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at the meeting are not considered routine under NYSE rules, so the broker, bank or other nominee cannot vote your shares on any of these other proposals unless you provide to the broker, bank or other nominee voting instructions for each of these matters. If you do not provide voting instructions on a non-routine matter, your shares will not be voted on that matter, which is referred to as a broker non-vote. It is, therefore, important that you vote your shares.

Abstentions and broker non-votes on one or more matters will not be considered votes cast and, therefore, will not affect the outcome of the vote on those matters at the 2016

If your shares are held in street name, you should follow the instructions provided by your broker, bank or other nominee to revoke or change your voting instructions.

The cost of this solicitation of proxies will be paid by the Company. In addition to the use of the mail, some of the officers and regular employees of the Company or its subsidiaries may solicit proxies by telephone or e-mail and will request brokerage houses, banks and other custodians, nominees and fiduciaries to forward soliciting material to the beneficial owners of common 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 our proxy solicitor, D.F. King & Co., Inc., 48 Wall Street, New York, New York 10005, at an anticipated cost of $24,000, plus reimbursement of out-of-pocket expenses.

If you plan to attend the meeting, you must request an admission ticket in advance .

Please submit your request for an admission ticket by completing the Pre-Registration Form located on the last page of this Proxy Statement and submitting it, along with your proof of ownership as of the record date for the meeting (March 28, 2016), no later than May 13, 2016, using one of the means identified on the Pre-Registration Form.

If your shares are held for you in the name of your broker, bank or other nominee, please provide evidence of your stock ownership as of the record date for the meeting (such

as your voting instruction form, a current letter from your broker, bank or other nominee or a photocopy of a brokerage or other account statement).

If you are a duly appointed proxy for a shareholder, you must provide proof of your appointment and proof of share ownership for the shareholder for whom you are a proxy.

You may bring only one immediate family member as a guest. All immediate family member guests must be 21 years of age or older. If you are a duly appointed proxy for a shareholder, you may not bring a guest.

All meeting attendees must present government-issued photo identification, such as a drivers license or passport, at the meeting.

The meeting facilities will open at 8:00 a.m., Eastern Time, to facilitate your registration and security clearance. For your security, you will not be permitted to bring any packages,

briefcases, large pocketbooks or bags into the meeting. Also, cellular and digital phones, audio tape recorders, video and still cameras, pagers, laptops and other portable electronic devices will not be permitted into the meeting. We thank you in advance for your patience and cooperation with these rules.

Yes. The Chairman will answer shareholders questions during the question and answer period of the meeting. In order to provide an opportunity for everyone who wishes to ask a question, each shareholder will be limited to two minutes. Shareholders may ask a second question if all

others have first had their turn and if time allows. When speaking, shareholders must direct questions to the Chairman and confine their questions to matters that relate directly to the business of the meeting.

In order for us to conduct the meeting, a majority of our outstanding shares of common stock as of the record date for the meeting (March 28, 2016), must be present in person or by proxy at the meeting. This is referred to as a quorum.

Your shares are counted as present at the meeting if you attend the meeting and vote in person or if you properly return a proxy by Internet, telephone or mail.

Abstentions and shares of record held by a broker, bank or other nominee (broker shares) that are voted on any matter are also included in determining the number of shares present. Broker shares that are not voted on any matter will not be included in determining whether a quorum is present.

BOARD AND GOVERNANCE MATTERS

DIRECTOR SKILLS AND EXPERIENCE

¡ Consumer goods experience

¡ Public policy expertise

¡ Regulated industries experience

¡ Public company board experience

¡ Chief executive officer experience

¡ Leadership in innovation

¡ Financial expertise, including chief financial officer experience

¡ Information technology/cybersecurity experience

The Board believes that it is important to retain the flexibility to allocate the responsibilities of the Chairman of the Board (the Chairman) and the Chief Executive Officer (CEO) in a way that it considers to be in the best interests of the Company. After due consideration by the Nominating, Corporate Governance and Social Responsibility Committee and the Board, the Board has concluded that presently combining the roles of Chairman and CEO is in the best interests of the Company. The Companys Mission is to own and develop financially disciplined businesses that are leaders in responsibly providing adult tobacco and wine consumers with superior branded products. The Board believes that the combination of the roles of Chairman and CEO promotes the pursuit of the Companys Mission by allowing the senior-most executive with accountability for the Companys day-to-day operations and execution of the Companys strategic plan, who also possesses significant business, regulatory and industry knowledge, to set Board meeting agendas (in consultation with the Presiding Director), to lead the related discussions and to communicate with one voice to employees, shareholders and other stakeholders. The Board considers this effective and efficient structure to be particularly appropriate for the Company given the unique challenges that the Company has faced and continues to face in its businesses, particularly domestic tobacco, and the enhanced regulatory environment.

The Boards strict adherence to sound corporate governance practices, as reflected in the Companys Corporate Governance Guidelines, has promoted, and continues to promote, the effective and independent exercise of Board leadership for the Company and its shareholders. The Company has a strong and experienced independent Presiding Director who, in discharging his responsibilities, promotes dialogue among independent members of the Board and directly, clearly and regularly communicates the views of the Board to management. Moreover, our independent directors convene at each Board meeting in an executive session led by the Presiding Director.

RESPONSIBILITIES OF OUR

PRESIDING DIRECTOR

¡ Preside over executive sessions of the independent directors and at all meetings at which the Chairman is not present

¡ Call meetings of the independent directors as he or she deems necessary

¡ Serve as a liaison between the Chairman and the independent directors

¡ Together with the Chairman, approve agendas for Board meetings

¡ Advise the Chairman of the Boards informational needs and, where appropriate, approve information sent to the Board

¡ Together with the Chair of the Compensation Committee, communicate goals and objectives to the Chairman and CEO and the results of the evaluation of his performance

¡ Be available for consultation and communication if requested by major shareholders

Committee Primary Responsibilities

Audit

The Audit Committee assists the Board in its oversight of (i) the integrity of the Companys financial statements and financial reporting processes and systems of internal control, (ii) the qualifications, independence and performance of the Companys independent registered public accounting firm, (iii) the internal auditors and the internal audit function and (iv) the Companys compliance with legal and regulatory requirements. The Audit Committee also prepares the Audit Committee report that the rules of the SEC require the Company to include in its proxy statement. See pages 21 to 22 for further matters related to the Audit Committee, including its report for the year ended December 31, 2015.

Compensation

The Compensation Committee determines and approves CEO compensation and reviews and approves the compensation of the other executive officers, including salary, annual incentive awards and long-term incentive awards. The Compensation Committee also oversees the development of executive succession plans and evaluates and makes recommendations to the Board regarding potential CEO candidates. In addition, the Compensation Committee evaluates the design and effectiveness of the Companys incentive programs. See pages 23 to 24 for further matters related to the Compensation Committee, including a discussion of its procedures and its report on the Compensation Discussion and Analysis appearing on pages 26 through 42.

Executive

The Executive Committee has authority to act for the Board during intervals between Board meetings to the extent permitted by law.

Committee Primary Responsibilities

Finance

The Finance Committee monitors the Companys financial condition, oversees the sources and uses of cash flow and the investment of certain employee benefit plan assets and advises the Board with respect to financing needs, dividend policy, share repurchase programs and other financial matters.

Innovation

The Innovation Committee assists the Board in its oversight of the strategic goals and objectives of the innovation programs of the Companys subsidiaries, which include innovation strategy, adult consumer research and marketplace insights, development and engineering programs and technological initiatives.

Nominating,

Corporate

Governance

and Social

Responsibility

The Nominating, Corporate Governance and Social Responsibility Committee identifies individuals qualified to become Board members consistent with the criteria established by the Board and described in the Companys Corporate Governance Guidelines, and recommends a slate of nominees for election at each annual meeting of shareholders; makes recommendations to the Board concerning the appropriate size, function, needs and composition of the Board and its Committees; reviews non-employee director compensation and recommends changes in compensation to the Board; advises the Board on corporate governance matters; oversees the self-evaluation process of the Board and its Committees; and provides oversight of the Companys public affairs, corporate reputation and societal alignment strategies.

Name Audit (1) Compensation (2) Executive Finance Innovation

Nominating, Corporate

Governance and Social

Responsibility (3)

Gerald L. Baliles*

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ü

ü

Chair

Martin J. Barrington

Chair

John T. Casteen III*

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ü

ü

Dinyar S. Devitre*

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ü

Thomas F. Farrell II* (4)

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ü

ü

Thomas W. Jones*

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ü

ü

Chair

Debra J. Kelly-Ennis*

ü

ü

ü

W. Leo Kiely III*

Chair

ü

ü

ü

Kathryn B. McQuade*

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ü

ü

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