In his final annual shareholders meeting as chairman and chief executive officer of Altria Group Inc., Martin J. Barrington touted the Henrico County-based tobacco company’s business performance and fielded questions ranging from litigation risks and farm issues to nicotine reduction and cigarette litter.
“It has been my privilege to serve, and I am deeply grateful to you all,” Barrington told about 80 shareholders, employees and others attending the Thursday morning meeting at the Greater Richmond Convention Center. The meeting also was webcast.
Barrington, 64, announced his retirement in February after 25 years with the company, including the past six as chairman and CEO.
His successor in the top executive role is Howard Willard, 54, who has worked for the company for 25 years and served as chief operating officer, chief financial officer and executive vice president of strategy and business development. Willard did not speak during the shareholders meeting.
Barrington said Altria, the parent company of top U.S. cigarette maker Philip Morris USA, had “another strong year” in 2017, increasing its dividend by 8.2 percent and paying $4.8 billion in dividends and $2.9 billion in share repurchases. The company reported profit for 2017 of $10.2 billion, or $5.31 a share, down from $14.2 billion, or $7.28 a share, in 2016, and up from $5.2 billion, or $2.67 per share, in 2015.
The company’s smokeable and smokeless tobacco businesses and its wine business all have increased their operating income since 2012, Barrington said. “Also during this period, we invested in our future,” he said.
Those investments have included alternatives to conventional cigarettes, such as e-vapor products that do not burn tobacco. Barrington said the company’s aspiration is to be “the U.S. leader in providing adult tobacco consumers with authorized, non-combustible, reduced-risk products.”
The U.S. Food and Drug Administration is considering establishing standards to reduce the nicotine content in cigarettes. On Thursday, Altria’s stockholders voted down a shareholder proposal to have the company disclose the nicotine levels in its cigarette brands and take steps to reduce the addictive constituent.
The proposal was put forward by The Sisters of St. Francis of Philadelphia. Sister Nora Nash, director of corporate social responsibility for the organization, said during the shareholder meeting it is “contradictory” for Altria to say it wants to offer reduced-risk products without taking steps to reduce nicotine in its cigarettes.
The company’s board of directors opposed the proposal, telling shareholders it presented “significant regulatory challenges” because the FDA has not provided authorization or guidance on nicotine levels. The proposal was rejected by 96 percent of the votes cast.
During the meeting, a group of teenagers representing a youth tobacco-control group in New York state demonstrated outside the convention center. John Chaffee, an adult who traveled to Richmond with the group, asked Barrington during the meeting whether using such terms as “reduced-risk” for novel nicotine products is misleading, just as the labels “light” and “low tar” on cigarette packages were misleading.
Barrington said no, because the federal Family Smoking Prevention and Tobacco Control Act defines terms such as “modified risk.” “No one is claiming it is safe,” he said. “But the idea is to move people to less hazardous products.”
One shareholder asked the company’s position on state governments legalizing cannabis, also known as marijuana. Barrington said it remains illegal at the federal level. “As long as it is illegal, it is not a category we are interested in,” he said.