Monday, May 20, 2024

New CEO of Altria Gifford: satisfied with the core tobacco business, disappointed to invest in Juul e-cigarettes


On May 17, according to foreign reports, at the first annual general meeting of shareholders of Altria Group Inc., he told the shareholders of the largest tobacco company in the United States that he was satisfied with the company’s business situation, and he acknowledged that the performance of last year was disappointing, especially for Juul labs, an electronic cigarette manufacturer Inc.’s nearly $13 billion investment.

However, shareholders expressed their dissatisfaction at the annual meeting. They voted against an advisory vote on the remuneration of the company’s executives with a small number of votes. Preliminary results showed that about 51% of shareholders voted against the proposal, while 49% voted for it.

But the vote is not binding on Altria’s board of directors, which sets executive compensation.

A spokesman for Altria group said that despite this, the Remuneration Committee of the board of directors still attached importance to the shareholders’ voting opinions on the proposal and would consider the voting results when making future remuneration decisions for our appointed executive officers.

Gifford, a former vice chairman and chief financial officer, took over as the top executive last month, when Howard A. Willard III, the former chairman and chief executive, retired about a month after his coronavirus test was positive.

Gifford told shareholders on Thursday that its core tobacco business of cigarettes, smokeless tobacco and cigars performed well in 2019.

Gifford told shareholders at the online annual meeting on Thursday that Altria’s 2019 has two distinct stories: the outstanding performance of our core tobacco business and the significant progress in promoting our non combustible business platform, as well as the disappointing performance from Juul investment.

‘I really like the way we are positioning our business,’ Mr. Gifford said.

The company has a leading market position in the cigarette and smokeless tobacco market and the exclusive right to sell iqos, an alternative smoking device made by iqos, in the United States.

The company made a decision at the end of 2018 to buy 35% of Juul labs, a California based maker of electronic evaporation products, for us $12.8 billion before Gifford became chief executive officer. After that, the company was strongly opposed and sued by consumers and tobacco companies, which led to a sharp increase in the number of minors using electronic cigarette products. It also faces a lawsuit filed by the Federal Trade Commission challenging the deal.

Gifford said the company would fight against it.

Since the end of 2019, Altria has written down more than $8.5 billion of its investment in Juul, reducing the value of its investment in the company to about a third of its initial payment.

Like most of Altria’s annual meetings, Giffords university has been severely challenged by tobacco control activists and shareholders.

Several questions presented to Gifford during the online meeting focused on whether the company would maintain dividends to shareholders, taking into account the write down of Juul’s investment.

Gifford assured shareholders that dividends were safe. Altria Group paid about $6.1 billion in dividends to shareholders in 2019.

‘we know that dividends are important to our shareholders and that’s still our top priority,’ Mr. Gifford said.

After the meeting, the board of directors of Altria group announced a regular quarterly dividend of 84 cents per share, which will be paid to shareholders on July 10 as of June 15.

Shareholders also rejected two proposals that would require the company to disclose more information about the cost of its lobbying efforts and report on its activities to prevent minors from smoking.

The company said it had invested $100 million in tobacco prevention programs.

The company said it had pledged about $7 million to support coronavirus mitigation efforts by employees, tobacco growers and non-profit organizations. The company said it also provided supplies, and a non-profit organization with an employee campaign to support the front line of the pandemic raised more than $200000.

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