Good day, and welcome to the Altria Group 2025 Annual Meeting Of Shareholders. Today's virtual meeting is scheduled to last less than one hour. In the unlikely event we experience technical issues today, we ask you to stand by while we try and resolve the issue and resume the meeting, or otherwise provide an update on the status of the meeting. I would now like to turn the meeting over to Kathryn McQuade, Chair of Altria's Board. Please go ahead.
Thank you. Good morning, everyone, and welcome. I call to order Altria's 2025 annual meeting of shareholders. I am Kathryn McQuade, Chair of Altria's Board. With me today are Billy Gifford, Altria's CEO; Brandt Surgner, Altria's Corporate Secretary. Thank you all for joining us. Let's start the meeting agenda and the Rules of Conduct, which are located in the bottom right of the virtual meeting site. The Rules of Conduct explain how we will conduct the meeting, including our question-and-answer session. We will begin by presenting our meeting document, move to electing directors, and then vote to ratify the selection of PricewaterhouseCoopers as Altria's independent registered public accounting firm. Next, we will move to our advisory vote on the compensation of Altria's named Executive Officers. Finally, we will proceed to the vote on two compensation plans.
After the plan proposal, we will close the polls, and Brandt will announce the preliminary voting results. Billy will then share brief remarks and answer your questions. Only shareholders of record, as of the close on March 25, 2025, are entitled to vote during the meeting. Shareholders may vote through the virtual meeting site until the polls are closed. You will need a valid 16-digit control number to vote. If you voted before the meeting, there is no need to vote unless you wish to change your vote. If you are voting at the meeting, we suggest you vote on each matter as it is presented. The window for shareholders to submit questions will remain open throughout the meeting. Again, I direct the shareholders to our Rules of Conduct for instructions on how to submit questions and for additional information about the question-and-answer session.
You must have a valid 16-digit control number to submit a question. Only questions relating to the meeting will be answered during the question-and-answer portion of the meeting, subject to the 30-minute time limit prescribed by our Rules of Conduct. With that introduction, Brandt, please present our meeting documents.
Thanks, Kathryn. I present, together with the affidavits of mailing, a copy of the notice of meeting, form of proxy, proxy statement, and annual report, which includes Altria's financial statements for the year ended December 31, 2024. 82.28% of Altria's common stock is represented here today, so a quorum is present.
Thank you, Brandt. Please file the documents with our meeting records. Altria has appointed Broadridge Financial Services to act as the inspector of election. Jim Alden and Peter Scheiblein each have taken the Oath of Inspector of Election and will be tabulating the vote for this morning's meeting. The inspector's responsibility is to determine the number of shares represented at the meeting and to certify the votes. All proxies are confidential unless shareholders have commented on them. Now let's turn to the election of Birectors. Please welcome our board of Directors, all of whom are in attendance today. It is an extraordinary and committed group that provides strong leadership and thoughtful oversight to Altria. We value the skills, experiences, and perspectives that they bring to the boardroom. Brandt, please announce the names of the nominees for director.
The nominees are Ian Clark, Marjorie Connelly, Matt Davis, Billy Gifford, Debra Kelly -Ennis, Kathryn McQuade, George Munoz, Virginia Shanks, Richard Stoddart, Ellen Straglman, and Max Yeaguirre, each to hold office until the next annual meeting of shareholders and until his or her successor has been duly elected and qualified.
Thank you. Under our bylaws, the nominations are closed. Our board recommends that shareholders vote in favor of each nominee for director. We will pause momentarily to allow votes to be cast. Our next item is the ratification of the selection of PricewaterhouseCoopers LLP as Altria's independent registered public accounting firm for 2025. We welcome Kevin Kelly from PwC, who has also joined us today. Brandt, please present the manner.
I move for the adoption of the following resolution. Resolved that shareholders of Altria Group Inc ratify the selection of PricewaterhouseCoopers LLP as Altria's independent registered public accounting firm for the year ending December 31, 2025.
Thank you. Our board recommends that the shareholders vote in favor of this matter. We will pause momentarily to allow votes to be cast. Let's now move to the advisory vote to approve the compensation of our named executive officers. While this vote is non-binding, the Compensation and Talent Development Committee will consider its outcome when making future decisions. Our board recommends that shareholders vote in favor of this proposal. Brandt, please present the matter.
I move for the adoption of the following resolution. Resolved that shareholders of Altria Group Inc approve on an advisory basis the compensation of Altria's named executive officers as described in the compensation discussion and analysis section of the proxy statement.
Thank you. Our board recommends that shareholders vote in favor of this matter. We will pause momentarily to allow votes to be cast. Our next matter is the vote of the 2025 Performance Incentive Plan. The board believes that the 2025 Performance Incentive Plan is an important element in Altria's Overall Compensation Program. Brandt, please present the matter.
I move for the adoption of the following resolution. Resolved that shareholders of Altria Group approve the 2025 Performance Incentive Plan as described in the proxy statement.
Thank you. Our board recommends that shareholders vote in favor of this matter. We will pause momentarily to allow votes to be cast. Our next matter is the vote on our 2025 stock compensation plan for non-employed directors. The board believes that the 2025 Stock Compensation Plan for our non-employed directors promotes the alignment of interests between our non-employed directors and our shareholders. Brandt, please present the matter.
I move for the adoption of the following resolution. Resolved that shareholders of Altria Group approve the 2025 Stock Compensation Plan for non-employee directors as described in the proxy statement.
Thank you. Our board recommends that shareholders vote in favor of this matter. We will pause momentarily to allow votes to be cast. All matters to be voted on have now been presented. If you wish to vote, please do so at this time. We will pause momentarily to allow final votes to be cast. Since all shareholders have had the opportunity to vote, the polls are now closed. We now move to the preliminary voting results. Brandt, please summarize the inspector's report.
The inspectors have completed the preliminary count of the vote. The preliminary voting results are as follows. Shareholders have elected each of the nominees for director with more than 96% of the shares voting for their election. The selection of PricewaterhouseCoopers LLP as Altria's independent registered public accounting firm for the year ending December 31, 2025, has been ratified with more than 96% of the shares voting in favor. Shareholders have approved on an advisory basis the compensation of Altria's named executive officers with more than 95% of the shares voting in favor. Shareholders have approved the 2025 performance incentive plan with more than 95% of the shares voting in favor. Shareholders have approved the 2025 stock compensation plan for non-employee directors with more than 97% of the shares voting in favor. That concludes the report.
Thank you, Brandt. Please file the report and the proxies with our meeting records. We will post the final voting results on Altria's website and file them with the SEC on a Form 8-K in the next few days. This concludes the business portion of the meeting, and that portion of the meeting is now adjourned. With that, I will turn the meeting over to Billy for some brief remarks, followed by the question-and-answer session. Billy.
Thanks, Kathryn, and good morning, everyone. I hope you've had the chance to review the business, financial, and corporate responsibility resources on altria.com, including our full year 2024 and first quarter 2025 business results and our latest corporate responsibility reports. Our corporate responsibility reporting demonstrates the continued progress we are making toward our vision of responsibly leading the transition of adult smokers to a smoke-free future. We believe that by meeting the opportunity to Advance Tobacco Harm Reduction, we will both align with societal demands of our business and create substantial shareholder value. Let's now proceed to our question-and-answer session. Mac Livingston, our Vice President of Investor Relations, will present the questions you have submitted through the meeting site. Let's begin.
Thanks, Billy. As we describe in our Rules of Conduct, we will take questions in the order in which they are received, subject to the 30-minute time limit. To permit as many questions as possible, we may group questions submitted by multiple shareholders on the same topic. The Rules of Conduct explain how we will handle questions if we run out of time. Your first question comes from Megan Marrogin. Do you ever feel sorry for all the lives lost and illnesses caused through the use of your tobacco products?
I think it's important that in dealing with the harm associated with using combustible products, I think it's important to focus on where we're trying to take the company into the future. It's really described clearly with our vision, which is to responsibly lead the transition of adult smokers to a smoke-free future. If you look at some of the publications by the FDA, they refer to it as a Risk cliff, and it shows that the risk associated with using nicotine is greatly reduced when you think about burning the tobacco to be able to have the enjoyment of the nicotine to smoke-free products. That's exactly where we're headed as a company and looking to position ourselves so that we can move the consumer, the adult consumer, to a smoke-free future.
Your next question comes from Emma Hanson. On your website page, Moving Beyond Smoking, all of the steps you are recommending involve purchasing other Altria non-smoking alternative products such as Mint Snooze, Cherry Pouches, Apple Chew, and Menthol Enjoy that all contain nicotine. Shouldn't your focus be working on alternatives to addiction or moving beyond addiction?
Yeah, welcome to the meeting. I think, again, I would point you to the vision, which is to responsibly lead the transition of adult smokers to a smoke-free future. It is important to look at some of those studies and science that the FDA has published where there's a great potential and promise of reducing the harm associated with enjoying nicotine by transitioning adult smokers to smoke-free products. That's where we're headed as a company as we move into the future, is really with our relationship with the consumer, is move them to smoke-free products that they can enjoy. That's what we're doing as we move the company forward.
Your next question comes from Victoria Harris. In April of 1994, your predecessor, CEO William Campbell, went before Congress and denied the addictiveness of nicotine. A few years later, CEO James Morgan compared nicotine to his love of gummy bears. Were they wrong to say that?
Yeah, welcome to the meeting. I think really what you're asking about is addiction and what is our stance on that. I would really encourage you to go to our website, and you'll see that we agree with the conclusions of public health that nicotine is an addictive substance. It can be very difficult for people to quit. However, millions have done so. We certainly don't want to deter consumers from trying, if they desire to quit, from attempting to quit. What you will also see on our website is we actually have resources and links to resources where consumers, if they're desiring to quit, have resources available to them that have been successful in having other individuals quit. I would just point you to our website, but thank you for your question.
Your next question comes from Francesca Richard. How many families have to bury their loved ones before you finally admit that profit matters above human life?
Yeah, a lot of questions similar. That's similar to the first one, but I think it's worth repeating. As we look to move the company forward, we believe in the promise of harm reduction, and the FDA does as well with some of the science they reported. What's really important is those that can't or won't quit, is we believe moving them to smoke-free products has the potential to greatly reduce the risk associated with enjoying nicotine. That's what we're positioning ourselves with with our portfolio of products and then how we expect the consumer to move through time.
Your next question comes from Rebecca Bwell-Lavoie. The Altria website recommends switching to smoke-free alternatives. Since nicotine is an addictive substance that is harmful to the brain, why would you support someone already addicted to tobacco to start using more products that they could get addicted to?
Yeah, welcome to the meeting. I would encourage you to look at all of the information we have on our website. You highlight one aspect of it, but the other aspect is if an individual, a consumer, wants to quit, again, we have those resources available to them. We also show the consumer how they can move beyond smoking and the great potential with some of the FDA studies that I mentioned before of those that can't or won't quit, transitioning them to smoke-free products. That is where we're really focused on moving the company into the future, and that's what we'll continue to do.
Your next question comes from Dana Mitchell. Do you feel various flavors in your tobacco products, including Menthol, are attractive to teens or make it easier for teens to start smoking?
Look, let me be clear upfront. One, thank you for your question. We believe kids should not use tobacco products, flavored or not. We believe the best way to prevent them from having access to that, and we lobbied for this, was raising the legal age across the U.S. to 21 plus. When you think about flavors, though, if you look at, and some of this has been published by the FDA and then other members of the industry, flavors do play a role in helping adults transition from smoking to the smoke-free products. If you look at the studies, you will see what the FDA refers to as a Risk cliff, that once you stop burning the tobacco and you have nicotine through smoke-free products, the risk associated with using nicotine is substantially reduced. We believe the FDA should support harm reduction.
That's by authorizing products that they've looked at the science and believe that it's appropriate for public health, and then enforcing against products that are in the marketplace illicitly, meaning they're illegal and no one knows what's in those products. It is important for smoke-free products to be an off-ramp for adult smokers, but prevent it from being an on-ramp for underage users.
Your next question comes from Jonathan Chafee. Altria has been saying that we are moving beyond smoking and we are no longer a tobacco company, but a harm reduction company. What is our timeframe for our harm reduction products to outsell our traditional cigarettes?
Yeah, welcome to the meeting, John. I think you're exactly right. Look, we're in a very dynamic industry that's evolving rapidly. It's really evolving because the consumer is desiring different products to meet their needs and desires. We want to evolve with the consumer so that we continue to satisfy those consumers. What we're trying to do is position ourselves with what we call a portfolio approach, having the best products, best brands in each of the categories that the consumer looks to engage with. We feel like we are building the right portfolio, both with the products we have in the marketplace, but the pipeline of products we have based on consumer research.
We need the FDA to authorize expeditiously products that they feel like are appropriate for the public health, and then enforce against products that are in the marketplace illicitly so that consumers, when they make the choice, can believe the science because it has been reviewed by a third party. That is what we are looking for. It is hard to pinpoint an exact date because we are going to move with the consumer and then actively try to transition the consumer to smoke-free products as we move forward.
Your next question comes from William Simons. Would the company consider apologizing for past campaigns designed to increase female smoking by using slogans and imagery that was attractive to young girls and women, including "See yourself as a king" campaign, "Find your voice," and "You've come a long way, baby"?
Yeah, I think what you're asking about is what are our marketing practices. The way we describe our marketing practices is really all of our tobacco operating companies are committed to marketing their products responsibly. What that means is to adult consumers, 21 plus, while taking steps to limit the reach to unintended audiences. Those unintended audiences are youth and non-tobacco users. All of our marketing practices align with this commitment, and our tobacco operating companies continue to market responsibly in the marketplace.
Your next question comes from David Parks. I see that the NEOs have compensation in the form of a company-paid pension plan. What is the history and future plans of providing a cost-of-living increase to those NEOs receiving the pension benefit?
Yeah, when we look at the pension plan, actually, if you go back in the history, that pension plan was frozen in the mid-1990s. There are no changes associated with the pension plan. For benefits across all of our colleagues at Altria, we consistently assess those to make sure they're fair. We look at the total compensation package, including the benefits that you mentioned, and make sure that they're appropriately compensating all of our employees, including the NEOs, and that they're fair in keeping pace with costs in the marketplace. Thanks for your question.
Your next question comes from Jim Marrick. What will the dividend policy be going forward? Can we continue to count on dividend increases?
Yeah, Jim, just to be clear, the dividend is always at the purview of the board. What I can tell you is how we think about it internally at Altria. Look, our tobacco operating companies convert income to cash at well over 90%, which is extremely rare in the CPG category. In a typical year after paying dividends, we have about $1 billion in excess cash that we put to use. From a dividend standpoint, we call it a Progressive Dividend Policy. What we're looking, our goal is, is to increase dividends annually in the mid-single digits as we move forward in time. We know dividends are extremely important to our investors and they're top priority for us.
Your next question comes from Luke Itemora. In your 2025 annual meeting of shareholders and proxy statement, Altria states, "We believe our responsible marketing practices have been effective in preventing use of our tobacco company's products among non-users and youth, and in preventing targeting towards specific tobacco user populations, including communities of color." Yet in June 2024, Altria applied to market four Menthol e-cigarettes despite strong scientific consensus, including from the CDC, that Menthol increases youth smoking. Menthol has long been used to target Black communities, Native Hawaiians, women, and youth. In Hawaii, 86% of Native Hawaiians smoke Menthol, nearly twice the rate of White smokers.
Given this reality, how does Altria account for its stated commitment to prevent racial and youth targeting with its continued promotion of Menthol products that are not only addictive, but disproportionately harm the very communities your statement claims to protect?
Yeah, I would just correct one thing or encourage you to read a bit deeper. I think you're referring to our civil rights and equity assessment. What you saw in that was that the demographics of the brands were described, but it was also findings that there were no signs of targeting to any race or class of individual consumers. I would encourage you to read that a little closer. To go directly at it from a youth aspect, I would encourage you to look at the National Youth Tobacco Survey, the latest one that came out. You'll see all nicotine use by underage consumers are declining. Be vapor, but you asked specifically about Menthol cigarettes. That is at generational lows for 2024, the latest one that was published.
I think some of the measures we put in place to prevent access at retail have had a great impact on that. Just a few of those, we contract with our retailers. About 96% of our retailers are under contract. As part of that contract, they are obligated to have we card programs and actually card individual consumers. We have store clerk training that goes along with that, as well as we invest in technology specific to age and identity verification technology that allows the clerk to not have human error, but to actually take the human error out of it. I mentioned it earlier, but I think it is important to mention again, we lobbied for Tobacco 21, which at the federal level and a majority of the states now has raised the minimum age to purchase nicotine-containing products to 21 plus.
You can see by investing in the technology and the We Card and then raising the age to 21, it helps to prevent access to underage users to nicotine products. Thanks for your question.
Your next question comes from Connor Lam. I appreciate Altria's efforts in tobacco control, but I'm a bit confused about its mission. How can a company pledge itself to move beyond smoking while still selling harmful tobacco products?
Yeah, again, welcome to the meeting. Again, I would refer you to some of the studies that have been published by the FDA, and I mentioned it earlier, the Risk cliff. Moving beyond smoking is having consumers that can't or won't quit transition to smoke-free products, which holds the promise and the potential to greatly reduce the harm associated with enjoying nicotine. That, I think, directly aligns as you go back and look at that and understand the answer I gave, directly aligns our vision and moving beyond smoking with our efforts as we move into the future.
Your next question comes from Seth Magia. Could you provide a bit more detail on the non-nicotine stress factor and the overall trends you might be seeing in the long term once that product becomes available? Would Altria look to add another vapor product to the portfolio in the long term alongside NJOY?
Yeah, what we referred to it earlier, we feel like with the products we have in the pipeline and with the insights that we have from consumers in the marketplace, we feel like we have the right pipeline of products to be able to bring to the market. One of the hindrances and what we're pushing the FDA to do is you'll remember in the statute is that each manufacturer would file with the FDA. Also in the statute is that the FDA committed to make its decisions within 180 days. As you look back, I can't recall any product being near authorized within a 180-day window. It actually is taking multi-years. We are looking for the FDA to be more expeditious in their authorizations, but also on enforcement.
What is important there is that we believe and we supported the FDA in our history is that an independent party should look at the science. The enforcement is necessary because of all the illegal products that completely shunned the regulatory process. No one knows what is in them. Consumers see them on the shelf at retail and believe they cannot distinguish what is legally in the marketplace and what is illegally in the marketplace. We need the FDA to work with us. I think we can greatly transform the harm associated with using nicotine in the U.S. with a functioning regulatory system and our pipeline of products once authorized.
Your next question comes from Jim Marrick. How are the tariffs affecting Altria's business?
Yeah, it's a good question. I do appreciate it. I think, look, you've probably read as many stories as I have. You've heard stories that, oh, it's going to increase inflation. You've heard stories that it's going to increase American jobs. They are kind of at opposite ends. From a cost input standpoint, we shared at the first quarter that it's immaterial to our cost input at this point in time. Look, it's a fluid environment. Things are changing rapidly, but thus far, it's immaterial to cost inputs. What we'll monitor is the impact it has on our consumer. Of course, if it's inflation, we'll be monitoring to see if it lessens the number of occasions that they buy products in the marketplace.
On the other hand, if you think about increased American jobs, it could increase their discretionary income and increase the number of purchases they make. We will continue to monitor that, but I appreciate your question.
Your last question comes from Connor Lam. With the FDA and CDC cuts, will Altria continue its efforts to create a smoke-free future? How will Altria take the initiative?
Yeah, we are fully committed to our vision, which again is to transition adult smokers to a smoke-free future. You can call me an eternal optimist. I believe the FDA can get to a regulatory functioning body and that we can get to a marketplace of fully authorized FDA products in the marketplace. We feel like we have the right pipeline. We just need the authorization and the enforcement to take place. We look forward to being able to compete in that future. We are fully committed to our vision and to transitioning adult smokers to a smoke-free future. This concludes the question and answer session. Thank you for all the questions and for your continued interest in Altria. The meeting is now adjourned.
The meeting has now concluded. You may now disconnect.