Good morning, everyone, and welcome to Altria Group's 2016 Annual Meeting of Shareholders, which I now call to order. I'm Marty Barrington, Chairman, CEO and President of Altria Group, And with me this morning are Denise Thiem, Altria's General Counsel and Brand Surgner, our Corporate Secretary. It's great to see all of you here today, and I want to welcome those of you listening on the webcast. Altria had another terrific year for shareholders, which we'll be discussing in a moment. First, though, let's set meeting rules and the agenda.
Our remarks today contain certain forward looking statements and reference non GAAP financial measures. Please direct your attention to the forward looking and cautionary statements and reconciliations of non GAAP to GAAP measures on alzvia dotcom. 2nd, the cards on your seats have our agenda, our meeting rules and important business highlights. We'll start by presenting the meeting documents, proceed to electing directors and then to voting on the selection of PricewaterhouseCoopers as Altria's independent registered public accounting firm. We'll then share a brief business update, followed by a non binding advisory vote on the compensation of Altria's named executive officers.
A question and answer session will follow, and then we will vote on 2 shareholder proposals if properly presented. Grant will report on the preliminary voting results, and then we'll adjourn. So Brant, please present the meeting documents.
Thanks, Marty. I present together with affidavits of mailing, a copy of the notice of meeting, form of proxy statement and annual report, which includes financial statements for the fiscal year ended December 31, 2015. Please remember that only shareholders of record as of March 28, 2016, may vote at this meeting. 88% of Altria's common stock is represented here today, so a quorum is present.
Thank you. Please file the documents with the records of the meeting. I appoint representatives from Computershare, the transfer agent for Altria's common stock as inspectors of election. The inspectors should please now execute the oath and take custody of all proxies and the certified list of holders of common stock as of close of business on March 28, 2016. This list, which is available for inspection throughout the meeting, contains the names and addresses of all shareholders of record and the shares held by each.
The inspector's responsibility is to determine the number of shares represented at the meeting and to certify the votes. All proxies and ballots are confidential unless shareholders have commented on them. We'll now distribute proxy cards to any shareholders who haven't yet returned them. If you have already returned your card or otherwise voted, you do not need to submit a new card. Please raise your hand if you need a proxy card.
Okay. Thank you. I want to welcome our Board of Directors. Their skills, diverse experiences and perspectives provide Altria with strong leadership and thoughtful oversight. And the election of the Board of Directors is our first agenda item.
Denise, please announce those nominees' names during the proxy statement.
The nominees are Gerald L. Belisle, Martin J. Barrington, John T. Castine III, Dinara Stevitri, Thomas F. Farrell II, Thomas W.
Jones, Deborah J. Kelly Ennis, W. Leo Kylie III, Catherine B. McQuade, George Munoz and Nabil Weisbakabe, each to hold office until the next annual meeting of shareholders or until his or her successor has been duly elected and qualified.
Thank you. Under our bylaws, the nominations are closed. Those in the room wishing to vote on the election directors should please do so now. Our next item is the ratification of the selection of PricewaterhouseCoopers LLP as Altria's independent registered public accounting firm. I I want to welcome Ken Lemelin to PwC, who is with us today.
Denise, would you please present the matter?
I move the adoption of the following resolution: Resolve that the selection of PricewaterhouseCoopers LLP as Altria's independent registered public accounting firm for the fiscal year ending December 31, 2016
be ratified.
Thank you. Those in the room wishing to vote on the ratification of PwC should please do so now. We're now pleased to update you on the business. We know that shareholders are familiar with our results through various means, including our 2015 annual report, a recent presentation at the CAGNY conference and our Q1 earnings release, and all those materials are available at alcidia.com. So rather than repeat all that here, we've prepared a card highlighting some of our business results and our successes.
So we'll briefly discuss a high level summary of full year let's start with our operating and financial results. In 2015, Altria and its companies delivered yet another year of excellent business results and outstanding returns for our shareholders, all in line with our strategies. We grew adjusted diluted earnings per share nearly 9%. We increased our dividend 8.7% and paid shareholders nearly $4,200,000,000 in dividend. Marlboro achieved a record retail share of 44%, larger than the next 10 brands combined.
Copenhagen and Skol achieved 51.3%, a record since the UST acquisition. Newmark continued the disciplined expansion of its Mark 10 XL e vapor product in select chains. We supported the approximately $107,000,000,000 business combination between AB InBev and SAB Miller, which will create the 1st truly global beer company and in which we anticipate Altria owning an approximately 10.5% interest. We delivered total shareholder return of over 23%, far outpacing the S and P 500 and the S and P Food, Beverage and Tobacco Index. And as a reminder, our TSR was 35% in 2014 and 29% in 2013.
Our heritage of consistent long term performance, profit growth and cash returns to shareholders continues to be why we believe Altria is such an attractive investment. In fact, a recent Wall Street Journal commentary placed Altria an elite company as one of the best U. S. Stocks over the past 30 years with cumulative total returns of 10,000 percent or more. And Barron's recently ranked Altria 3rd among the top 500 public companies for delivering superior operating performance over the past 3 years.
Turning to 2016, our businesses are off to a strong start against our full year objectives. Altria grew 1st quarter adjusted diluted EPS by 14.3% despite a tough 2015 comparison. And both the smokeable and smokeless product segments saw robust adjusted operating companies' income growth and expanded margins. So once again, our first quarter results illustrate the strength of our core tobacco businesses and our focus on execution. Therefore, we reaffirm our guidance for 20 16 full year adjusted diluted EPS in a range of $3 to $3.05 representing growth of 7% to 9% from our 2015 adjusted diluted EPS base of $2.80 How we achieved these results is as important as what we achieved.
Responsibility is core to our mission and values, which guide us daily. In fact, Altria was named CR Magazine's 100 Best Corporate Citizens List for the 6th straight year. We've identified 4 responsibility priorities that are important to our stakeholders and key to our continued success: reducing the harm of tobacco products, marketing responsibly, managing our supply chain responsibly and developing our people and our culture. We'll comment briefly on our work respecting harm reduction and supply chain responsibility. Our companies take a comprehensive approach to tobacco harm reduction that includes helping reduce underage tobacco use, supporting cessation efforts, communicating about the health effects of tobacco use and developing and marketing lower risk products.
Kids should not smoke or use any tobacco products. Our companies continue to invest in positive youth development programs to help young people build self confidence, make healthy decisions and resist risky behaviors, including tobacco use. In 2015, our company has invested more than $22,000,000 in our Success360 initiative, which promotes the healthy development of middle schoolers by supporting youth serving organizations such as Big Brothers, Big Sisters and Boys and Girls Clubs, among others. These investments are part of an approach that has contributed to positive results over time. In fact, according to the National Survey on Drug Use and Health, underage use of cigarettes is at a generational low.
However, there's still work to be done across tobacco products, including e cigarettes. Adult tobacco consumers be guided by the messages of public health authorities in making decisions whether to use tobacco products. Our companies communicate about health risks by complying with all federal laws and regulations requiring health warnings. And in addition, Altria's companies submit extensive information to the U. S.
Food and Drug Administration about the ingredients used and the harmful and potentially harmful constituents found in cigarette smoke and smokeless tobacco. FDA has the authority to determine how this information is communicated to the public. For adults who continue to use tobacco products, a growing body of evidence suggests that some products may be less harmful than others. So our companies are developing a portfolio of innovative products to both meet the evolving preferences of adult tobacco consumers and potentially reduce the risk of tobacco related disease, and we engage with the FDA on our scientific research and results to assess that potential. In an important recent development, the agency published its final deeming regulations, thus extending its regulatory authority to all tobacco products, including e vapor.
We have exclusive rights in the United States to Philip Morris International's heated tobacco product. BMI is conducting extensive research to substantiate potential reduced exposure and reduced risk claims. We are supporting PMI on an FDA application to designate this product as a modified risk tobacco product, and our teams are making excellent progress on branding and go to market strategies for the U. S. Developing a comprehensive harm reduction strategy is among the most meaningful actions the FDA strategy is among the most meaningful actions the FDA takes to reduce the health effects of tobacco.
Moving to supply chain responsibility. We continue to support protecting worker rights and helping growers to enhance farm safety and labor practices. For example, in 2015, we helped more than 10,000 growers receive training on labor management. We enhanced our monitoring programs to include farm worker interviews to better assess grower compliance with our supplier protons. So the executive leadership team and I are very pleased with Altria's strong business performance and the company's momentum.
We recognize and thank our talented colleagues for delivering these strong results and staying committed to our mission and values. And once again, for a more detailed discussion of our business results and our responsibility efforts, please refer to altry.com. We will now move to the advisory vote to approve the compensation of our named executive officers. While this vote is non binding, the compensation committee intends to consider its outcome when making future decisions for these executives. We believe that our executive compensation programs contribute to our excellent business results and strong shareholder returns.
As the proxy statement fully described, we designed these programs to align the interest of executives and shareholders, promote the company's mission and business strategies and reward the achievement of corporate and individual performance goals. At the 2015 Annual Meeting, more than 96% of the votes cast approved the compensation of our named executive officers. The Board recommends that shareholders approve on an advisory basis the compensation of our named executive officers as described in the proxy statement. Those in the room wishing to vote on this matter should please do so now. We'll now transition to our 30 minute question and answer session.
We welcome this opportunity to hear from you. The rules of the meeting will govern our session, particularly those helping to manage our time, so please review them before asking a question. The lights to help us are right in front. Thank you very much in advance for your cooperation. If there's not enough time for all the questions today, please complete and return a comment card so we may respond to you.
Please identify yourself and address your question to me. And so let's begin. Yes, ma'am?
Good morning, Marty. It's Ann Gerken with Davenport.
Hi, Ann. Welcome. Thank you.
Congratulations on a very strong start to 2016. Marty, I wanted to ask you about current consumer trends. Are you seeing any change in tobacco purchase patterns or trading up to premium varieties in the marketplace currently and what other challenges
do you look for this year as the
year unfolds besides state ex ODOT?
Sure. Well, thanks for those questions. I think the premiumization of the category continues. I think that the shares in the premium brands are as high as they've ever been in recent memory. And we continue to expect that, I think, throughout the year.
I appreciate your comments about the quarter. We did get off to a good start, which is always nice. We always remind people there are 3 more to go. So, we try not to get ahead of our skis. But listen, the businesses are strong.
Just that abbreviated presentation, I think, speaks to the tremendous work that our people are doing, both on the business itself and on the responsibility initiatives. So we're looking forward to a good 2016 in line with our guidance. Appreciate you coming to the meeting. Thank you. Yes, sir.
Good morning, Mr. Barrington. This is Edward Sweeter, a shareholder from Massachusetts.
Welcome back, Mr.
Sweeter. Good to see you. Good to see you. In the past 2 months, the following events have occurred. On March 17, the Florida Supreme Court ruled in the Sulphur case that the widow of a smoker who had died of lung cancer could seek punitive damages against a tobacco company on strict liability and negligent claims.
A week later on March 24, the Florida Supreme Court in the Chacon case ruled that a smoker did not need an official diagnosis before the cutoff date for membership in the original Engel's class. On April 25, the Connecticut Supreme Court ruled in the Isarelli case that the so called good tobacco language of restatement second of torts does not shield tobacco companies from product liability lawsuits. This result is similar to a recent ruling in Massachusetts. And of course, earlier this week, Monday, May 16th, in the Schwartz case, the U. S.
Supreme Court declined to consider Philip Morris USA's request to review an Oregon jury's $25,000,000 punitive damage award to a widower whose wife had died of lung cancer. My question is why shouldn't Altria Group's shareholders and investors be very concerned about these negative litigation developments for the company that have occurred just in the past 2 months? Thank you
for your question, Mr. Sweden. Again, welcome back. Good to have you here. Listen, litigation presents a risk to us.
We lay those risks out with the full disclosures. I think it's also fair to say though that the company has done quite a good job of managing those risks. It's true that the cases that you've mentioned to us this morning have happened. I won't do it, but we could go down the other side of the ledger and talk about all the litigation successes we've had. Just one I'll mention, for example, in Larson case where a jury returned to verdict for PM USA in less than 1 hour.
So yes, you're right that they do represent risks, but the cases are extremely well managed. My comment to shareholders would be to try to read the case to see the disclosures there. And I think most people would agree, Mr. Sweet, is that over time that the litigation risk has come down. It's come down significantly.
It's come down responsibly, and it's due to the good work of people like Denise Keene others in our law department who do quite a good job of managing the cases. I appreciate your question. Welcome back.
My name is Justin Flores, Vice President
of the Farm Labor Organizing Committee, Farm Workers Union in North Carolina. It's been a year since I was here last year addressing you all. And unfortunately, I just need to report that from the ground, as we get started with another tobacco growing season, we're seeing another season where far too many workers are dealing with poverty wages, this is quality housing and a very real fear of retaliation for speaking out about issues. I do want to commend you and your team for the good faith efforts made in dealing with supply chain issues and bring up one concern I've had, which is what we feel is a lack of an interest in really engaging and collaborating with workers and work organizations on the ground. We've had some very good discussions, but understand that real collaboration with our organization has not been something that Altria has been interested in doing.
I think that this really misses an opportunity. There's nobody in the world that wants to be more compliant in the supply chain than the very farm workers that are doing that work. And so I encourage continued not only dialogue, but real collaboration, so we can work together to deal with these issues. And one example of that has been when there have been problems, workers retaliated against wage theft, unsafe working conditions. We've brought a few of these to the attention of Altria.
I understand that the company policy is to not state whether or not that is an Altria grower or to collaborate with us in order to find a solution. Again, I think that's just a really big lost opportunity. One of these examples is Jackson Farms in Ocherville, North Carolina, where last year 7 of our members filed a wage theft lawsuit and immediately after this year were not requested to return under the H-2A program or are now on the blacklist. So we've been doing everything we can to get these folks back working off the blacklist so they can feed their families. And we really like to engage with you all in finding a solution.
The first step would be some transparency to know whether or not this is in fact an Altria contract farm or PM USA contract farm. I actually have a petition around that particular farm that I'd like to give in to you all or somebody that I can hand
it to.
Hand it to
the gentleman next to you and I'll see that I'll get it.
All right, great.
I appreciate that. And I would really encourage that some real collaboration on workers' rights with workers' rights organizations on the ground would be a really great step and next step for Altria to deal with supply chain issues.
Thank you, Mr. Flores. You're very eloquent spokesperson for your cause, and I appreciate all the good work you've done with our team. And I stay regularly briefed on this. It may interest you to know that when I began my career at Altria, actually, I began very closely with the leaf department and I worked on farm and grower issues.
So it's been a continuing interest of mine. I stay close to it. I'm going to try to help you with a little transparency this We do not use Jackson Farms. And what I also can tell you is our auditing program is working. Earlier this year, we had a farm where there were violations that were disclosed through our audit.
We tried to work with the grower on remediated. When they weren't remediated, I can tell you, we terminated that grower's contract. So we share your interest in improving conditions in the field. And I hope that we can continue to work together with real collaboration. I appreciate you coming and sharing your views.
Okay, we'll go over here. Good morning, sir.
Good morning. My name is Donnie Shiplett, and I want to thank Philip Morris for the investment to help pay for my college education.
Thank you, sir. You're very welcome. Thank you for coming to the meeting, and thank you for your comments. I think in accordance with the rules, I'll go this way. Good morning.
Mr. Chairman, my name is Michael Schbach and I represent the AFL CIO Reserve Fund. And Mr. Chairman, on December 10, 2015, I had the experience of taking a tour of the PM USA manufacturing facility, kindly arranged by President Cliff Fleet, and Linwood Sykes accompanied me on that very briefly. I can say that it was an experience that I will not forget.
Cliff Fleet asked me after the tour what I thought and I could only say that I was speechless, absolutely speechless. 600,000,000 cigarettes in a single day. The manufacturing required a very orderly process with everyone knowing his or her place and job. But there was something else that I could not help noticing, the pride of your employees and their driven nature to keep the machines going. I suspect that determination and pride owes a lot to the vision and forward thinking outlook of our company, which I'm told integrated its workforce before the other tobacco company and respects and affirms freedom of association of its manufacturing workers represented by the VCTGM and IAM at the Philip Morris USA manufacturing facility.
But Mr. Chairman, the same isn't true for thousands of Mexican and Central American farm workers that work on Altria contract farms. Obviously, working in a tobacco field is very different than working in a clean setting, temperature and humidity controlled environment that keeps machines efficiently running with a Starbucks relatively close at hand. The truth is that tobacco farm workers are not subject to the provision of the Federal National Labor Relations Act and there is no law or process in place that would provide a pathway to collect bargaining as understood in the UN Global Compact your company is to which your company is a signatory. The reason tobacco farm workers are not covered by federal labor law, which was adopted in the 1930s is because of the reality of Jim Crow, racism, white supremacy and feudalism, which existed in the corporate polity of the powerful economic interest, which of course tobacco, the tobacco industry was part of.
Mr. Barr, I
don't want to interrupt you, but yes, your time is expired. Can I ask you to sum up? I think I haven't thrust your question. I'll be glad to reply.
Now is the time to open to right the wrongs that were implemented at that time. And you're so forward thinking in your area of labor rights and freedom of association that you would collaborate in a real way with the farm labor organization. Thank you very much. Last thing I have is, what is your understanding of freedom of association as found in the UN General UN Global Compact and ILO conventions to which Altria is committed to?
Yes, sir. I appreciate your comments and let me try to reply. First of all, I appreciate your comments about the manufacturing center. It's a terrific place filled with terrific people and you saw 2 of our best in Cliff Leighton and Linwood Sykes. So I'm glad you had a good day.
Listen, I can explain to you that our framework for addressing this issue, which is let's begin with Altria. We do respect freedom of association. And as you point out, some of our facilities are unionized, others are not, and we enjoy excellent relationships with the unions that represent our workers. So we do respect freedom of association. With respect to our supply chain, we encourage our suppliers, including our growers, to respect freedom of association.
I'm sure you've seen our supplier code of conduct, which does that. And we do it through other various means, including the Farm Labor Practices and elsewhere. The difference between us, I think, lies in Flock's desire to unionize those workers who are not Altria's workers, of course, they work for the growers. And Altria's position that we should not be placed in the position of forcing people to sign agreements that they don't wish. The growers, most of them I understand, do not wish to sign those agreements and they are after all, they run their own businesses.
They're small business men and women who have to make up their own decisions about whether they wish to sign the agreement that Block is putting forth. The short version is that is not up to Alcoa, that is up to the growers and it's up to Block and it's up to the workers. We encourage it, we respect it, but we can't compel it. And that I think lies the difference between us. We have so much in common and we have made so much progress the field.
I hope that we won't let this issue come between us. We just respectfully have a difference of opinion about how far Altria should go on this particular issue. And that's our point of view, sir. Okay. Thank you.
Maybe if we have time, we can come back over here. I want to make sure I respect this gentleman over here. Good morning, sir.
Good morning, Mr. Chairman. My name is Julian Martinez and I represent SARE jobs for Progress National. SARE is a national nonprofit community based organization serving more than 1,300,000 people a year by assisting them with their employment and educational needs. CERN Nationals and many others in the Hispanic community would like to thank Altria for the support you have provided in the past and programs you have sponsored in our community.
We appreciate your efforts in somewhat diversifying your Board, but it doesn't really reflect your customer base nor the population of this country. Likewise, your senior management needs a lot more diversity.
This doesn't make you bad, it just shows you have room for improvement.
The American dream is alive and well. Hispanics born in this country are more highly educated and earn higher incomes than their immigrant parents. Hispanics outpaced all other Americans in forming their own businesses. They will represent fully 1 third of the U. S.
Population in just 45 years and be an economic force of great consequence. Latino owned businesses increased 46.9% from 2,007 to 2012. In 2012, 3,900,000 Latino businesses had receipts totaling over $517,000,000,000 making up 12% of total business. Female Latino business owners were 44.4 percent of Latino firms as compared to 35.3% for non Latino firms. Hispanics are the youngest racial or ethnic group in the United States.
1 third or 17,900,000 of the Latino population is younger than 18, about a quarter of 14,600,000 are millennials. This is a marker you
will have to capture if you are succeed in
the future. Again, we would like to commend you for all your positive efforts relating to our community.
Thank you. Thank you for your comments very much. Glad to have you at the meeting. I appreciate your comments about diversity, which we are working on very hard. I happen to agree with much of what you say.
There's room to get better. We have a major initiative away at our company to get better about this. I might refer you to our website where it's described. We're trying to improve our representation at all levels of the company, including at the Board of Directors and on the executive management team. And I can assure you that I share your views, and we're working very hard on it.
And I appreciate your nice comments about working with your organization, which is terrific. So thank you, sir. Yes, ma'am. Good morning.
Good morning. I'm Amber Updike, a RealityTech member. And if Philip Morris USA isn't targeting kids and doesn't want kids to start smoking as they state, then why are they paying $9,000,000,000 per year to market their products where kids
are likely to see it?
Thank you for coming to the meeting. Welcome. Glad you're here. Appreciate your question. Listen, you can go to the website and you can go to our corporate responsibility report, which has actually quite a lot of facts throughout the question that you're asking.
We do not market our products to them, people. We market them to adult tobacco consumers. We take all kinds of steps. We have for many, many years to try to make sure that we're putting forth our best efforts on that. If you go to the website, you'll see that we've described some of those areas.
It's the work we've done on youth tobacco prevention, for example. And we're one of the largest sponsors you may have seen in our remarks this morning, supporting the good organizations that are working in that regard. It may interest you to know there was a time actually when tobacco products were actually on the counters of stores and they were sold in that way. And in fact, there was Tilbridge, which wasn't helping. We led the effort to get them off of the counter, to get them behind the back bar so that a clerk had to check for age, to make sure that the right person was buying it and was of age to do it.
We supported the Food and Drug Administration regulation, which as I'm sure you know has all kinds of regulations in this regard. So I appreciate your question and I want to assure you that we share your interest in making sure that young people are not using tobacco products, and we work very, very hard at it. Welcome back to the meeting. Welcome to the meeting, I guess I should say. Thank you.
We have a question over here.
Good morning, sir. My name is Howard Daylog, And I'd like to ask a question about retained earnings. Would you comment on what is the purpose of our stock buyback program? And what is sacrificed in R and D and other business expansion efforts in the tobacco products and other activities and businesses that Altria may be able to find a core B value?
Yes. Thank you very much. Welcome to the meeting. Good business question. I can tell you our approach to it.
Our business model is to maximize our core businesses, which as you saw are going pretty strong here from the report this morning. At the same time, we want to be innovating for our future, and that means we do make capital investments from time to time. We're building an e vapor business, as you know. We're working on this product with Philip Morris International. I'd like to reassure you we have plenty of capital to do that.
The way that we think about capital deployment is principally to make sure that we're paying the dividend. We have one of the highest dividend payout ratios in consumer packaged goods or most anywhere at 80%. So once we pay the dividend, we look at the best use of cash. Our CapEx is relatively modest in terms of a business of our size or scale, but we do have some. We do acquisitions from time to time.
Tack on acquisition, look at the Green Smokey Vapor business, we use capital for that. And then we invest. But we do not starve our business for R and D or for machinery upgrades, but we do have fairly robust installed infrastructure. So that's how we think about capital deployment. I'm over here.
Good morning, sir.
Good morning, Mr. Barrington. How are you? Good.
Thank you. My name is John Chafee. I am a shareholder. I'm from Pennsylvania. Last year at this meeting, reasonable regulations was discussed with many cities and states raising the age purchase tobacco products and e cigarettes to 21.
How does Altria feel about this new age and is that seen as reasonable by the company? Also as a shareholder, what is Altria plan to do to make up for this potentially lost revenue and customers as the ages between 1820 is an important one for new customers to start smoking?
It's Jay who welcome to the meeting. Glad you're here. Thanks for your question. Let's start. I think we can agree that minimum age is important.
You may know that our company was one of the first that went around and actually lobbied to have minimum age laws put in place where they were not in the United States. We agree with you that minimum age is important. The debate that's undergoing or or undergoing right now is really about where to draw that line as you point out. And some say 18. There are strong historical reference 2018.
Most of the states, most of the localities have used 18, not universally, but most. If we look to the master settlement agreement in the mid-1990s, 50 Attorney General that signed that agreement thought that 2018 was the right demarcation point for someone to make a choice about using tobacco products. I know, you're aware the FDA bill itself, which passed in 2,009 shows 18 as the national minimum age, while at the same time pointing out that it could be studied. So our position is we're for minimum age. There's a debate ongoing about where the line should be drawn.
The process that we would prefer be used is the one that Congress put out 2,009. They asked FDA to study the question and send a report over to Congress and then Congress could debate that about what the right age was. That's the process that we support. We're in favor of minimum age. I think there are arguments that have to be sorted through about where to draw the line.
That's our position. Okay, thank you for your question. Are there any other questions? All right, thank you all very much for that. I appreciate it.
We'll now hear presentations on 2 shareholder proposals included in the proxy statement, and then we'll vote on them. We believe shareholders should vote against these proposals for the reasons we explained in the proxy statement. So in the interest of time, we won't elaborate further on our views, but we encourage all shareholders to read the proposals and our responses. Proponents and any speakers commenting on the proposal should please first identify themselves and follow the rules of the meeting. Once again, thank you in advance for your cooperation.
So would the representative from Trinity Health for Proposal 4 please present the proposal?
Good morning, Mr. Barrington, members of the Board, fellow shareholders. I am Kathy Rowan representing Trinity Health. Along with Catholic Health Initiatives, the Sisters of St. Francis of Philadelphia,
the Priests
of the Sacred Heart and the School Sisters of Notre Dame, we are proponents of Proposal 4, which asks our company to undertake a thorough analysis of all the harmful liquids, additives and chemicals and their potential health consequences when each brand of our tobacco products is used as intended by consumers and report the results of the analysis on the Altria website. We filed this proposal after reading news reports on the additives and chemicals used in e liquids and their chemical and pharmacological impacts. It made us realize that there is no real clarity to our knowledge as to the negative health impacts due to additives and chemicals for the whole range of tobacco products, whether they are cigarettes, smokeless or e cigarettes. We appreciated the dialogue we've had with Altria representatives on the issue. But despite general agreement with our concerns about transparency and disclosure, the company had decided to wait instead for the FDA to finalize the deeming rule, which you referred to earlier.
Now we have that deeming rule. And among other things, the rule requires tobacco companies to report ingredients and harmful and potentially harmful constituents. However, my understanding is that companies are given 3 years to comply with the reporting requirements. It's our hope that Altria will not wait 3 years to comply and instead take a leadership role to go beyond compliance in the interest of people's health and come forward to disclose information on all harmful and potentially harmful constituents in all its tobacco products, including e cigarettes. This is what our proposal calls on our company to do, and I ask fellow shareholders
to support it. Thank you. Thank you, Ms. Brown. Welcome back to the meeting.
Are there any comments on the proposal? Okay, thank you. Those in the room wishing to vote on this proposal should please do so now. Will the representative from AFL CIO, Proposal 5, please present the proposal?
Chairman, Chief Executive Officer and President Barrington, members of the Board and fellow shareholders, I am Michael Schbach representing the AFL CIO Reserve Fund. We urge Altria Inc. To participate in mediation of any specific instances of alleged human rights violations involving the company's operations. If mediation is offered by a governmental national contact point for the Organization For Economic Cooperation and Development, OECD. Altria Group and its subsidiaries directly employ approximately 8,800 people and depend upon a small number of significant suppliers.
This proposal simply asked Altria Group to honor the OECD's guidelines by accepting an offer of human rights mediation from the national contact point of an OECD nation. The national contact point for the United States, for example, is an official of the State Department. Similar officials serve as national contact points in the 44 OECD countries. Altria Group has taken steps to respect human rights, but it needs to provide an independent remedy for alleged human rights violations in its operation or its supply chain. Altria Group's opposition statement to this proposal claims PM USA and USSTC assess growers' operations, including farm safety training for workers and expect growers to address any issues identified in these assessments, including those related to human rights.
But these assessments are not an independent grievance mechanism. They are entirely financed by Altria Group. They are not the same as the independent governmental OECD human rights process. Just as the right to seek redress before an independent judicial system is indispensable to us all, individuals and corporations, so the right to seek mediation before the independent OECD human rights process is indispensable to all Altria Group workers, whether they work directly for the company or anywhere in its supply chain. It is indispensable to Altria Group 2.
Altria Group says it respects and remedies human rights abuses. Now is the time for our company to join with PESCO, which has accepted OECD mediation. Now is the time for Altria Group to take the next step for human rights. We urge shareholders to support Proposal 5. Thank you.
Thank you, Mr. Chirag. Are there any comments on the proposal? Mr. Flores?
Yes. As it relates
to this proposal, I just want to point out that, as Michael mentioned, as farm workers are excluded from the Labor Relations Act, which means while most workers have the right to join union, to petition their employers and to get an election for and to collectively bargain, farm workers don't have that right. And the reverse of that means that it is legal for farm workers to be fired when they come together and petition their employer for increased wages or better work conditions. And so I think that's the really key part of this particular proposal. And also to your point made earlier, I want to clarify that what Flock seeks is not in any sense to have Altria compel employers to sign an agreement with Flock. But we do wish that Altria would compel growers to respect freedom of association and the right to collectively bargain.
And so I want to clarify that because I think it's an important distinction. While it certainly wouldn't be your role to force a grower to sign agreement with Block, I think in respecting human rights, it would be your role to guarantee that growers in your supply chain do respect those rights. And one final point on the audits, I think it is shows progress that the audits are now showing some violations and there are some issues there. I would just suggest that that's the tip of the iceberg and that an audit is basically a snapshot in time, but doesn't give you the true story of what's going on in a particular farm that real collaboration with the workers on that farm would. So again, I just want to make that clarification and encourage the company through this proposal or otherwise to use international standards of human rights instead of the federal law that has failed farm workers.
Okay. Thank you for those comments. Are there any other comments? Okay. Those in the room wishing to vote on this proposal should please do so now.
Okay. All matters to be voted on have now been presented. If you need to do so, please complete your proxy card, raise your hand and an usher will collect your card. Okay, thanks. Since all shareholders have had the opportunity to vote, the holes are now closed.
The ushers should have collected all the proxies and delivered them to the inspectors. And will the inspectors please deliver their 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 87% of the shares voting voting for their election. The selection of PricewaterhouseCoopers LLP as Altria's independent registered public accounting firm for the fiscal year ended December 31, 2016 has been ratified with more than 98% of the shares voting in favor. Shareholders have approved on an advisory basis the compensation of the company's named executive officers with more than 93% of the shares voting, voting in favor. Proposal 4 has been defeated with 93% of shares voting on the proposal voting against and 6.6% voting in favor.
Proposal 5 has been defeated with 94.1 of shares voting on the proposal voting against and 5.9% voting in favor. That concludes the report. Okay. Thanks, Brandt.
Please file the inspectors report, the oath of the inspectors, their certificate and the proxies with the records of the meeting. We'll post voting results on our website with a press release following the meeting, and we'll file the final voting results with the SEC on a Form 8 ks. I want to thank everyone for coming today or listening to the webcast, And thank you for your continuing confidence in Altria. Our meeting is adjourned.