Morning, everyone. Welcome to Altria Group, Inc. 2014 Annual Meeting of Shareholders, which I now call to order. I'm Marty Barrington, Chairman and Chief Executive Officer of Altria Group. I want to extend a warm welcome to all shareholders, employees, retirees and guests who are here today or listening on the webcast.
With me here this morning are Denise Keene, Altria's Executive Vice President and General Counsel and Brand Surgner, our Corporate Secretary. 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 altria.com. The cards on your seats have the agenda and rules for today's meeting. We'll start by presenting certain formal documents, proceed to the election of the Board of Directors, and then move to the ratification of PricewaterhouseCoopers as Altria's independent registered public accounting firm.
I'll then share a business update. We'll have an advisory vote on the compensation of Altria's named executive officers. A question and answer session will follow and then we'll vote on to shareholder proposals. Grant will then report on the preliminary voting results and will adjourn. Brent will now present certain formal documents.
Thank you, Marty. I present to the meeting together with affidavits of mailing, a copy of the notice of meeting, form of proxy, proxy statement and annual report, which includes financial statements for the fiscal year ended December 31, 2013. The holders of record of common stock at the close of business on March 24, 2014 are entitled to vote at this meeting. 86% of Altria's common stock is represented here today, so a quorum is present for the transaction of business. Thanks, Brandt.
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. Inspectors are instructed to 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 24, 2014. This list which is available for inspection throughout the meeting contains the names and addresses of all shareholders 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 vote of all matters presented at the meeting.
All proxies and ballots are confidential unless shareholders have written comments on them. We'll now distribute proxy cards to any shareholders in the room who have not yet returned them. Shareholders who have already returned their proxy cards or voted by the Internet, mail or telephone do not need to submit a new card. If you need a card, would you please raise your hands? Thank you.
Upon conclusion of the voting, please return the card to an usher who will deliver it to the inspectors. I want to welcome our Board of Directors, all of whom are here today. Their skills, experiences and diverse perspectives provide Altria with strong leadership and thoughtful oversight. The election of the Board of Directors is the first agenda item. Item.
Denise, please announce those nominees' names appearing in the proxy statement.
The nominees are Gerald L. Belisle, Martin J. Barrington, John T. Castine III, Dinar Estevitri, Thomas W. Farrell II, II, Thomas W.
Jones, Deborah J. Kelly Ennis, W. Leo Kylie III, Catherine B. McQuade, George Munoz and Nabil Liza Cobb, each to hold office until the next annual meeting of shareholders or until his or her successor shall have been duly elected.
Thank you. Under our bylaws, denominations are closed. Those shareholders in the room wishing to vote on the election of directors should please do so now. The next agenda item is the ratification of PricewaterhouseCoopers LLP as Altria's independent registered public accounting firm. And Lenelan from PricewaterhouseCoopers is with us today.
No shareholders in the room wishing to vote on this matter should please do so now. I'm now pleased to share with you our business update. 2013 was a strong year, thanks to our terrific brands, talented people and the mission framework that continues to guide us. Today, we're proud to highlight some of our results and progress. Our mission is to own and develop financially disciplined businesses that are leaders in responsibly providing adult tobacco and wine consumers with superior branded products.
We pursue our mission through 4 core strategies invest in leadership, align with society, satisfy adult consumers, and create substantial value for shareholders. By focusing on these strategies Altria continued to deliver superior returns for shareholders in 2013. Altria delivered adjusted diluted earnings per share growth of 7.7% on the strength of its diverse business model and solid performance by its core tobacco businesses. Our operating company's premium brands Marlboro, Black and Mild, Copenhagen and Skol continue to hold the leading positions in the largest and most profitable U. S.
Tobacco categories. In innovative products, Newmark took important steps on its path towards leadership in the e vapor category with the launch of Mark 10 and its recent acquisition of Green Smoke and we're pleased to welcome the Green Smoke team to our family. Altria's smokeable product segment grew full year adjusted operating company's income by 2.4 percent to $6,400,000,000 The Smokeless Products segment grew adjusted operating company's income by 7% to over $1,000,000,000 and the Wine segment grew adjusted operating company's income by 13.5 percent to $118,000,000 and each of the segments expanded their adjusted operating companies income margins in part due to our focus on productivity. In fact, we reached our goal in 2013 of achieving $400,000,000 in annualized savings versus previously planned spending. We also provided significant cash returns to shareholders paying more than $3,600,000,000 in dividends and we increased the dividend by 9.1%, our 47th increase in the last 44 years.
Our adjusted diluted EPS growth together with our large and growing dividend helped deliver total shareholder return of 28.6 percent in 2013, which outpaced the S and P Food, Beverage and Tobacco Index. In 2013, we continued to achieve success in managing litigation. For example, PM USA obtained a defense judgment in the 16 year old Brown Lights class action case in California and the New York Court of Appeals refused recognize an independent medical monitoring claim against PM USA. However, we continue to face substantial litigation challenges as we have for many years. Almost 10 years ago, the Illinois Supreme Court dismissed a $10,100,000,000 verdict against PM USA in a lights case known as price.
Recently, a lower Illinois court ordered that the judgment against PM USA and price be reinstated. PM USA is asking the Illinois Supreme Court to immediately review this unprecedented decision, which we believe is contrary to law. A comprehensive discussion of tobacco related litigation is found in Altria's 2014 1st Quarter Form 10 Q filing. Our goal remains to protect the interest of our shareholders by vigorously defending these claims. Over the long term, our financial goals are to grow adjusted diluted EPS at an average annual rate of 7% to 9% and maintain a target dividend payout ratio of approximately 80% of adjusted diluted EPS.
From 2011 through 2013, we grew our adjusted diluted EPS at a compounded annual rate of 7 point 8% and grew our dividend at a compounded annual rate of 8.1 percent to $1.92 per share. During that period, we paid shareholders $10,200,000,000 in dividends and repurchased approximately $3,000,000,000 of shares. Our earnings performance and strong dividend contributed to total shareholder return of 83% from 2011 through 2013, outperforming the S and P 500's return of 57%. To create value for shareholders, we focus on the 4 core strategies I mentioned. Our first strategy of investing in leadership reflects our focus on excellent people, leading brands and stakeholders important to our success.
Leadership has long been a hallmark of Altria and last year we continued to invest in our people to help us remain successful in a dynamic environment. In 2013, we surveyed employees to measure their engagement and better understand how Altria compares with other high performing companies. The results confirmed that Altria is a terrific place to work and that our workforce is engaged and aligned to our mission. In fact, more than 3 fourths of employees who responded said they would recommend Altria as a great place to work. A similar number said they saw a clear link between their work and the company's mission and goals.
These results were well above the benchmark companies, many of which are recognized by Fortune Magazine as best places to work. We also received helpful feedback on opportunities to do even better including enhancing our culture to support innovation and diversity and inclusion. In 2013, we made strong progress in these areas. Our values define our expected behaviors as we pursue our mission. They are integrity, trust and respect, passion to succeed, executing with quality, driving creativity into everything we do and sharing with others.
So we began by making sure our values clearly included behaviors essential to innovation and inclusion. We supplemented our leadership development programs to improve our executives' capability to lead in an innovative and inclusive way. And we're continuing to shape our culture through training, communication and recognition programs. We also established an Executive Diversity Council, which I chair to oversee our diversity and inclusion efforts. We expanded employee resource groups to better foster professional development, engagement, inclusion and business success.
As a result, hundreds of employees now are participating in employee resource groups. We also launched a mentoring program within our Windows network and are expanding it. Through these collective efforts, we'll improve our innovation systems and culture, enhance the skills, knowledge and capabilities across our organization, better fill our leadership pipeline with a diverse set of qualified candidates and promote a culture where all are welcome challenged to contribute. Investing in leadership also includes our communities. During the last 10 years, we've contributed nearly $1,000,000,000 in cash and in kind contributions and partnered with hundreds of non profit organizations who are improving the communities where our companies operate.
Today, we focus primarily on supporting positive youth development, protecting the environment and arts and culture. We also participate in important civic initiatives, support and honor our veterans and are there to help when emergency relief is needed. Examples of our 2013 efforts include providing the Science Museum of Virginia with $1,000,000 to help develop a statewide youth science program, leading the creation and funding of Middle School Renaissance 2020, an initiative that's developing effective after school programs for middle school kids in Richmond Public Schools. Funding Boulder Crest, a healing retreat for wounded veterans and their families and helping the American Red Cross deliver relief to those affected by tornadoes in Illinois and Oklahoma. We also support our employees' generous efforts to donate their time and resources to their communities.
The Altria Companies' employee community fund is the cornerstone of these efforts. This employee managed fund awarded nearly 3 approximately 140 grantees last year. Altria matched more than $1,200,000 in employees' charitable contributions and our employees volunteered over 34,000 hours in 2013. We're privileged to partner with best in class community organizations and we are immensely proud of the generous spirit of our employees. Our second strategy is aligning with society.
Our long term business success requires that we manage businesses responsibly and actively participate in resolving societal concerns relevant to them. To begin, kids should not smoke or use any tobacco products. For many years, Philip Morris USA has invested in positive youth development programs to help kids make healthy decisions and resist a range of risky behaviors including tobacco use. Today progress continues through the efforts of many including our companies, FDA, youth serving organizations, retailers and third party groups like weak hard. We invest through our Success360 initiative, which helps organizations better deliver programs to middle school kids, so they can lead healthy lives and avoid using tobacco.
Success360 partners include leading organizations such as Boys and Girls Club and Big Brothers Big Sisters. In 2013, we invested more than $21,000,000 in Success360. These programs and many other efforts have helped reduce the rate of underage tobacco use to the lowest level in a generation. According to government data, the rate of current use of any tobacco products among 12 to 17 year olds declined to 8.6% in 2012, down from 15.2% in 2002. So significant progress has been made, but there's still more to do.
Our approach to this issue informs our position on e vapor. We agree that the sale of all tobacco and nicotine containing products should have a minimum purchase age of 18 and we've encouraged FDA and the states to enact such a requirement. Last month, FDA announced it was extending its regulatory authority over e vapor and other tobacco products and issued proposed regulations including a minimum a minimum purchase age of 18. So we'll continue to support that provision as FDA develops its final rule. You'll find our positions and practices regarding these and other tobacco related issues on our websites.
PM USA's website, for example, acknowledges the overwhelming medical and scientific consensus that cigarette smoking is addictive and causes serious disease in smokers. The site and PM USA's direct mail communications highlight the online quit assist resource, which offers cessation information. We also respond to other societal expectations such as environmental stewardship. We've set long term goals to reduce our environmental impacts and are making good progress. For example, we helped restore 1,300,000,000 gallons of water in the Washington State River Basins near many of St.
Michel Wine State's vineyards. PM USA and USSTC are replacing their boilers to reduce greenhouse gas emissions and costs and PM USA signed up more than a 500,000 adult smokers to reduce cigarette litter. Our corporate responsibility efforts are more fully described at altria.com. Fundamentally, we welcome the opportunity to work on issues relevant to our businesses. While there is always more to do, 3rd parties continue to recognize Altria for this approach.
For example, Altria was named for the 2nd consecutive year to the Dow Jones Sustainability North America Index. Civic 50 selected Altria again as one of America's most community minded companies. DiversityInc. Magazine named Altria 1 of 25 Noteworthy Companies for Diversity and Corporate Responsibility Magazine has named Altria for 4 consecutive years to its 100 Best Corporate Citizens list. Our third strategy is satisfying adult consumers by converting our understanding of their preferences into better and more creative products.
Our tobacco companies maintain leading positions in cigarettes with Marlboro, in machine made large cigars with Black and Mild and in smokeless tobacco with Copenhagen and Skol. They are committed to responsibly marketing these products by building relationships between brands and their adult consumer unintended audiences. In 2013, PM USA continued to invest in the Marlboro brand architecture to maintain the brand's momentum. The brand architecture engages loyal and competitive adult smokers more effectively and is driving innovation in products, packaging, equity campaigns and promotions. For example, in 2013, Marlboro expanded Southern Cut in the Gold family and Marlboro Edge and the Marlboro Black family.
Improvements to marlboro.com expanded the brand's ability to deliver engaging content to age verified smokers 21 years of age and older through their mobile devices. Marlboro has grown its share of the U. S. Cigarette category consistently since 1954, achieving a 43.7% retail share in 2013. Today, Marlboro is larger than the next 10 cigarette brands combined.
Turning to machine made large cigars, Black and Mild is positioned as the best any day cigar adults enjoy for its smooth taste and pleasant aroma. Middleton expanded Black and Mild Jazz nationally in 2013 to help strengthen its position in the category. In Smokeless, Copenhagen has provided adult dippers moist smokeless tobacco satisfaction since 18/22. Copenhagen reinforces its strong equity through product quality, packaging, 1 to 1 adult communications and promotions like the Med of Copenhagen in which Copenhagen brings adult jippers together to work on community projects. USFTC also has focused on profitably expanding Copenhagen's appeal to more adult dippers including through product innovations like Copenhagen Southern Blend and Copenhagen Black.
The Skol brand celebrates its 80th anniversary this year. Skol offers a smooth, balanced smokeless tobacco experience. Skol is refreshing its value equation to strengthen its position. For instance, Skol is using the equity campaign of a pinch better. Over the past 3 years, U.
S. STC has grown Copenhagen and Skol's combined retail share by 2.8 points to 50.7% in 2013. Moving to our wine business, Ste. Michelle Wine Estates continues to earn critical acclaim, including nearly 2 portfolio in 2013. Beyond our core businesses, many adult tobacco consumers are interested in innovative tobacco alternatives.
We're focused on meeting these evolving preferences and developing potentially lower risk products, which we believe is a significant opportunity under FDA regulation. In 2012, we established Newmark to develop and commercialize innovative products for adult tobacco consumers. Last year Newmark made good progress towards its long term goal of category leadership in the growing U. S. E vapor category.
The company launched Mark 10 in Indiana and Arizona. Following these successful tests, Newmark begins its rolling national launch of Mark 10 in the coming weeks. Additionally, Newmark recently acquired the Green Smoke e vapor business, adding significant e vapor experience and complementing its product portfolio. Late last year, we announced agreements with Philip Morris International. Under these arrangements Altria licensed PMI exclusively to sell Newmark's e vapor products in international markets.
Altria received an exclusive U. S. License from PMI to commercialize 2 of the innovative heated tobacco products that it's developing and for which it's pursuing FDA approval as a modified risk tobacco product. We're supporting our innovative product strategies by constructively engaging with FDA and other stakeholders. We continue to believe that developing a comprehensive harm reduction framework is among the most meaningful actions FDA can take to reduce the health effects of tobacco use.
We are advocating for a science based regulatory system that timely evaluates products that are potentially less harmful than conventional cigarettes and encourages innovation and accurate scientifically grounded communication to adult consumers. Our approach to FDA regulation includes both compliance and advocacy. The agency has inspected all of our regulated companies' manufacturing facilities and audited numerous marketing programs in adult only facilities. In 2013, our tobacco companies made numerous presentations and submissions on proposed regulations and we'll continue to build a long term constructive relationship with the agency. In summary, we remain focused on maintaining a strong core business, while making disciplined investments in innovative products for the future.
In pursuing our mission Altria has consistently delivered value for you, our shareholders. We're pleased with our recent business performance and proud of our results. Turning to 2014, in the Q1, our businesses continue to make of special items increased 5.6 percent behind a strong performance from our smokeable product segment and growth in our smokeless product segment. Each of our reportable segments grew their adjusted operating company's income, income margins and grew retail share in line with their strategy. Further, we paid shareholders $957,000,000 in dividends in the first quarter and purchased 2.70 $2,000,000 in shares.
As of April 30, 2014 Altria maintained an attractive annualized dividend yield of 4 point 8%. So we're off to a good start against our full year objectives. Altria thus reaffirms that it expects 2014 full year adjusted diluted EPS to increase by 6% to 9% to a range of 2.5 $2 to $2.59 from an adjusted diluted base of $2.38 per share in 20.13. Now, we'll have an 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 compensation decisions for our named executive officers.
We believe that our executive compensation programs contribute to our business results and strong shareholder returns. As the proxy statement fully describes, we design these programs to align the interests of executives and shareholders, promote the company's mission and business strategies and reward the achievement of corporate and individual performance goals. At the 2013 shareholder meeting, more than 95% of the shares cast approved on an advisory basis, the compensation of our named executive officers. The Board recommends that shareholders approve on an advisory basis the compensation for our named executive officers as described in the compensation discussion and analysis section and compensation tables in the proxy statement. Those shareholders in the room wishing to vote on this matter should please do so now.
We'll now begin our question and answer session. To ask a question, please use one of the microphones in the aisles. We'll alternate between the microphones until our time is up or there are no further questions and we have ushers to assist you. We welcome this opportunity to hear from you, To provide everyone who wishes to ask a question and opportunity, each speaker should please limit his or her question to 2 minutes. And the speaker should please conclude his or her question.
Thank you all in advance for your cooperation. You may ask a follow-up question after all other shareholders have asked theirs. If there's not enough time for all the questions in today's meeting, please complete and return a comment card, which an usher can provide you and we'll respond to you promptly. And if you would please identify yourself and address your question to me. So let's begin please.
Good morning, Mr. Barrington and members of the Board. I am Edward Sweda, a shareholder from Massachusetts. 2 weeks ago, South Korea suffered a major legal setback when a panel of of Illinois 5th District Court of Appeal unanimously reinstated a $10,100,000,000 bench verdict in the light cigarette class action, the price case. And of course you did mention that during your presentation.
Back in 2005, the Illinois Supreme Court had overturned that verdict on what we now know is the false premise that the U. S. Federal Trade Commission had authorized the conduct that was the basis for the company's liability in that case. Subsequently, the FTC itself and also the U. S.
Supreme Court in the 2,008 ruling in the Goods case made that clear as well. So while of course the company will appeal that April 29 ruling by the 5th District Court of Appeal in Illinois. My question to you is, what steps has Altria taken to prepare to pay this multibillion dollar judgment if the appeal to the Illinois Supreme Court proves unsuccessful? Thank you.
Mr. Sweetie, thank you for your question. Welcome back to the meeting and welcome back to Richard. I didn't make reference to Myles Price in my remarks. And as you know the 10 Q contains a very comprehensive discussion of that.
I would just repeat 1 or 2 things I think for shareholders' context, which is it's worth remembering that the Illinois Supreme Court dismissed this case nearly 10 years ago. And for 10 years since, the plaintiffs have been trying to ask a court to try to revive it, which as you point out they were able to do a couple of weeks ago. That's why we've already taken an immediate appeal to the Illinois Supreme Court. And what we intend to do is to ask the Illinois Supreme Court to do again what it has already once done, which is to dismiss the dismiss the matter. We just with all respect to the court, we think the decision is not well taken and we're vigorously pursuing that appeal.
And again all that is laid out in the 10 Q. Thank you for your question and welcome back. Good morning Mr. Chairman. My name is Julian Martinez and I'm representing SARE Jobs for Progress National.
SARE was organized 50 years ago in Texas to assist Hispanic community, prepare for and find economic opportunities. CERA has expanded our services into many other areas and provide these services across our country serving over 1,300,000
people a year.
All 3 have been a long time partner with Cera and we'd like to take this opportunity to thank you for all you have done for Cher and the Hispanic community, especially your current participation in our 50th Annual Conference a couple of ago in Dallas as a Diamond co sponsor. Altria has been a leader in fostering relationships and services within the Hispanic community. Your vision has been a shining example to other corporations. Every so often, societies experience moments when change is right in plain sight. We had several such moments from early 2014 that several iconic American brands rolled out ads during the Super Bowl and Olympics that were aimed at once one voiceover call, the new us.
They do their market research and look at their numbers. They know how fast the country is changing. The nation's 16,000,000 Hispanic children will likely continue to be one of our fastest growing child populations. The U. S.
Census Bureau projects that the number of Hispanic children will rise to 24,000,000 by 2025. Hispanics accounts for more than 50,000,000 consumers who collectively process a possess $1,300,000,000,000 in buying time, a figure that makes them the world's 15th largest economy I'm sorry, 14th largest economy. We are glad that Altria has a vision to react to these changes. We also appreciate the diversity on your Board and we look forward to our continued relationship. Thank you.
Mr. Martinez, welcome to our meeting. You should come every year and get a ticket I hope. It's very nice things that you say about Altria. I have to tell you the pleasure is all ours.
You have a terrific organization. We're so proud to partner with you and others. And as you heard in my remarks this morning, we have major initiatives underway at the company to do even better in the area of diversity and inclusion Barrington. My
Mr. Barrington. My name is Michael Crosby. I'm a Capuchin Franciscan Friar from Milwaukee, Wisconsin and we are shareholders in Belle Trium. Some years ago, there was comments and data showing problems in the farms with farm workers, housing, pay, so on.
And out of that, the Farm Labor Practices Group was created. It's a multi stakeholder group that includes Alliance 1, Universal Leaf, the big 3 U. S. Tobacco companies and stakeholders like us and some Department of Labor reps and also a representative of farm workers. One of the issues that is coming up increasingly is the issue of child labor on non H2A farms.
And this just the fact that you got so many non H2A suppliers to the company can create problems around that issue of ensuring that there won't be child labor on the farms that are producing product for the company.
Thank you for your very thoughtful question. Welcome back to our meeting. It's always a pleasure to have you. I want to thank you again for your participation and leadership in the Farm Labor Practices Group. I think that there's been good progress there made on the important kinds of social issues that you're raising in the field.
As you know, we are a participant in the Farm Labor Practices Group. I think you also know that we were one of the leaders in developing the handbook that is used for our growers in the field about what we expect about conditions in the field. And one of those provisions is of course compliance with all laws. And there are laws in place that govern the use of child labor in the field, not just the tobacco field, of course, but in agriculture generally. The laws vary a bit by state to state and they vary a bit because you have to take into account certain tests that are done on family farms.
But we have provisions in our GAAP handbook on that and I think our representatives have made their views known on that issue at the Farm Labor Practices Group. So I've made a note of the issue that you've raised with us this morning and I'll make sure that the engagement with you continues on it.
Since nobody else is here, I'd like to comment on that. There is a difference between the family farms that have their own children and the non family farms that may be having children that are from undocumented parents. And it doesn't seem that there is effective monitoring of this. And there is going to be increasing data showing that that is a problem. And I think you know that data that is going to be showing that reality.
And it just seems what is needed is some concerted industry wide approach to this that isn't on the table yet. That for me, it would say, you just say to your suppliers, if you have child labor that is not your own family, that's another issue. But other labor, we won't buy product from you. It just seems it's got to be stronger than what I've seen on the table and I don't see movement that way.
Okay. Thank you. I understand the Chair of Good morning, Mr. Chairman. I'm Thad Jones.
I'm the Chairperson for the Virginia Board of Veterans Services. During your presentation, you mentioned the fact that Trio, you all are supporting veterans on the behalf of the 840,000 veterans that we have living in the Commonwealth, plus there will be others as a drawdown from Afghanistan and Iraq. Could you give us some examples as far as the programs and hiring practices that you'll have with the company? Sure. Thank you.
I'd like to begin by thanking you and all our veterans for your service. We owe you a great debt. Veterans are a really important initiative for us. One place to go see what we're doing on this is, if you can go to Can't Beat the Experience, it's a website that we use for recruiting. And one of the improvements that we've made is to have a page there that tells veterans about our programs for them, tells them we'd love to hire them and tells them how they can apply for work at Altria.
There are 3 videos there actually who are veterans who are currently employed by us. And trust me, what they say in those three videos is so much more eloquent than I could ever explain to you about our approach. But that's one place to go. We have outreach to the veteran communities. One thing that we're very proud of is we have Veterans Day observances actually at all of our facilities in which are very heavily attended by the way in which employees come to honor and respect veterans who are part of their family, veterans who are in our workplaces.
And one of the greatest things that I've seen lately at the company is most of our facilities have created what's called a Wall of Honor and we have photographs and data about the people either our own veterans or their family members so as to be a constant reminder of the debt we owe our veterans. So I think we're doing a lot better for veterans and I appreciate your coming and sharing that. If there's anything we can do further to work with you, please let us know. Thank you, sir. Yes, sir.
Thank you. So we have a question.
Yes. Again, Mr. Sweetie from Massachusetts. Just a brief follow-up. Obviously, I do understand and expect and realize that you expect to win the appeal to the Illinois Supreme Court.
But my question, which didn't get specifically addressed, is what steps if any have you taken to deal with the possibility that you might lose that appeal. And if you lose the appeal then the $10,100,000,000 judgment is going to have to be paid.
I understand the question. I think there's a long way to go before anybody talks about paying a judgment in that case. But you should know as is the case with most of our issues at Altria, we prepare for every contingency Mr. Sweden. So I think that's the way to think about that.
Thank you for your follow-up question. Are there any other questions? Okay. Well, thank you everyone for your questions. Everyone should please now return to their seats.
We'll now hear presentations on 2 shareholder proposals included in the proxy statement and then we'll vote on those proposals. We believe shareholders should vote against these proposals for the reasons set forth fully in the proxy statement. In the interest of time, I won't elaborate on our views today, but we encourage all shareholders to read the proposals and our responses. Proponents should please limit their presentation to 4 minutes or less and each speaker commenting on the proposal to 2 minutes or less. We'll devote no more than 8 minutes to each proposal.
And as before, our lighting system will help us. Thanks in advance for your cooperation. With the proponent for the proposal on health effects and cessation materials, please identify yourself and your proposal.
Mr. Barrington, again Michael Crosby, I'm here to propose the resolution on health effects and cessation materials for poor and less formally educated tobacco consumers that has been filed with Trinity Health, Catholic Health Initiatives, Sisters of St. Francis of Philadelphia, the Sisters of Charity of New Jersey, the Dominican Sisters of Belleville, New York. You will recall last year it happened that I read in the Richmond Post Dispatch the day of the annual meeting that 40% of the smokers of our product are poor people in Virginia. And I asked what the company was doing to try to mitigate that when people are addicted, poor, don't have many options and how to create programs to address that when people are addicted to the product as you indicated earlier in your remarks.
And you went back to child smoking and legal issues around that that you're complying with. And I came back to the new new companies selling in the United States. And since we filed the resolution, there was a front page article in The New York Times in new economic divide, the poor smoke more. The data that I had last year said 40%. In this, it says that researchers are showing that 55% of the nation's 42,000,000 smokers are poor people.
So we the majority of our smokers are poor and less educated people. And therefore, if you look at the fact that tobacco farm workers are undocumented and 70% of them are undocumented. So at the front end, we're making our profits on the back of exploitable people. At the end of the user product, we're making money on poor and less educated people. And so here we are getting all our financial returns, but it's on the backs of poor people, both at the front end in the production through undocking their farm workers and at the tail end by poor and less educated people.
So when we hear about all the financial successes and their earnings per share and the dividends, what does it really profit any of us to have all these strong financial returns if so much of our profits are being realized on the backs of exploitable farm workers and poor and less educated users of our product. It seems to me that the company as this New York Times article is saying has a joint obligation, as it says, for governments to try to address this in a creative way. It just seems to me when I look at the 2 big of the 4 values aligning with society and satisfying adult consumers that this would be part of our social obligation and social responsibility not to have so much of our products coming on the backs of poor people. Pope Francis said we have a culture of indifference that comes from materialism and consumerism that blocks out compassion. I'm asking you for the compassion to support this resolution to urge the company to do something about this and not continue the indifference that seems so evident because of the consumer choices that we benefit from.
So I urge support of this resolution.
Thank you. Are there any comments? Okay. Thank you. Those shareholders in the room wishing to vote on the proposal should please do so now.
Excuse me, sir.
Do you have a comment, Mr. Spriggs? Sorry, I didn't mean to cut you off. I didn't I thought you were asking another question.
No, this is regarding the resolution. Again, it's Edward Sweda from Massachusetts. I reiterate the support for the resolution and really emphasize how mild the proposal is. What of course, I read over the company's urging a vote against the proposal and noticed references to general population including many references to the website. Keep in mind still in this day and age not everyone has access to the Internet.
So what is being asked for in the proposal is to come up with some specific measures to deal with try to avert cessation for those poor and low income, lesser educated people who are struggling with their addiction. And in so many instances that addiction started when they themselves were children. And you can talk quite a bit about in general terms what the company has been doing both on the website and obviously the warning labels on PACS have been there for many years. But nonetheless these alarming statistics are there in terms of the great economic disparity in terms of the uses of our products. So what's being called for very simply is to address that issue and to try to come up with in collaboration with some mechanism whereby it would be easier and more efficient and effective for people who are smoking and who are addicted and want to overcome that addiction to do so.
So again, I reiterate support for this very modest shareholder proposal. Thank you.
Thank you for those comments. Are there any other comments on this proposal? Okay. Now those shareholders in the room wishing to vote on the proposal should please do so now. With the proponent for the second proposal on lobbying disclosure, please identify yourself and your proposal.
Again, Edward Sweda from Massachusetts. And fellow shareholders and members of the Board, I am here to support proposal number 5, which is asking our company to provide a report on state and federal lobbying expenditures, including indirect funding of lobbying through trade associations and support for tax exempt organizations that write model legislation. Transparency and accountability and corporate spending to influence public policy are truly in the best interest of Altria shareholders. While the company has spent $20,750,000 in 20 12 2013 on federal lobbying activities, according to federal disclosure reports, there is still incomplete disclosure about spending at the state level where such disclosure is not comprehensively required by law and where of course our company does do lobbying. And according to Follow the Money between the years 2000 and 320 12, Altria has had at least 633 different lobbyists in 49 states.
In talking with Altria representatives, Father Crosby, complimented them for now disclosing some of the trade association memberships that they have, which is certainly an improvement from last year, although it does remain unclear whether this is a comprehensive disclosure. As an example, Altria lists the involvement with the Chamber of Commerce, which is consistently the largest lobbying group in Washington. And in the past 2 years alone, the Chamber has spent more than $210,000,000 in lobbying. But the shareholders of Altria currently do not have any way of knowing how much of Altria's trade association contributions are in fact being used to lobby on its behalf. This proposal also asked for disclosure of payments to the American Legislative Exchange Council or ALEC, a nonprofit that convenes state lawmakers and corporate representatives to write and endorse model legislation.
And as we all know ALEC has attracted negative attention for its role in getting states to pass the so called stand your ground laws and that that was central in the tragic death of Trayvon Martin in Florida. And ALEC also has been working voter ID, what many would call voter suppression laws and also anti immigration bills. ALEC has an over 30 year history of involvement with the tobacco industry and Altria does serve on ALEC's Private Enterprise Board. So Altria does list its involvement with ALEC, but again the company's shareholders have no way of knowing how much Altria is contributing to it. Our company states that participation in the legislative, regulatory and political process at all levels of government is vital to our business and important
to our
shareholders. So the basis is that lobbying is done to promote the company's interest and ultimately therefore shareholder interest. Our request for disclosure in this proposal is simply asking Altria to show that its lobbying is being done for the company and the shareholders' best interest. Lobbying is shareholders' money that is being spent. So, does our company stand behind its spending?
Why should Altria intentionally keep us in the dark about how they are spending shareholder money? What does Altria have to hide? And I contend that these are very reasonable questions to ask. Publicly available data does not provide a complete picture of Altria's lobbying expenditures. Altria's shareholders need complete disclosure to be able to evaluate the use of corporate assets for lobbying and the risks that this spending poses to shareholders.
Therefore, we urge shareholders to vote in favor of this proposal. Thank you.
Thank you, Mr. Sweta. Are there any comments on this proposal?
Mr. Barrington, I'd like to just make a couple of comments. When we are talking about e vapor products, everybody is using the image, not everybody, so many people are using the image of the Wild West. This is so wide open because there aren't regulations except as we heard before related to youth, which is legal as it is already. When something is so wide open and we don't have the science as clearly as possible, There is a rush to get the product out.
And so there's going to be all sorts of lobbying on something we don't know that the consequences of. I was reading in the Business Day section in The New York Times right after the FDA ruling. For e cigarettes, the regulatory battle now begins. And there was an interesting point. It says, to settle lawsuits brought by state attorneys general, cigarette makers like Altria agreed to stop advertising on billboards in all forms of public transportation like buses.
Asked on Thursday, the day before the day of their FDA ruling, whether Altria which sells Marlboro cigarettes would support advertising restrictions on its e cigarettes that mirrored those for cigarettes, a company spokesman, David Sylvia, declined to comment. I think the company needs a position. If it would say, we will do this, if every other e cigarette maker, e vapor maker will do this and not have any more advertising, it would be an equal playing field. The Wild West wouldn't be wide open. It would be able to be monitored.
There's such a thing as in ethics called the precautionary principle that if there is data that indicates there could be serious harm using this product, but we're not clear, the precautionary principle demands that you say restrict whatever it is going to be to make it expanded. Father Cross, I want to interrupt, but could you I would ask support for this resolution because it's just too wide open.
Thank you very much for those comments. Would anyone else like to comment? Okay. Thank you. Those shareholders in the room wishing to vote on the proposal should please do so now.
All matters to be voted on have now been presented to the meeting. If you need to do so, please complete your proxy card, raise your hand and an usher will collect your card. Okay. Thank you. Since all shareholders have had the opportunity to vote, I declare the polls close.
The ushers should now have collected all the proxies and they're directed to deliver them to the inspectors for counting. While the inspectors count the proxies, I'll make a few concluding remarks. Altria has an outstanding track record of delivering consistent attractive results for shareholders. We remain confident that our strategies, our company's leading brands and our diverse business model will continue to create value for our shareholders into the future. None of this would be possible without our talented employees whose passion and efforts drive our success and I thank them for all that they do.
I also want to thank you, our shareholders for your continuing confidence in Altria. It is a privilege for me to serve as Chairman and CEO of this great company. Will the inspectors please deliver their report? And, Brent, will you please read the report? The inspectors of election has completed the preliminary count of the vote, which I have received.
The preliminary voting results are as follows. Shareholders have elected each of the nominees for Director with more than 91% 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 ending December 31, 2014 has been ratified with more than 99% of the shares voting in favor. Shareholders have approved on an advisory basis the compensation of the company's named shareholder proposal on health effects and cessation materials has been defeated. 96.28 percent of shares voting on the proposal voted against the proposal and 3.72% voted in favor.
The shareholder proposal on lobbying disclosure has been defeated. 93 point 5 4% of the shares voting on the proposal voted against the proposal and 6.46 of the inspectors of election, their certificate and the proxies with the records of the meeting. We'll post voting results on our website with press release following the meeting and we'll file final voting results in a Form 8 ks. Thank you everyone for coming today. Please travel safely.
On your way home, our meeting is adjourned.