Good morning, everyone. Welcome to Altria Group Inc.'s 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 Grant 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, 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, then we'll vote on two shareholder proposals. Grant will then report on the preliminary voting results, we'll adjourn.
Thank you, Marty. I present to the meeting, 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 31st, 2013. The holders of record of common stock at the close of business on March 24th, 2014, are entitled to vote at this meeting. 86% of Altria's common stock is represented here today, a quorum is present for the transaction of business.
Thanks, Grant. 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. Denise, please announce those nominees' names appearing in the proxy statement.
The nominees are Gerald L. Baliles, Martin J. Barrington, John T. Casteen III, Dinyar S. Devitre, Thomas F. Farrell II, Thomas W. Jones, Debra J. Kelly-Ennis, W. Leo Kiely III, Kathryn B. McQuade, George Muñoz, and Nabil Y. Sakkab, 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, the nominations 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. Ken Lenolen from PricewaterhouseCoopers is with us today. Those 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 four 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 & Mild, Copenhagen, and Skoal, continued to hold the leading positions in the largest and most profitable U.S. tobacco categories. In innovative products, Nu Mark took important steps on its path towards leadership in the e-vapor category with the launch of MarkTen and its recent acquisition of Green Smoke, and we're pleased to welcome the Green Smoke team to our family. Altria's smokable product segment grew full-year adjusted operating company's income by 2.4% to $6.4 billion.
The smokeless product segment grew adjusted operating company's income by 7% to over $1 billion, and the wine segment grew adjusted operating company's income by 13.5% to $118 million. Each of the segments expanded their adjusted operating company's income margins, in part due to our focus on productivity. In fact, we reached our goal in 2013 of achieving $400 million in annualized savings versus previously planned spending. We also provided significant cash returns to shareholders, paying more than $3.6 billion 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% in 2013, which outpaced the S&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 to recognize an independent medical monitoring claim against PM USA. We continue to face substantial litigation challenges as we have for many years. Almost 10 years ago, the Illinois Supreme Court dismissed a $10.1 billion verdict against PM USA in a lights case known as Price. 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 first quarter Form 10-Q filing. Our goal remains to protect the interests 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%-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 7.8% and grew our dividend at a compounded annual rate of 8.1% to $1.92 per share. During that period, we paid shareholders $10.2 billion in dividends and repurchased approximately $3 billion of shares. Our earnings performance and strong dividend contributed to total shareholder return of 83% from 2011 through 2013, outperforming the S&P 500's return of 57%. To create value for shareholders, we focus on the four 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 three-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. 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. 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 women's 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 and challenged to contribute. Investing in leadership also includes our communities. During the last 10 years, we've contributed nearly $1 billion in cash and in-kind contributions and partnered with hundreds of nonprofit 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 million 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 million to approximately 140 grantees last year. Altria matched more than $1.2 million 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. 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 our 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 We Card. We invest through our Success 360 initiative, which helps organizations better deliver programs to middle school kids so they can lead healthy lives and avoid using tobacco.
Success 360 partners include leading organizations such as Boys & Girls Club and Big Brothers Big Sisters. In 2013, we invested more than $21 million in Success 360. 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. 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 purchase age of 18. 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 1.3 billion gallons of water in the Washington State river basins near many of Ste. Michelle Wine Estates' vineyards.
PM USA and USSTC are replacing their boilers to reduce greenhouse gas emissions and costs, and PM USA signed up more than a half million 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's always more to do, third parties continue to recognize Altria for this approach. For example, Altria was named for the second consecutive year to the Dow Jones Sustainability North America Index. The Civic 50 selected Altria again as one of America's most community-minded companies. DiversityInc Magazine named Altria one of 25 noteworthy companies for diversity, and Corporate Responsibility Magazine has named Altria for four 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 & Mild, and in smokeless tobacco with Copenhagen and Skoal. They are committed to responsibly marketing these products by building relationships between brands and their adult consumer audiences while taking steps designed to limit reach to 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 in the Marlboro Black family. Improvements to marlboro.com expanded the brand's ability to deliver engaging content directly 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 & Mild is positioned as the best any day cigar adults enjoy for its smooth taste and pleasant aroma. John Middleton Co. expanded Black & 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 1822. Copenhagen reinforces its strong equity through product quality, packaging, one-to-one adult communications, and promotions like The Men of Copenhagen, in which Copenhagen brings adult dippers together to work on community projects. U.S. Smokeless Tobacco Company 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 Skoal brand celebrates its 80th anniversary this year.
Skoal offers a smooth, balanced smokeless tobacco experience. Skoal is refreshing its value equation to strengthen its position. For instance, Skoal is using the equity campaign of A Pinch Better. Over the past three years, U.S. Smokeless Tobacco Company has grown Copenhagen and Skoal'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 225 90+ ratings across its 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 Nu Mark to develop and commercialize innovative products for adult tobacco consumers. Last year, Nu Mark made good progress towards its long-term goal of category leadership in the growing U.S. e-vapor category.
The company launched MarkTen in Indiana and Arizona. Following these successful tests, Nu Mark begins its rolling national launch of MarkTen in the coming weeks. Additionally, Nu Mark 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 Philip Morris International exclusively to sell Nu Mark's e-vapor products in international markets. Altria received an exclusive U.S. license from Philip Morris International to commercialize two 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 will 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 first quarter, our businesses continued to make excellent progress.
Altria's 2014 first quarter adjusted diluted EPS, which excludes the impact of special items, increased 5.6% behind a strong performance from our smokable product segment and growth in our smokeless product segment. Each of our reportable segments grew their adjusted operating company's income margins, and grew retail share in line with their strategy. Further, we paid shareholders $957 million in dividends in the first quarter and purchased $272 million in shares. As of April 30th, 2014, Altria maintained an attractive annualized dividend yield of 4.8%. We're off to a good start against our full year objectives. Altria thus reaffirms that it expects its 2014 full year adjusted diluted EPS to increase by 6%-9% to a range of $2.52-$2.59 from an adjusted diluted base of $2.38 per share in 2013. 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 the 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 an opportunity, each speaker should please limit his or her question to two minutes. Our lighting system will help guide us. When a speaker has 30 seconds remaining, the light in front of the stage will turn to yellow, and when the speaker's time has expired, the light will turn red, 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. If you would please identify yourself and address your question to me. Let's begin, please.
Good morning, Mr. Barrington and members of the board. I am Edward Sweda, a shareholder from Massachusetts. Two weeks ago, of course, Altria suffered a major legal setback when a panel of the Illinois Fifth District Appellate Court unanimously reinstated a $10.1 billion bench verdict in the light cigarette class action, the Price case. 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 2008 ruling in the Good case, made that clear as well.
While, of course, the company will appeal that April 29th ruling by the Fifth District Appellate Court in Illinois, my question to you is, what steps has Altria taken to prepare to pay this multi-billion dollar judgment if the appeal to the Illinois Supreme Court proves unsuccessful? Thank you.
Mr. Sweda, thank you for your question. Welcome back to the meeting. Welcome back to Richmond. I did make reference to Price in my remarks, and as you know, the 10-Q contains a very comprehensive discussion of that. I would just repeat one or two things, I think, for shareholders' context, which is it's worth remembering that the Illinois Supreme Court dismissed this case nearly 10 years ago. 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. 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 matter.
With all respect to the court, we think the decision is not well taken, we're vigorously pursuing that appeal. Again, all that is laid out in the 10-Q. Thank you for your question, and welcome back.
Good morning, Mr. Chairman.
Morning.
My name is Julian Martinez, and I'm representing SER Jobs for Progress National. SER was organized 50 years ago in Texas to assist the Hispanic community prepare for and find economic opportunities. SER has expanded our services into many other areas and provide these services across our country, serving over 1.3 million people a year. Altria has been a long-time partner with SER, and we would like to take this opportunity to thank you for all you have done for SER and the Hispanic community, especially your current participation in our 50th annual conference a couple of weeks 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 aha moments when change is right in plain sight.
We had several such moments in early 2014 as several iconic American brands rolled out ads during the Super Bowl and the Olympics that were aimed at what one voiceover called 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 million 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 million by 2025. Hispanics account for more than 50 million consumers who collectively possess $1.3 trillion in buying power, a figure that makes them the world's 14th largest economy. We are glad that Altria has the vision to react to these changes. We also appreciate the diversity on your board. We look forward to our continuing 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. 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 with organizations like yours. Thank you for your partnership. We have a question here. Morning.
Morning, Mr. Barrington. My name is Michael Crosby. I'm a Capuchin Franciscan friar from Milwaukee, Wisconsin, and we are shareholders in Altria. Some years ago, there was comments and data showing problems in the farms with farm workers, housing, pay, so on. Out of that, the Farm Labor Practices Group was created. It's a multi-stakeholder group that includes Alliance One, Universal Leaf, the big three 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. Just the fact that you got so many non-H2A suppliers to the company can create problems in quality control and issues like this.
I'm wondering, what can the company do 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. One of those provisions is, of course, compliance with all laws. There are laws in place that govern the use of child labor in the field, not just the tobacco field, of course, but in agricultural generally.
The laws vary a bit by state to state, and they vary a bit because you have to take into account certain tasks that are done on family farms. We have provisions in our GAP handbook on that, and I think our representatives have made their views known on that issue at the Farm Labor Practices Group. 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. There is going to be increasing data showing that that is a problem. I think you know that data that is going to be showing that reality. It just seems what is needed is some concerted industry-wide approach to this that isn't on the table yet. That for me, I would say, you just say to your suppliers, "If you have child labor that is not your own family, that's another issue.
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 distinction you're making, and I understand the point of view you're putting forth. I've made a note of it, and we'll make sure that we engage on it. Thank you.
Good morning, Mr. Chairman. I'm Fab Jones. I'm the chairperson for the Virginia Board of Veterans Services. During your presentation, you mentioned the fact that Altria, you all are supporting veterans on 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 all have with the company?
Sure. 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. 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 three videos there, actually, who are veterans who are currently employed by us. Trust me, what they say in those three videos is so much more eloquent than I could ever explain to you about our approach. 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. 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. 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. We have a question.
Yes. Again, Mr. Sweda, 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. 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? If you lose the appeal, then the $10.1 billion 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. You should know, as is the case with most of our issues at Altria, we prepare for every contingency, Mr. Sweda. 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 two shareholder proposals included in the proxy statement, 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, we encourage all shareholders to read the proposals and our responses.
Proponents should please limit their presentation to four minutes or less, each speaker commenting on the proposal to two minutes or less. We'll devote no more than eight minutes to each proposal. As before, our lighting system will help us. Thanks in advance for your cooperation. Would 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 Saint Elizabeth, and the Dominican Sisters of Blauvelt, New York. You will recall last year it happened that I read in the Richmond Times-Dispatch the day of the annual meeting that 40% of the smokers of our product are poor people in Virginia. I asked what the company was doing to try to mitigate that when people are addicted, poor, don't have many options, and the need to have some creative marketing that informs people of what they can do and how to create programs to address that when people are addicted to the product, as you indicated earlier in your remarks.
You went back to child smoking and legal issues around that that you're complying with. I came back to the microphone and said, "You haven't answered the question." Because the question wasn't answered last year, the resolution was filed with you and with the other two companies selling in the U.S. 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 million smokers are poor people. The majority of our smokers are poor and less educated people. Therefore, if you look at the fact that tobacco farm workers are undocumented, 70% of them are undocumented.
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. 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 undocumented farm workers and at the tail end by poor and less educated people. 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 The 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 two big of the four 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. 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.
Did you have a comment, Mr. Sweda?
Well, I'm here to second.
Sorry. I didn't mean to cut you off. I thought you were asking another question.
No, this is regarding the resolution.
Okay.
Again, Edward Sweda from Massachusetts. I reiterate the support for the resolution and really emphasize how mild the proposal is. Of course, I read over the company's urging a vote against the proposal and noticed references to the general population, including many references to the website. Keep in mind, still, in this day and age, not everyone has access to the internet. What is being asked for in the proposal is to come up with some specific measures to deal with, try to urge cessation for those poor, low-income, lesser-educated people who are struggling with their addiction. In so many instances, that addiction started when they themselves were children. 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 packs have been there for many years.
Nonetheless, these alarming statistics are there in terms of the great economic disparity in terms of the users of our product. 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 poor people who are smoking and who are addicted and want to overcome that addiction to do 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. Would the proponent for the second proposal on lobbying disclosure please identify yourself and your proposal?
Again, Edward Sweda from Massachusetts. Fellow shareholders and members of the board, I am here to support proposal number five, 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 in corporate spending to influence public policy are truly in the best interest of Altria shareholders. While the company has spent $20.75 million in 2012 and 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. According to FollowTheMoney.org, between the years 2003 and 2012, 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 involvement with the Chamber of Commerce, which is consistently the largest lobbying group in Washington. In the past two years alone, the Chamber has spent more than $210 million 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 asks 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.
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 was central in the tragic death of Trayvon Martin down in Florida. ALEC also has been working on voter ID, and 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. Altria does list its involvement with ALEC, but again, the company shareholders have no way of knowing how much Altria is contributing to it. Our company states that participation in the legislative, regulatory, and political processes at all levels of government is vital to our business and important to our shareholders. The basis is that lobbying is done to promote the company's interests and ultimately, therefore, shareholder interests.
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 interests. Lobbying is shareholders' money that is being spent. 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?
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 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. Sweda. Are there any comments on this proposal?
Mr. Barrington, I'd like to just make a couple 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, we don't have the science as clearly as possible, there's a rush to get the product out. There's going to be all sorts of lobbying on something we don't know 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. 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 and all forms of public transportation like buses. Asked on Thursday, the day before the day of the 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.
Michael Crosby , I don't want to interrupt, but could you please.
I would ask for 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 closed. 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? Grant, 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 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 executive officers with more than 93% of the shares voting in favor. The shareholder proposal on health effects and cessation materials has been defeated. 96.28% of the shares voting on the proposal voted against the proposal, and 3.72% voted in favor. The shareholder proposal on lobbying disclosure has been defeated.
93.54% of the shares voting on the proposal voted against the proposal, and 6.46% voted in favor. That concludes the report.
Thank you, Grant. Please file the inspector's report, the oath 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 a press release following the meeting, and we'll file final voting results in a Form 8-K. Thank you, everyone, for coming today. Please travel safely on your way home. Our meeting is adjourned.