2013 Shareholder Meetings

2013 Shareholder Meetings -- Tobacco

May is the time for the shareholder meetings for Philip Morris International, Reynolds American, Lorillard, and Altria. Here will be reports on these meetings

Please note: Unlike Altria and Philip Morris International, Reynolds American does not provide an audio web cast of the annual shareholders meeting, and only two reporters were present. Neither mentioned the drama of the day.

Also, please note: No-Smoking is the rule at the Altria, PMI, and Reynolds American meetings.

Report entered May 14, 2013, on the May 9, 2013 meeting of RAI,
by Edward L. Sweda, Jr., Attorney, entitled: Orders, points of order, "out of order" and ordered out!
A photo credited to Mr. Sweda along with his report, and reports from earlier years, are available at the Public Health Advocacy Institute web site.

As the hour of 9:00 A.M. approached on May 9, 2013, the date of Reynolds American, Inc.’s (RAI) Annual Shareholders Meeting in Winston-Salem, North Carolina, the atmosphere seemed more contentious than in previous years. In addition to the tight security that included the wanding of shareholders for anything metallic in their possession, the removal of suit jackets and the emptying of all pockets, Reynolds American management had arranged for the presence of four uniformed Winston-Salem police officers inside the meeting room. That contingent of police supplemented several officers stationed outside the Reynolds American building at 401 North Main Street.

Running the meeting was the Chairman of RAI’s Board of Directors, Tom Wajnert, who pleasantly wished the audience a good morning and commented on the beautiful, sunny weather outside. Mr. Wajnert’s pleasant demeanor lasted less than a minute when, after addressing “points of information” by two shareholders who asked about the tardiness of the company’s response to written questions submitted at the 2012 Annual Shareholders Meeting, he declared that a third shareholder who began to raise a point of information was engaging in “silliness’ and was “out of order.”

After Mr. Wajnert proclaimed from the podium that he would “not tolerate disruptive behavior,” he turned the forum over to RAI President and Chief Executive Officer Daan Delen, who provided a report on the company’s activities in 2012. Delen trumpeted his company’s increasing endeavors in the field of tobacco harm reduction and boasted about RAI’s “innovation,” noting that Camel snus has 80% of the snus market. Delen also touted Zonnic, a nicotine gum, and Vuse, a brand of e-cigarettes whose distribution will be expanded in 2013.

In the presence of many shareholders who are concerned about the deplorable conditions under which migrant farm workers toil in tobacco growing fields, Delen praised the audit of North Carolina farms his company conducted since the 2012 Annual Shareholders Meeting and R.J. Reynolds’ “Good Manufacturing Practices” program, as well as its health and safety training DVDs. [Members of the Farm Labor Organizing Committee (FLOC) demonstrated outside the building throughout the morning.

Finally, Delen, mentioned the increased transparency of the company’s disclosure of its political contributions on its website. This decision had followed the submission by the Province of St. Joseph of the Capuchin Order in Milwaukee and Rev. Michael Crosby, of a proposed shareholder resolution calling on the company to do so. That proposal was withdrawn by the sponsor following RAI’s disclosure.

What Mr. Delen did not give shareholders – for the first time in this author’s lengthy history of attending tobacco company annual shareholders meetings – was any comment about any aspect of tobacco litigation. Delen’s silence on this issue came less than two months after the Florida Supreme Court resoundingly rejected the tobacco industry’s legal argument that the way Engle Progeny trials have been conducted since 2009 violates the industry’s due process rights.

During Senior Vice President Dara Folan’s report on an advisory vote for compensation to board members, a shareholder from the audience attempted to make a point of order. Mr. Wajnert immediately declared that shareholders should “stop playing a stand-up game,” and, without knowing the issue the shareholder was trying to raise, determined that person to be “out of order” and declared that he “won’t tolerate interruptions.”

After a supporter and a seconder of an AFL-CIO-backed shareholder resolution calling for the annual election of board members to replace the current three-year staggered terms made their presentations (the resolution was defeated), the next order of business was the question-and-answer session.

In its agenda distributed to attendees, RAI informed the audience that it had allotted all of 25 minutes to consider questions from shareholders. As soon as the meeting’s Q&A session was declared open, Dr. Sharon Brown, a grandmother and a shareholder from Pennsylvania, who was seated second from the aisle where the company’s sole microphone for audience members was situated, stood up and attempted to get to the microphone. Sitting to her right was a male employee of RAI who neither rose to allow Dr. Brown to get by, nor moved his legs sufficiently to allow her by. This author, who had been seated immediately to Dr. Brown’s left and was intending to follow her to the microphone, instead saw Dr. Brown fall to the floor after she attempted to get by the RAI employee. By the time Dr. Brown was able – without any assistance whatsoever from the RAI employee who was at the microphone or from the RAI employee who had been sitting to her right – to get back onto her feet, approximately fifteen people had formed a line leading to the lone microphone. The RAI employee at the microphone ordered Dr. Brown to go to the end of the line.

After the allotted 25 minutes had expired and with eleven people still standing in line to ask a question, Mr. Wajnert announced that he would take two final questions. After those two final questions had been asked and answered, Dr. Brown went to the microphone and, noting that the day before she had attended the Philip Morris International Annual Shareholders Meeting in New York City, a meeting where more than an hour was allotted for questions, asked that more time be allowed for shareholders’ questions.

Mr. Wajnert emphatically denied that request. When Dr. Brown then noted that she had been tripped while attempting to approach the microphone and that she had been similarly tripped at the company’s 2011 Annual Shareholders Meeting, Mr. Wajnert’s response was to call on security, including the Winston-Salem police officers, to remove her from the meeting room on the grounds that she was “out of order.”

The meeting was adjourned several minutes after the ejection of Dr. Sharon Brown.

Members of the Farm Labor Organizing Committee union and supporters from across the street picketed outside Reynolds American's corporate headquarters in downtown Winston-Salem today in an effort to pressure the tobacco giant into signing an agreement to guarantee collective bargaining rights for farmworkers.

About 125 farmworkers and supporters picketed outside Reynolds American headquarters on North Main Street, where the company was conducting its annual shareholders meeting this morning. Representing an array of progressive groups from North Carolina and beyond, supporters chanted, "Si se puede!" and carried small red flags bearing the farmworker union's emblem, along with signs with statements such as "Dios es un dios de justicia."

The union is seeking an agreement from Reynolds to ensure that freedom of association and collective bargaining rights for workers on contract farms that supply tobacco to the company, and to provide protection against human trafficking and squalid conditions in labor camps.

Union president Baldemar Velasquez emerged from the shareholder meeting in an upbeat mood at about 10:30 a.m., and said that for the second year in a row the tobacco company has "responded with a proactive dialogue."

Velasquez said he has recently met with Reynolds American CEO Dan Delen and plans to meet with Mark Holton, vice president and general counsel, tomorrow for more substantive talks.

"I told him the next steps can't be a cosmetic practice," Velasquez said. "I told him worker have to have representation rights and the ability to speak for themselves. At this company, they're the ones who make the decisions that allow the growers to sell their product. They need to guarantee the workers' rights at the bottom of the supply chain.

"Until this manufacturer follows the examples of manufacturers in Ohio such as Campbell Foods and Dean Foods, and corrects the inequities in their supply chain, there will not be justice," the union president continued. "Reynolds American could make a statement to the world through an agreement that they uphold workers rights."

David Howard, a spokesman for Reynolds American, rejected the idea that the company would consider signing any agreement to guarantee collective bargaining rights.

"I would say that there's no progress as it relates to RJ Reynolds," he said. "We can't enter into collective bargaining agreements with farmworkers. The farmworkers themselves, they already have the right of freedom of association; that's already addressed. If a worker on a farm wishes to join a union we have no qualms at all about that. Whether they want to be in a union or don't want to be in a union, that's their choice."

Howard said ... he believes the parties have made important progress despite differences on the company's role in any collective bargaining arrangements.

"Some of that progress includes the establishment of a multilateral council that RJR has participated in as well as FLOC, the growers association, other manufacturers and the [state] Department of Labor," Howard said. "These issues are agriculture wide and they're not specific to tobacco farms and they're not specific to North Carolina."

Howard said Reynolds American is announcing today that it will make a donation to Telemon, a Raleigh-based nonprofit that gives matching grants to farmers to improve farmworker housing.

Contingents from numerous labor and community groups, including the International Association of Machinists and Aerospace Workers, Occupy Winston-Salem, NC Waste Awareness and Reduction Network, the Beloved Community Center, Cakalak Thunder and Hope, made up the picket line.

"That's what solidarity is all about," said Joe Greaser a member of the Machinist union who traveled from Raleigh. "There's power when workers support each other."

It also was the sixth consecutive meeting in which more than 100 supporters of the Farm Labor Organizing Committee conducted a demonstration and street march to put pressure on Winston-Salem-based Reynolds.

According to the N.C. Growers Association, FLOC represents about 2,000 farm workers in North Carolina. FLOC has identified a number of problems at tobacco farms, including fatalities, sub-minimum wages, child labor, heat stroke, pesticide and nicotine poisoning, green tobacco sickness, and the lack of water and breaks during work.

At the 2012 meeting, Daniel Delen, Reynolds' chief executive, pledged to meet with FLOC representatives unilaterally and form a multilateral council that involves other tobacco manufacturers, growers, advocacy groups and labor officials. That pledge drew applause from many advocates, in large part because Reynolds tended in the past to not respond to protesters, saying the issues are the responsibilities of the farms.

Although there was no formal farm-labor shareholder proposal for the 2013 meeting, Delen dedicated much of his formal presentation Thursday to the issues. He said the council has met three times, along with meetings at a subcommittee level.

“In our opinion, these discussions have been constructive and candid,” Delen said of the direct talks with FLOC.

Baldemar Velasquez, FLOC’s president, said he provided Reynolds with a proposal in December that asks the company to address concerns “with human trafficking, squalid conditions in labor camps and fear of speaking up” with the farms in which they have contracts. Tom Wajnert, Reynolds’ chairman, said the company is discussing the proposal.

Delen said Reynolds has agreed to work with Telamon Corp., a nonprofit group based in Raleigh with a focus on labor conditions and low-income families, to improve housing at farms that used migrant labor. Telamon provides matching grants to farms for improving and repairing housing units.

“R.J. Reynolds plans to provide funds that will significantly expand its program to provide better housing to more migrant workers, regardless of whether or not an RAI operating company purchases tobacco from the grower that employs them,” Delen said. “Our hope is that this expansion of Telamon’s reach within the state will serve as a pilot program.”

Delen and Wajnert said all of the farms that Reynolds has contracts with have been subject to an audit by Underwriters Laboratories’ responsible sourcing unit in the past year. The auditors found that 95 percent of growers provided a safe environment for workers and 73 percent provide documented health and safety training to workers.

Velasquez said that while he appreciates how far Reynolds has moved in its willingness to discuss farm worker issues, he questions why executives won’t sign an agreement guaranteeing the right to organize and collectively bargain for all farm workers in their supply chain. He encourages Reynolds to write its support of farm-worker rights into its corporate social responsibility policy, similar to what Philip Morris USA and British American Tobacco have done in recent years.

“We are glad that the cries of the harvesters have reached the board of directors,” Velasquez said, paraphrasing James 5:4 from the New Testament. “We see the company taking some action on these elusive issues, but you can be in compliance with regulations and not be in compliance with the human condition.

“I invite the board to take off their corporate shoes, put on some jeans and come to the pits of the tobacco farms during stroke season (July and August) and tell me the growers are providing an appropriate environment for these workers. They’ll get a more honest understanding, rather than the answers you tend to get from farm workers knowing they are talking to company-contracted auditors.”

Velasquez and other advocates pushed Reynolds to take a corporate stance in support of immigration reform since 90 percent of tobacco farm workers are undocumented. Wajnert said Reynolds has no plans to take a stance.

“We believe Reynolds has the power to help some transformative change happen with farm worker rights, not just in the tobacco fields, but all fields,” Velasquez said.