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Stockholders Nix Proposals on Smoking, Salvadoran Coffee Boycott

April 25, 1991

RICHMOND, Va. (AP) _ Philip Morris Cos. shareholders Thursday overwhelmingly rejected proposals to study the impact of cigarette and beer advertising on children, to place warnings on cigarettes sold worldwide, and to boycott Salvadoran coffee beans.

Leaders of the New York-based consumer products company vowed to increase Philip Morris’ hold on markets worldwide.

Philip Morris also introduced chairman-to-be Michael A. Miles. Miles, chairman and chief executive officer of Kraft General Foods, will assume the same title Sept. 1 for the entire company. He replaces Hamish Maxwell, who reaches the company’s mandatory retirement age of 65 in August.

Philip Morris makes the world’s top-selling cigarette, Marlboro. Products made by its Kraft General Foods include Maxwell House coffee and Jell-O. Philip Morris also owns Miller Brewing.

Shareholder Bob Luick of Chicago asked Miles, a non-smoker and the company’s first chairman from outside the tobacco business, not to forget that tobacco made Philip Morris what it is.

″Philip Morris helped make Kraft,″ Luick said. ″Kraft did not make Philip Morris. I hope you don’t lose sight of that and let the tail wag the dog. There’s always been a tobacco man as chairman. I have my doubts.″

Miles responded: ″Please do not be concerned.″ He said after the meeting that his selection does not signal a change in the direction of the 144-year- old company.

The proposal that garnered the most ″yes″ votes - 6.68 percent - asked the board to establish a minimum standard worldwide for warnings on the health-hazards of smoking.

Father Michael Crosby of the Province of St. Joseph of the Capuchin Order in Milwaukee, a group of Franciscan Brothers, cited Philip Morris’ position that smoking should be a decision made by consenting adults. The United States is among countries that require such warnings.

″In Third World countries, where there is no information, there is no informed consent,″ Crosby said. ″People buy our products and they just don’t know the health risks.″

Ultimately, those people ″are going to be suing our company,″ he said.

In its statement recommending a ″no″ vote, Philip Morris said that countries that don’t require warning labels account for about 11 percent of its total cigarette sales. Placing warning labels on cigarettes in countries where they are not required is not useful, the company said.

Stronger cigarette sales helped boost the company’s profits 21.5 percent in the first quarter, to $942 million. Maxwell said 1990 earnings were up 20 percent as were net earnings per share, to $3.83.

Philip Morris’ acquisition last year of Jacobs Suchard gives the company more scale in Europe, where it is already the third largest food company, Miles said. ″It gives us greater ability to capitalize on the opening of Eastern Europe,″ he said.

In the last seven years, the company’s dependence on tobacco and domestic sales has decreased, Maxwell said. In 1984, tobacco accounted for 91 percent of operating income. That’s down to 64 percent now, he said. In 1984, 17 percent of operating income came from outside the United States. The proportion will approach 26 percent in 1991, he said.

″Our business is solid and its global significance is growing,″ Maxwell said. ″Our global expansion is already under way.″

The company also recommended voting against the other shareholder proposals.

The Sisters of Loretto in St. Louis proposed a boycott of Salvadoran coffee beans. The Rev. William H. Batterman, pastor of the Lutheran Church of Our Redeemer and representing the Evangelical Lutheran Church in America, spoke in favor of the resolution.

Buying Salvadoran coffee beans helps fund human rights abuses and violence, including the murders of six Jesuit priests, their cook and her daughter, Batterman argued. ″Sadly, that is the result of doing business with the Salvadoran government,″ he said.

That proposal failed, 97.6 percent to 2.4 percent.

A proposal to study the extent advertising of Miller products reaches people too young to drink failed, 96.9 percent to 3.1 percent.

The Evangelical Lutheran Church in America proposed a study of the impact Philip Morris’ promotions have on children’s decisions to smoke, especially Marlboros. That proposal failed, 96.4 percent to 3.6 percent.

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