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Tobacco Corp. Promotes Woman to CEO

November 9, 2000

LOUISVILLE, Ky. (AP) _ Marketing specialist Susan Ivey was promoted Thursday to president and chief executive of Brown & Williamson Tobacco Corp., apparently becoming the first woman to run a major U.S. tobacco company.

Ivey, 42, takes over as CEO of the nation’s third biggest cigarette maker from Nick Brookes, who headed the company during a turbulent time as cigarette makers were bombarded by lawsuits that accused them of concealing the dangers of smoking.

Brookes, 50, who has been CEO since 1995, is taking an executive post in London with British American Tobacco, B&W’s parent company. Brookes will be regional director for BAT’s America Pacific region, including the United States, Japan, Canada and Korea.

Ivey takes over as Brown & Williamson’s president from Earl Kohnhorst, 53, who will retire at year’s end. Both appointments are effective Jan. 1.

Ivey has headed marketing operations for the past two years at Brown & Williamson, whose main brands include Kool, Lucky Strike, GPC and Misty.

The company has been struggling as its share of the U.S. market has fallen to about 12 percent from 15 percent in the wake of the settlement that the major tobacco makers signed with the states in late 1998.

In addition to agreeing to pay $246 billion over 25 years to the states for treating sick smokers, the tobacco companies agreed to quit advertising on billboards and accepted other limitations on their ability to market cigarettes.

The company has also been trying to cut costs.

The promotion for Ivey, who began her career at Brown & Williamson in 1981, was one of several moves involving top B&W executives announced Thursday.

``This new organizational structure in conjunction with our cost reduction exercise will improve Brown & Williamson’s focus and competitiveness in the U.S. market,″ Ivey said through a spokesman. ``Additionally, with a primary focus on marketing and people, I am confident this organization will improve its position in the U.S. tobacco industry.″

Brown & Williamson spokesman Mark Smith said he believed that Ivey’s promotion marked the first time that a woman has become chief executive of a tobacco company.

Bill Pecoriello, a tobacco analyst for the investment firm of Sanford C. Bernstein, said it was the first time he knew of a woman becoming the top-ranking executive of a major U.S. tobacco company.

``She’s qualified to do it,″ Pecoriello said. ``The question is if there is going to be any change in strategy as they face a very difficult situation in the U.S. market.″

Ivey was unavailable for additional comment on her plans on Thursday.

She will be taking over as the company reduces its work force as part of an effort to cut costs in the face of its shrinking market share.

Smith said Thursday that 384 employees accepted the company’s recent offer to take early retirement, including 68 workers at the Louisville headquarters. The others work at a B&W manufacturing plant in Macon, Ga., or work in sales across the country, Smith said.

The early retirements will begin early next year, he said. The company had made the offer to about 500 employees in September.

The company is also trying to shed 300 jobs at the Macon plant, offering severance packages to hourly workers.

Brown & Williamson plans to announce additional cutbacks in its work force next month, Smith said. ``There will definitely be some. We don’t know how many,″ he said.

Smith said the company is looking for ways to reduce costs and improve efficiency. Brown & Williamson currently employs 6,000 people nationwide.

Pecoriello said the biggest problem for B&W is growing competition in discount brands, which account for a large portion of B&W’s revenue.

Smith said Brown & Williamson has been harder hit by the tobacco settlement with states than its main competitors, Philip Morris and R.J. Reynolds Tobacco.

The industry raised cigarette prices to offset settlement costs.

Smith said some customers responded to price hikes by switching from Brown & Williamson discount brands to less-expensive products by small manufacturers not involved in the national settlement.

As part of the corporate shakeup, Carl Schoenbachler will leave as executive vice president and chief financial officer for another senior executive position.

The new chief financial officer will be Jeff Eckmann, who had been vice president and controller.

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On the Net:

Brown & Williamson site: http://www.brownandwilliamson.com

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