(Continued)
Proposal 5 – "Two Cigarette" Approach to Marketing
The Sinsinawa Dominicans, 585 County Road Z, Sinsinawa, WI 53824, claiming beneficial ownership of 75 shares of common stock, submitted the proposal set forth below. On October 22, 2007 the following op-ed piece, The Two Cigarette Society appeared in The New York Times. It was written by David G. Adams, a lawyer who was the director of the policy staff at the Food and Drug Administration from 1992 to 1994. WHEN it comes to the health of our children, two cigarettes may be better than one. Young smokers who begin their habit with nicotine-laden cigarettes need a cigarette that will not leave them to later fight the ravages of addiction. Experts tell us that teenagers often begin smoking to copy their peers and others whom they see smoking. As adults, however, they continue smoking largely because of the addictive qualities of nicotine. (Ninety percent of smokers regret having begun smoking and most make efforts to stop.) This means that in the absence of addictive levels of nicotine in their cigarettes, most young smokers would ultimately quit. A two-cigarette strategy would prohibit young smokers from buying addictive cigarettes. The tobacco industry is capable of producing cigarettes that are virtually free of nicotine, and regulators could develop clear standards for non-addictive cigarettes. (Disclosure: My law firm represents tobacco companies, but I have recused myself from that work.) The age to purchase addictive cigarettes might be set at 21. Better yet, sales of addictive cigarettes could be restricted to individuals born 19 or more years before the two-cigarette strategy was put into effect. Under this approach, 18-year-olds who start smoking non-addictive cigarettes would be prohibited from switching to addictive cigarettes even after they turned 21. In addition, a higher federal excise tax on addictive cigarettes than on non-addictive cigarettes would create a financial incentive for smokers of all ages, including scofflaw adolescents, to select non-addictive cigarettes. Granted, a two-cigarette policy would not be a panacea. It would not end smoking, it would not give us safer cigarettes, and it would not undo the addiction that grips the current generation of smokers. The Institute of Medicine, a unit of the National Academy of Sciences, has called for a gradual reduction of the nicotine content in all cigarettes to non-addictive levels (an approach I proposed 13 years ago when I worked at the Food and Drug Administration). But it would take decades to eliminate addictive cigarettes from the market. While a worthy strategy for eliminating addiction many years from now, a gradual approach would still permit the addiction of the next generation of smokers. Decades of addiction will mean disease and death for millions of our children. If we can prevent addiction at the outset, we shouldn’t waste another day. This resolution’s shareholders are against smoking itself because of its health-hazards. We also believe a lesser evil is better than a greater evil. Hence the following: RESOLVED: shareholders request the Board of Directors to begin immediately to find ways to implement a “two cigarette” approach globally with all its various cigarette brands and to report such to the shareholder and its publics within six months of the annual meeting.
The Board recommends a vote AGAINST this proposal.
The Company shares the proponents’ desire to prevent youth smoking and reduce the harm caused by tobacco use. However, we believe that proposals such as that offered by Mr. Adams in his New York Times op-ed and set forth in this shareholder proposal can only be addressed within the context of a comprehensive regulatory framework that applies uniformly and equally to all manufacturers. PM USA supports tough but reasonable federal regulation of cigarettes, including measures to reduce smoking by minors, and believes that such regulation should address the manufacture, sale, marketing and use of tobacco products. PM USA has been engaged in advancing its views on this topic. However, in contrast to proposals for federal regulation, the proposal put forward by the proponents asks the Company to unilaterally implement product standards regarding “non-addictive cigarettes.” Importantly, however, the op-ed article quoted by the proponents does not envision unilateral implementation by one company, but rather endorses a regulatory structure applicable to all companies in which government regulators would develop standards for “non-addictive cigarettes,” age restrictions on purchase of certain cigarettes, and higher federal excise taxes. A comprehensive regulatory approach at the national level, in contrast to the unilateral approach urged by the proponents, is the only way to ensure that all manufacturers — foreign or domestic, large or small — are required to comply with uniform standards that are established by public health authorities. The action requested by the proponents is not an effective approach to either youth smoking prevention or reducing the harm tobacco use causes. Therefore, the Board urges stockholders to vote AGAINST this proposal, and proxies received by the Company will be so voted unless stockholders specify a contrary choice in their proxies. |