(Continued)
Elements of Compensation and Benefits for 2007
Our compensation and benefit programs are designed to deliver total compensation upon attainment of targeted goals at levels between the 50th and the 75th percentiles of compensation paid to executives in the Compensation Survey Group, described below. This approach has been critical to attracting and retaining employees and has contributed to low employee turnover across all of our businesses. Actual awards can exceed the 75th percentile when business and individual performance exceed targeted goals. A description of each element of the compensation and benefit program in 2007 follows. - Base Salary - Annual Incentives - Long-Term Incentives - 2007-2009 Long-Term Performance Incentive Awards
Base Salary
Several factors are considered when setting base salaries, including each executive’s individual performance rating, level of responsibility, prior experience, and the relationship between base salaries paid within our businesses. In addition, as appropriate, the Compensation Committee compares the base salaries paid to our executive officers to the base salaries paid to executive officers holding comparable positions at other companies in the Compensation Survey Group. Numerical weights are not assigned to any factor. The base salary ranges for salary band A through salary band D executives who were based, for purposes of pay, in the United States were as follows: 
The base salary ranges for executives who were based, for purposes of pay, outside of the United States are determined based on local market competitive practices. Mr. Calantzopoulos, who was in salary band B, was the only named executive officer based outside of the United States in 2007 for purposes of pay, and he is located in Switzerland. The 2007 base salary range for salary band B in Switzerland is below: 
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The midpoints of salary band B is equivalent to $1,202,302 based on the average conversion rate for 2007 of $1=1.1987 CHF. However, as noted above, this salary range is based on local market competitive practices and is not directly comparable to the U.S. dollar salary range used for those executives based for purposes of pay in the United States. |
See “Compensation and Benefit Changes for 2008" for the base salary ranges in effect for 2008. 
Annual Incentives
The Annual Incentive Award program is a cash-based, pay-for-performance plan for management employees worldwide, including our named executive officers. We believe that the use of cash (as opposed to equity) for annual incentives is consistent with competitive practice among companies within the Compensation Survey Group. Each participant has an award target expressed as a percentage of base salary. The target award is paid when both business and individual results are achieved at planned levels of performance. Actual awards paid vary based on an assessment of actual business performance and individual performance. In December of each year, the Compensation Committee assesses our overall corporate performance, as well as the performance of each of our businesses for that year. Based on its assessment, the Compensation Committee assigns business ratings that are used to determine the size of the incentive award pool. Businesses that perform at planned levels of performance received a rating of 100. The ratings reflecting the business performance assessment can range from 0 to 130. Business ratings determined for 2007 are discussed below under “2007 Executive Compensation Decisions.” Each participant is rated on a five-point scale with only the top three points (“Good,” “Exceeds” and “Spectacular”) generally eligible to receive an annual incentive award. Individuals who achieve their annual objectives receive a rating of “Good.” To assure a disciplined, fair and equitable assessment of individual performance, general guidelines have been set by the Compensation Committee whereby approximately 50% of the eligible population receives a rating of “Good” or less, 40% receives a rating of “Exceeds” and 10% receives a rating of “Spectacular.” Annual incentive target award ranges for salary bands A through D for 2007 were as follows: 2007 Annual Incentive Target Award Ranges(1)
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Annual incentive target award ranges are stated as a percentage of base salary and assume that business results are at planned levels of performance (i.e., at a rating of 100). These are target ranges only. There is no guarantee that any amount will be paid. |
Long-Term Incentives
We award long-term incentives to senior executives through a combination of cash-based long-term performance incentive awards and either restricted or deferred stock. The mix of cash-based incentives and equity awards varies based on salary band. Consistent with our compensation objectives, the mix has been intended primarily to focus executives on total stockholder return, or TSR, long-term operational performance and progress against strategic and societal objectives while remaining sensitive to stockholder dilution concerns. We believe that long-term incentives play a key role in attracting and retaining executives. The long-term incentives are based on the performance of Altria Group, Inc. in total as opposed to the performance of each operating company.
2007-2009 Long-Term Performance Incentive Awards
The Long-Term Performance Incentive Plan, or LTIP, for Altria executives in salary bands A through F, including our named executive officers, began its most recent performance cycle on January 1, 2007. Awards under this plan are based primarily on long-term growth in total stockholder return, an assessment of progress against our societal alignment objectives and, to a lesser extent, our strategic performance. We generally use three-year long-term performance cycles that are end-to-end and do not overlap. The three-year cycle is consistent with our planning cycle, and we have determined that utilizing cycles that do not overlap provides clarity for participants and stockholders. Awards are payable to executives in cash and are based on an assessment of overall corporate and individual performance. Each participant has an award target based on their salary band, normally expressed as a percentage of cumulative year-end base salaries over the three-year cycle. At the conclusion of each performance cycle, the Compensation Committee considers our TSR results over this time period and qualitatively assesses our performance against the strategic measures communicated to participants at the commencement of the performance cycle. Based on its assessment, the Compensation Committee assigns a rating used to determine the size of the LTIP award pool. The specific LTIP ratings can range from 0 to 130. As noted below, the 2007- 2009 performance cycle was terminated on December 31, 2007. See “Compensation and Benefits Changes for 2008” for modifications to the LTIP measures for 2008. LTIP award targets established for salary bands A through D for the 2007-2009 performance cycle were as follows: 2007 Long-Term Performance Incentive Award Ranges(1)
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LTIP award ranges are stated as a percentage of cumulative year-end base salaries over the three-year performance cycle, and assume that results of our businesses are at planned levels of performance reflected by an assigned performance rating of 100. These are target ranges only. There is no guarantee that any award will be granted. |
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