Stockholder Proposals

(Continued)

Proposal 1 — Shareholder Say On Executive Pay

Chris Rossi, P.O. Box 249, Boonville, Calif. 95415, claiming beneficial ownership of 1,500 shares of
Company stock, sponsors this proposal.

RESOLVED, that shareholders of our company request our board of directors to adopt a policy that
provides shareholders the opportunity at each annual shareholder meeting to vote on an advisory
resolution, proposed by management, to ratify the compensation of the named executive officers
(“NEOs”) set forth in the proxy statement’s Summary Compensation Table (the “SCT”) and the
accompanying narrative disclosure of material factors provided to understand the SCT (but not the
Compensation Discussion and Analysis). The proposal submitted to shareholders should make clear
that the vote is non-binding and would not affect any compensation paid or awarded to any NEO.

Investors are increasingly concerned about mushrooming executive pay which often appears to be
insufficiently aligned with the creation of shareholder value. As a result, in 2007 shareholders filed
more than 60 “say on pay” resolutions with companies, averaging a 42% vote. In fact, seven
resolutions exceeded a majority vote. Aflac (AFL) decided to present such a resolution to a
shareholder vote in 2009. A bill to provide for annual advisory votes on executive pay passed in the
U.S. House of Representatives by a 2-to-1 margin.

The advantage of adopting this proposal should also be considered in the context of our company’s
overall corporate governance. For instance in 2007 the following governance status was reported (and certain concerns are noted):

• Total actual compensation for our CEO, Mr. Camilleri, was $42 million in 2006.
• The Corporate Library http://www.thecorporatelibrary.com, an independent investment research firm, believes that this executive pay level represents a significant risk for shareholder interests and is unjustified since total shareholder return relative to the S&P 500 was a modest 4% in 2006.
• Furthermore, Mr. Camilleri’s total annual compensation is among the very highest for firms of
  this size. This raises concerns over the alignment of executive interests with shareholder
  interests.
• The Corporate Library rated our company:
  • “D” in Corporate Governance.
  • “Very High Concern” in CEO Compensation.
  • “High Governance Risk Assessment”

Additionally:

• We had no Independent Chairman – Independent oversight concern.
• Plus our Lead Director, Mr. Huntley, age 77, had 31-years director tenure and also served on
  our audit and executive pay committees – Independence concern.
• Ms. Bailey, with 18-years director tenure, served on all 3 of our key Board Committees –
  Independence concern.
• We had no shareholder right to:
  1) Cumulative voting.
  2) To act by written consent.
  3) To call a special meeting.

The above status shows there is room for improvement and reinforces the reason to take one step
forward now and vote yes:

Shareholder Say on Executive Pay -
Yes on 1

The Board recommends a vote AGAINST this proposal.

The Board recommends that you vote against this proposal for a number of reasons.

First, as recognized by the SEC’s overhaul of executive compensation disclosures, executive compensation policies, practices and determinations have become increasingly complex and must take into account a number of factors. The complexity and breadth of information that boards of directors and compensation committees consider and evaluate in connection with executive compensation decisions is fundamentally at odds with the proponent’s suggestion of annually requesting a “For” or “Against” ratification on selected portions of our overall executive compensation. As a result, we believe that the proposal, even if implemented, would not provide our Board with meaningful input regarding our stockholders’ various positions on complex executive compensation matters. Instead, the proposal creates a risk that the vote results may send an inaccurate or incomplete message to our Board, rather than communicating the actual and numerous viewpoints of our stockholders on particular aspects of our executive compensation program.

Second, stockholders already have an effective means to communicate with the Board, the Presiding Director and the Compensation Committee to express any specific concerns with the Company’s executive compensation philosophy and programs, which have all been approved by our shareholders. The “Communications with the Board” section of this proxy statement on page 7, provides the details for how stockholders or other interested parties can provide meaningful feedback to the Compensation Committee. This direct communication process provides better and more useful information to the Committee than a simple tally of affirmative and negative votes could provide. Such a tally simply does not provide any meaningful information for the Committee to consider as it makes executive compensation decisions.

Third, the Compensation Committee that oversees our executive compensation programs and evaluates the performance of our senior executives is comprised solely of independent directors and has established a compensation philosophy of providing compensation programs that support our ability to attract, develop and retain world-class leaders, producing outstanding business performance and shareholder value. The Committee exercises great care and discipline in making executive compensation decisions. The Company and the Committee continually assess our executive compensation programs and make determinations that take into account the dynamic, global marketplace in which the Company competes for talent.

Fourth, adoption of the proposal could put our Company at a competitive disadvantage and negatively impact shareholder value by impeding our ability to recruit and retain critical personnel. Our Company operates in an intensely competitive and challenging recruiting environment and our success is closely correlated with the recruitment and retention of talented employees and a strong management team. A competitive compensation program is therefore essential to the Company’s long-term performance. Adoption of an advisory vote could lead to a perception among our employees and those for which we compete that compensation opportunities at our Company may be limited, especially as compared with opportunities at companies that have not adopted this practice, and may impede our ability to recruit and retain critical personnel. We currently are not aware of any competitor of ours that has adopted this practice.

In support of his proposal, the proponent cites a poor rating the Company has been given by The Corporate Library, one of several corporate governance ratings firms and the only one that gives the Company a low score. The proponent also inaccurately overstates the total compensation Mr. Camilleri received in 2006, despite the fact that his compensation was disclosed in our 2007 Proxy Statement. We also note that approximately 45% of the CEO’s compensation in 2006 was an incentive award under our 2004-2006 Long-Term Incentive Plan. During this period, our total stockholder return (“TSR”) increased 80.5%, significantly ahead of the three-year TSR of the S&P 500 (35.1%), Altria’s Peer Group (42.1%) and our Compensation Survey Group (35.9%).

The Board does not believe the advisory vote called for by the shareholder proposal will improve the
efficiency of the Company’s compensation programs or its disclosures regarding the compensation
programs, or otherwise is in the best interests of its shareholders. Instead of encouraging shareholders to take advantage of the Company’s current policies and procedures for communicating with the Board, the proposal advocates substituting a less effective mechanism, which fails to express the intent of the vote.

For these reasons, the Board recommends a vote AGAINST this proposal, and proxies received by the Company will be so voted unless stockholders specify a contrary choice in their proxies.