Philip Morris shareholders walk out of talks with board

September 22, 1994|By New York Times News Service

NEW YORK -- Several members of a group of Philip Morris' largest shareholders walked out of a meeting with company board members yesterday, complaining that the company did not take seriously their concerns about splitting its tobacco and nontobacco operations.

"Philip Morris pledged to us that we could have a healthy give and take with their outside directors," said Mark Green, the New York City public advocate, who attended the meeting as a trustee of the New York City Employee Retirement System. "But when we walked into the room, it was a teacher-student situation, with management on a stage."

The unusual, long-awaited meeting at the corporate headquarters of the Philip Morris Cos. in Manhattan yesterday had originally been scheduled for July 13.

But the institutional investors, mainly representing pension funds, boycotted that meeting because outside directors, principally Hamish Maxwell, the company's former chairman, were not scheduled to attend.

Some of the pension-fund executives felt that last week's plan by Kohlberg, Kravis, Roberts & Co. to shed a major portion of its stock in RJR Nabisco Holdings had put the idea of a Philip Morris split-up back on the table.

Some institutional shareholders have been uneasy about the company's potential legal liability for the health problems of smokers, and they say that such problems have depressed the share price of Philip Morris.

Seven company directors were seated on a stage for the meeting. The pension-fund representatives walked out of the meeting after a presentation from R. William Murray, chairman of Philip Morris, which several of the investors described as "a monologue."

"They told us we'd have 45 minutes on the issues and then there would be a cocktail party," said Jon Lukomnik, the deputy comptroller in charge of the $51 billion New York City pension funds, which own 5.7 million shares of Philip Morris. "I guess they wanted everyone to go away drunk, fat and happy, but we wanted a meeting of substance."

A spokesman for Philip Morris, Nicholas M. Rolli, said that "like the others who chose to stay, those who walked out could have asked any question they wanted to ask."

Those who walked out said that the "majority" of investors had left. But a Philip Morris spokesman said only 10 of the 30 invited institutional investors walked out.

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