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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant Filed by a party other than the Registrant      

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
  Definitive Additional Materials
Soliciting Material under §240.14a-12

Altria Group, Inc.

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY):
  No fee required
Fee paid previously with preliminary materials
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11


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2022

Notice of Annual Meeting
of Shareholders and
Proxy Statement


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Our Vision

Responsibly lead the transition of adult smokers to a smoke-free future.

To achieve this Vision, we plan to:

  Lead the industry in operating responsibly and preventing underage use of adult products.       Deliver a portfolio of innovative, FDA-authorized, smoke-free products and equitably transition adult smokers to them.  
             
  Maximize the profitability of our combustible products while appropriately balancing investments in Marlboro with funding growth of our smoke-free portfolio.   Invest in our manufacturing employees and facilities to enable them to be the manufacturers of choice for all Altria’s current and future portfolio of tobacco products.  
             
  Seize leadership in the external environment through communications, engagement and science-based policy and regulatory solutions.   Build employee capabilities to accelerate progress towards our Vision and further evolve the way we work and behave.  
             
  Help position Cronos as a leader in a highly responsible, regulated and legalized U.S. cannabis market.   Maximize the contribution of Altria’s investments to our long-term value.  

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    6601 West Broad Street
Richmond, Virginia 23230
     
             
      Dear Fellow Shareholder:      
                                         
   

I am pleased to invite you to join us at the 2022 Annual Meeting of Shareholders of Altria Group, Inc. to be held on Thursday, May 19, 2022 at 9:00 a.m., Eastern Time. While dynamics are changing with regard to the COVID-19 pandemic and pandemic-related restrictions may be loosening in some areas, out of an abundance of caution we have decided to hold a virtual meeting again this year using a live webcast. We made this decision to support the health, well-being and convenience of our shareholders, employees and the broader community.

We believe the virtual format enhances the ability of shareholders to attend the meeting. In fact, shareholder attendance at our virtual meetings has been significantly higher compared to attendance at our in-person meetings. During the 2022 annual meeting, shareholders will be able to vote their shares electronically and will have the opportunity to ask questions. In addition, a webcast replay will be posted to our Investor Relations website at https://www.altria.com/investors following the meeting. For more information on our annual meeting, including details on how to attend the meeting, see the instructions under “Instructions for the Annual Meeting” on page 71 of this Proxy Statement.

At this year’s meeting, we will vote on the election of 12 directors, the ratification of the selection of PricewaterhouseCoopers LLP as Altria’s independent registered public accounting firm and, if properly presented, one shareholder proposal. We will also conduct a non-binding advisory vote on the compensation of Altria’s named executive officers. We will report on our business, and shareholders will have an opportunity to ask questions.

Your vote is very important. I encourage you to complete, sign and return your proxy card, or use telephone or Internet voting prior to the meeting, so that your shares will be represented and voted at the meeting even if you cannot attend.

Sincerely,



 
           
      William F. Gifford, Jr.
Chief Executive Officer
     
        For further information
about the 2022 Annual
Meeting, please call
1-804-484-8838
 
             
                              
             
             

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Letter from our Board of Directors

       

Dear Fellow Shareholder:

It is with great pride that we serve as Altria’s Board and stewards of your investment. We actively oversee Altria’s senior management as they lead employees in pursuing our Vision, manage challenges, such as the COVID-19 pandemic and issues of racial injustice in our communities, foster a diverse and inclusive corporate culture and navigate a dynamic business environment.

Altria’s Vision to Responsibly lead the transition of adult smokers to a smoke-free future is being implemented at a pivotal time for the tobacco industry, as millions of adult tobacco consumers are seeking alternatives to cigarettes and regulatory and legislative actions are shaping the future for reduced harm products. We believe Altria has the experience and strategic focus to navigate this dynamic environment to deliver meaningful progress toward achieving the Vision.

As stewards of your investment in Altria, the Board’s primary responsibility is to foster Altria’s long-term success by establishing broad corporate policies, setting strategic direction and overseeing management. In discharging our responsibilities, we monitor performance against Altria’s strategic priorities and oversee key risk areas. We also oversee Altria’s environmental, social and governance (“ESG”) risks, priorities and initiatives. We encourage you to read more about Altria’s six responsibility focus areas and its ESG progress in the Corporate Responsibility Reports, available at https://www.altria.com/responsibility.

During 2021, we lost a remarkable member of our team and a pillar of the Richmond, Virginia community with the passing of our independent Chair, Thomas F. Farrell II, who had served on our Board for 13 years. Mr. Farrell’s leadership and his commitment to helping Altria achieve its Vision provided a strong foundation for Kathryn B. McQuade to assume the role of independent Chair. Ms. McQuade has served on our Board for 10 years and is the first woman to serve in this role for Altria.

We are proud to be a Board comprised of diverse individuals with extensive leadership experiences. We believe that our collective experiences, skills and diverse perspectives enable highly effective oversight and rigorous decision making.

We thank you for your investment in Altria and your support for the Board.

Sincerely,

Your Board of Directors

         





 

Your Board of Directors

John T. Casteen III

Marjorie M. Connelly

R. Matt Davis

Dinyar S. Devitre

WilIiam F. Gifford, Jr.

Debra J. Kelly-Ennis

W. Leo Kiely III

Kathryn B. McQuade

George Muñoz

Nabil Y. Sakkab

Virginia E. Shanks

Ellen R. Strahlman

     









       

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Notice of 2022 Annual Meeting of Shareholders of Altria Group, Inc.

Items of Business   Board
Recommendation
1 To elect as directors the 12 nominees named in the accompanying Proxy Statement.   FOR each
director nominee
2 To ratify the selection of PricewaterhouseCoopers LLP as Altria’s independent registered public accounting firm for the fiscal year ending December 31, 2022.   FOR
3 To hold a non-binding advisory vote to approve the compensation of Altria’s named executive officers.   FOR
4 To vote on one shareholder proposal, if properly presented at the meeting.   AGAINST

Shareholders will also transact other business properly coming before the meeting.

Voting

Your vote is important. We strongly encourage you to vote as promptly as possible through the Internet, by telephone or by mailing your completed and signed proxy card (or voting instruction form, if you hold your shares through a broker, bank or other nominee). You may also vote during the meeting by following the instructions under “Instructions for the Annual Meeting” on page 71 of this Proxy Statement. Each share is entitled to one vote on each matter to be voted upon at the annual meeting.

Attending the Meeting

To attend the virtual meeting, you will need to enter the 16-digit control number included on your proxy card, Notice of Internet Availability of Proxy Materials or voting instruction form. For instructions on attending the meeting, please see “Instructions for the Annual Meeting” on page 71 of this Proxy Statement.

2021 Annual Report

A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 accompanies this Proxy Statement.

Date of Distribution

This Notice, the Proxy Statement and the proxy card are first being made available or mailed to shareholders on or about April 7, 2022.

By Order of the Board of Directors,

i

W. Hildebrandt Surgner, Jr.
Vice President, Corporate Secretary and Associate General Counsel
April 7, 2022
Richmond, Virginia

Date and Time

Thursday, May 19, 2022 at 9:00 a.m.,
Eastern Time.

Place

There is no physical location for Altria’s 2022 Annual Meeting. Shareholders may instead attend virtually at www.virtualshareholdermeeting.com/ALTRIA2022.

Who can vote

You are entitled to vote if you were a
shareholder of record at the close of
business on March 28, 2022.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on May 19, 2022:

Altria’s Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K for the fiscal year ended December 31, 2021 are available, free of charge, at https://www.altria.com/proxy.

Under the U.S. Securities and Exchange Commission rule that allows companies to furnish proxy materials to their shareholders over the Internet, we mail to many shareholders a Notice of Internet Availability of Proxy Materials, rather than a paper copy of this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. We believe this expedites shareholders receiving proxy materials, lowers costs and conserves natural resources. The Notice of Internet Availability explains how to access the proxy materials online, vote online and obtain a paper copy of our proxy materials.



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Proxy Statement – Table of Contents

Frequently Requested Information
Commitment to Board Diversity   2        Executive Compensation Design   35
Board Skills and Experience and Demographic Backgrounds   2   Compensation Survey Group   48
  Summary Compensation Table   51
Board Leadership Structure and Governance   5   CEO Pay Ratio   61
Our Board’s Oversight Role   6        
Proxy Statement Summary                i
Voting Matters and Board Recommendations   i   Corporate Responsibility   iv
Casting Your Vote   i   Board Nominees   vii
Altria Overview   ii   Corporate Governance Highlights   viii
Our Vision   ii   Stakeholder Engagement   ix
Our Operating Companies and Investments   ii   Executive Compensation Highlights   ix
2021 Business Highlights   iii        
Board and Governance Matters           1
Altria Board of Directors   1   Director Compensation   13
Board and Committee Governance   5    Proposal 1  Election of Directors   17
Board Meetings and Attendance   12   2022 Director Nominee Biographies and Qualifications   17
Board Effectiveness   12  
Audit Committee Matters           24
Annual Evaluation and Selection of Independent
Registered Public Accounting Firm
  24   Audit Committee Report for the Year Ended December 31, 2021   25
Independent Registered Public Accounting Firm’s Fees   24    Proposal 2  Ratification of the Selection of
 Independent Registered Public Accounting Firm
  26
Pre-Approval Policy   25  
Executive Compensation           27
Compensation and Talent Development Committee
Report for the Year Ended December 31, 2021
  28   2021 Executive Compensation Program Decisions   38
  Decision Making Process   47
Compensation Discussion and Analysis   28   Other Considerations   50
Introduction   28   Compensation Tables and Other Matters   51
Overview   29    Proposal 3  Non-Binding Advisory Vote to
 Approve the Compensation of Altria’s Named
 Executive Officers
  62
Executive Compensation Design   35  
Shareholder Proposal           63
 Proposal 4  Shareholder Proposal - Commission a Civil Rights Equity Audit   63
Ownership of Equity Securities of Altria           67
Directors and Executive Officers   67   Delinquent Section 16(a) Reports   68
Certain Other Beneficial Owners   68        
Related Person Transactions and Code of Conduct   69
Prohibition on Hedging and Pledging   70
Instructions for the Annual Meeting   71
Questions and Answers about the 2022 Annual Meeting and Voting   72
Questions and Answers about Communications, Altria Documents and Shareholder Proposals   78
Other Business   80
Exhibit A – Altria Group, Inc. Non-GAAP Financial Measures   A-1
             

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Proxy Statement Summary

This proxy statement summary highlights information about Altria Group, Inc. (“Altria,” “we,” “our” or “us”) and certain information contained elsewhere in this proxy statement (“Proxy Statement”), which has been prepared in connection with Altria’s 2022 Annual Meeting of Shareholders (the “2022 Annual Meeting” or the “meeting”). This summary does not contain all the information that you should consider in voting your shares. You should read the entire Proxy Statement carefully before voting.

Voting Matters and Board Recommendations

Proposal
1
     

Election of Directors

Our Board recommends a vote FOReach nominee.

See page 17.

     
Proposal
2
 

Ratification of the Selection of Independent Registered Public Accounting Firm

Our Board recommends a vote FOR this proposal.

See page 26.

     
Proposal
3
 

Non-Binding Advisory Vote to Approve the Compensation of Altria’s Named Executive Officers

Our Board recommends a vote FOR this proposal.

See page 62.

     
Proposal
4
 

Shareholder Proposal to Commission a Civil Rights Equity Audit

Our Board recommends a vote AGAINST this shareholder proposal.

See page 63.

     

Casting Your Vote

    How to Vote  
   
       
  If your shares are registered in your name with Computershare, Altria’s transfer agent (record holders), or you are voting shares held through one of our employee benefit plans:  
       
  Internet
www.proxyvote.com
 
       
       
  Telephone
In the U.S. or Canada, call toll-free:
1-800-690-6903.
 
       
       
  If you hold your shares through a broker, bank or other nominee* (street name holders):  
       
  Internet
www.proxyvote.com
 
       
  Telephone
Refer to voting instruction form for instructions on how to vote by telephone.
 
       
  *      If bank/broker makes these methods available.  
       
       
  Both record holders and street name holders may also vote:  
       
  Mobile Device
Scan the QR Code that appears on your proxy card, Notice of Internet Availability of Proxy Materials or voting instruction form to vote using your mobile device.
 
       
  Mail
Complete, sign and mail your proxy card or voting instruction form in the self-addressed envelope provided.
 
       
  During Meeting
There is no physical location for the 2022 Annual Meeting. For instructions on voting remotely during the 2022 Annual Meeting, please see the instructions under “Instructions for the Annual Meeting” on page 71 of this Proxy Statement. We encourage you to vote in advance of the meeting using the other methods available.
 


 

Altria Group, Inc. – Proxy Statement     i


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PROXY STATEMENT SUMMARY

Altria Overview

Our Vision

Our companies have a long history of leadership in the tobacco industry. Today, adult tobacco consumers are increasingly seeking new options, including those that reduce risk, and their preferences are evolving rapidly. Our 2030 Vision is to “Responsibly lead the transition of adult smokers to a smoke-free future” (“Vision”). This Vision drives our focus on Moving Beyond Smoking™ by providing adult smokers more potentially reduced harm alternatives. To help achieve this Vision, we are working to create the conditions for tobacco harm reduction to succeed through external engagement, science and advocacy.

Our Operating Companies and Investments

We have a leading portfolio of tobacco products for adult tobacco consumers that are manufactured and marketed by our tobacco operating company subsidiaries, including:

                                                            
 
Philip Morris USA Inc. (“PM USA”), the maker of Marlboro cigarettes;
U.S. Smokeless Tobacco Company LLC (“USSTC”), the maker of Copenhagen and Skoal moist smokeless tobacco products;
John Middleton Co. (“JMC”), the maker of Black & Mild cigars; and
Helix Innovations LLC (“Helix”), the maker of on! oral nicotine pouches.
     
       
 
 
       
       
              

We seek to return long-term value to our shareholders through the financial performance of our tobacco operating company subsidiaries and our investments in:

                                                            
 
Anheuser-Busch InBev SA/NV (“ABI”), the world’s largest brewer;
JUUL Labs, Inc. (“JUUL”), the nation’s leading e-vapor company; and
Cronos Group Inc. (“Cronos”), a leading global cannabinoid company.
     
       
 
       
       
              

ii     www.altria.com


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PROXY STATEMENT SUMMARY

2021 Business Highlights

We delivered outstanding results in 2021 and managed through the challenges presented by the COVID-19 pandemic. Our tobacco businesses were resilient and, while we faced some challenges along the way, we continued to make progress toward our Vision.

Smoke-free Portfolio

We continued to invest behind the rapidly growing oral nicotine pouch category by acquiring the remaining 20% of the global on! business. Helix made significant progress with on! in the U.S. market by:
   
  growing on! retail share of the total U.S. oral tobacco category to 3.9 percentage points in the fourth quarter of 2021, an increase of 2.8 percentage points versus the fourth quarter of 2020;
     
  achieving unconstrained on! manufacturing capacity for the current estimated size of the U.S. oral nicotine pouch category; and
     
  expanding on! retail distribution to approximately 117,000 U.S. stores.
     
In heated tobacco, PM USA introduced the new IQOS 3 device into the market in the first half of 2021 and expanded the availability of IQOS and Marlboro HeatSticks to retail stores across Georgia, Virginia, North Carolina and South Carolina.
   
Although we had to remove IQOS and Marlboro HeatSticks from the U.S. market at the end of 2021 due to orders imposed by the International Trade Commission relating to a patent dispute, PM USA gained significant knowledge through its earlier IQOS commercialization efforts, which we believe can be used going forward to support other smoke-free products. PM USA:
   
  gained insight into educating U.S. adult smokers about a brand-new tobacco category and effectively supporting their transition journey to smoke-free alternatives;
     
  gained valuable knowledge on leveraging modified risk tobacco product claims to transition adult smokers; and
     
  built a robust post-market surveillance system as required to monitor tobacco products authorized by the U.S. Food and Drug Administration (“FDA”).
   

Financial Highlights

Our reported diluted earnings per share (“EPS”) decreased 44.2% to $1.34 primarily driven by the 2021 non-cash impairment of our investment in ABI.
   
Our adjusted diluted EPS, (1) which excludes the impact of special items, grew 5.7% to $4.61.
   
We returned more than $8.1 billion in cash to shareholders in 2021 through dividends and share repurchases. This total represented the third-largest single-year cash return in Altria’s history and the largest annual return since 2002. In August 2021, our Board of Directors (“Board of Directors” or “Board”) raised the regular quarterly dividend for the 56th time in the past 52 years. Our annualized dividend per share was $3.60 as of December 31, 2021.
   
We sold our Ste. Michelle Wine Estates business in October 2021 and received net cash proceeds of approximately $1.2 billion.
   
(1) Adjusted diluted EPS is a financial measure that is not consistent with United States generally accepted accounting principles (“GAAP”). See Exhibit A to this Proxy Statement for information regarding non-GAAP financial measures used in this Proxy Statement and reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures.
   

Altria Group, Inc. – Proxy Statement     iii


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PROXY STATEMENT SUMMARY

(1) Adjusted operating companies income (“Adjusted OCI”) is a financial measure that is not consistent with GAAP. See Exhibit A to this Proxy Statement for information regarding non-GAAP financial measures used in this Proxy Statement and reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures.
(2) 2021 results include financial performance of the wine segment prior to our sale of the Ste. Michelle Wine Estates business on October 1, 2021.
(3) 2019 amounts have been recast to conform with current period presentation for certain ABI mark-to-market adjustments that were not previously identified as special items and that are now excluded from Altria’s adjusted financial measures.

Corporate Responsibility

We believe our responsibility priorities and results have been important factors in our industry leadership for many years. Our decision to place “responsibly” at the forefront of our Vision signifies our commitment to corporate responsibility, and we believe our ongoing efforts to focus on a variety of responsibility issues further the pursuit of our Vision.

Our Responsibility Focus Areas

In 2020, we conducted a comprehensive, formal responsibility materiality assessment to identify environmental, social and governance (“ESG”) issues that we believe are important to our long-term sustainability and success. Through the materiality assessment, we identified six responsibility focus areas to guide our actions toward achieving our Vision and set goals to allow us to measure our progress. We highlight below recent accomplishments in each of the focus areas.

iv     www.altria.com


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PROXY STATEMENT SUMMARY

2021 Highlights

Formed responsibility focus area steering committees, led by senior executives, to oversee strategic alignment of internal initiatives with established 2025 corporate responsibility goals.
   
Established a cross-functional ESG disclosure team to further enhance governance of our ESG reporting.
   
Completed an internal assessment of our ESG leadership maturity and system readiness to support potential future independent assessments of select ESG-related disclosures.
   
Introduced enhanced reporting vehicles to further support transparent disclosure of ESG progress, including ESG Data Tables and a series of Corporate Responsibility Reports, each focused on one or more of our responsibility focus areas, including the goals for each area. We encourage you to read these reports and data tables, which are available at https://www.altria.com/responsibility.
     
Conducted over 200 tobacco harm reduction engagements with federal and state elected officials and policymakers.
   
Advocated that the FDA address adult smoker nicotine misperceptions to facilitate transitioning to smoke-free products.
   
Participated in 15 engagements with the FDA and 34 engagements with public health stakeholders on harm reduction.
   
Filed 151 new patents related to harm reduction efforts.
   
Acquired the remaining 20% ownership stake of the global on! business and increased distribution of on! to approximately 117,000 U.S. stores.
   
Visits to QuitAssist®, our website dedicated to providing resources for those who want to quit using tobacco products, increased by 138% year over year from 2020 to 2021.
     
Engaged with the FDA to share data from our Underage Tobacco Use Survey to broaden understanding of the latest product-specific underage tobacco use trends.
   
Continued to support Tobacco 21 laws, which have been enacted at the federal level and in 39 states and the District of Columbia.
   
Continued to support efforts to reduce youth usage of e-vapor, with national survey data reflecting a decline since 2019. The Centers for Disease Control and Prevention’s 2021 National Youth Tobacco Survey (“NYTS”) showed 7.6% of middle and high schoolers reported e-vapor use in the past 30 days as compared to 20% in 2019. (1)
   
Increased use of point-of-sale age validation technology to more than 104,000 retail stores representing approximately 62% of PM USA volume.
   
Granted over $25 million to positive youth development organizations from our Board- allocated contributions.
   
(1) Due to differences in data collection procedures, the Centers for Disease Control and Prevention advises that any comparison of the 2021 NYTS estimates to previous NYTS survey years that were primarily conducted on school campuses should be interpreted with caution.
     
Released our first standalone Task Force on Climate-related Financial Disclosures (“TCFD”) report – making us the first U.S. tobacco company to join more than 2,700 supporters of the TCFD.
   
Signed a renewable electricity virtual power purchase agreement to accelerate our progress to achieving our targets of using 100% renewable electricity and reducing operational greenhouse gas emissions by 55% by 2030.
   
Received a double ‘A’ rating for addressing climate change and protecting water security by CDP Global (“CDP”) for the second consecutive year.

Altria Group, Inc. – Proxy Statement      v


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PROXY STATEMENT SUMMARY

Launched a $250,000 Stronger Together challenge to support industry-led, sustainable efforts toward inclusion, diversity and equity (“ID&E”). We distributed the funds among eight projects submitted by trade partners, including retailers and wholesalers, for ID&E education, and training and development programs and platforms.
   
Achieved 8.85% diverse supplier spend against a newly established supplier diversity goal of 15% or more by 2030.
   
Increased visibility of social and environmental responsibility within our supply chain through 100% contracted tobacco grower participation in the Good Agricultural Practices Certification program and 100% international tobacco grower participation in the Sustainable Tobacco Program self-assessment. In addition, more than 67% of our key suppliers submitted responses to CDP’s Climate Change, Forest and Water Security questionnaires at our request.
   
Recognized as a member of CDP’s 2021 Supplier Engagement Leaderboard for climate change, highlighting our work in sustainable supply chain management.
     
Made progress toward our Inclusion & Diversity Aiming Point to have 30% of our vice president-level and director-level employees be employees of color. As of December 31, 2021, 24% of our vice president-level and 26% of our director-level employees were people of color.
   
Expanded use of our internal talent development system to improve fairness, transparency and inclusiveness in the internal hiring and promotion process. 33% of selected internal candidates were employees of color versus 29% total salaried population and 54% were female versus 42% total salaried population.
   
For employees performing the same or similar duties, salaries of female employees were 99.6% of those of our male employees and salaries of employees of color were 99.9% of those of our white employees after adjusting for factors generally considered to be legitimate differentiators of salary, such as performance and tenure.
   
Created a new five year community impact plan and contributed approximately $61 million to local and national non-profit organizations in five focus areas: positive youth development and preventing underage use; employee giving, volunteering and civic action; workforce and economic equity; environment; and equitable and vibrant communities.

vi     www.altria.com


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PROXY STATEMENT SUMMARY

Board Nominees

You are being asked to vote on the following 12 nominees for director. All directors are elected annually by a majority of the votes cast. More information about each director can be found under “Proposal 1 – Election of Directors” beginning on page 17.

        Director       Board Committee Membership (1) (2)
Name and Principal Occupation   Age   Since   Independent   AC CC EC FC IC NC
Ian L.T. Clarke
Chief Financial Officer, Greater Toronto Airports Authority
  61                    
Marjorie M. Connelly
Retired Chief Operating Officer, Convergys Corporation
  60   2021          
R. Matt Davis
President, Driftwood Leadership, LLC and retired President,
North America, and Senior Vice President, Global Corporate Affairs, Dow Inc.
  57   2021          
William F. Gifford,
Jr. Chief Executive Officer, Altria Group, Inc.
  51   2020                
Debra J. Kelly-Ennis
Retired President and Chief Executive Officer,
Diageo Canada, Inc.
  65   2013        
W. Leo Kiely III
Retired Chief Executive Officer, MillerCoors LLC
  75   2011        
Kathryn B. McQuade
Retired Executive Vice President and Chief Financial Officer,
Canadian Pacific Railway Limited
  65   2012        
George Muñoz
Principal, Muñoz Investment Banking Group, LLC
and Partner, Tobin & Muñoz
  70   2004        
Nabil Y. Sakkab
Retired Senior Vice President, Corporate Research and
Development, The Procter & Gamble Company
  74   2008        
Virginia E. Shanks
Retired Executive Vice President and Chief Administrative
Officer, Pinnacle Entertainment, Inc.
  61   2017          
Ellen R. Strahlman
Retired Executive Vice President, Research & Development
and Chief Medical Officer, Becton, Dickinson and Company
  64   2020          
M. Max Yzaguirre
Retired Executive Chairman, Forbes Bros. Holdings, Ltd.
  61                    
(1) AC Audit Committee EC Executive Committee IC Innovation Committee
  CC Compensation and Talent
Development Committee
FC Finance Committee NC Nominating, Corporate Governance and Social Responsibility Committee
  Chair Member Audit Committee Financial Expert
(2) At our Board’s organizational meeting following the 2022 Annual Meeting, our Board plans to determine 2022-2023 committee assignments.

Composition and Diversity of Board Nominees

The composition of our Board nominees is as follows:

More information on the self-identified diversity demographics of our Board and nominees can be found in “Board Skills and Experience and Demographic Backgrounds” on page 2

Altria Group, Inc. – Proxy Statement     vii


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PROXY STATEMENT SUMMARY

Corporate Governance Highlights

         
  Board Independence and Composition   Board Performance and Key Responsibilities  
 

  11 of our 12 director nominees are independent

  Separate Chair and Chief Executive Officer (“CEO”) roles, with an independent Chair

  All NYSE-required Board committees consist solely of independent directors

  Independent Committee Chairs

  Executive sessions of independent directors at each meeting

  Director retirement guidelines

  Board diversity from various perspectives

 

  At least 75% Board and Committee meeting attendance in 2021 by each director, during each director’s respective term of service

  100% director attendance at our 2021 Annual Meeting of Shareholders (“2021 Annual Meeting”) by directors who were then serving

  Oversight of strategic plan development and execution

  Oversight of key risk areas and risk management processes

  Oversight of executive compensation

  Participation in executive succession planning

  Review of investor perspectives and engagement

  Annual Board and Committee self-evaluations

  Oversight of corporate culture initiatives

  Oversight of ESG program and activities, including stakeholder engagement

 
         
  Shareholder Rights   Policies, Programs and Guidelines  
 

  Annual election of directors

  Directors elected by majority voting except in contested elections

  Resignation policy for directors who fail to receive majority support in an uncontested election

  One share, one-vote standard

  Proxy access with market terms

  No shareholder rights plan or “poison pill”

 

  Comprehensive Code of Conduct, Code of Business Conduct and Ethics for Directors and Corporate Governance Guidelines

  Robust political activity disclosure and compliance program

  Extensive Corporate Responsibility Reports

  Compensation “clawback” policy

  Robust stock ownership and holding requirements for directors and executive officers

  Policies prohibiting hedging and pledging of our shares by directors and executive officers

  Comprehensive new director orientation and ongoing director education programs

 
         
  We believe the foregoing practices are well aligned with the Investor Stewardship Group’s corporate governance principles for U.S. listed companies, which include (i) accountability to shareholders, (ii) shareholder voting rights proportionate to economic interest, (iii) responsiveness to shareholders, (iv) strong, independent leadership, (v) structures and practices that enhance Board effectiveness and (vi) management incentive structures aligned with long-term strategy.  
     

   

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PROXY STATEMENT SUMMARY

Stakeholder Engagement

We value our stakeholders’ perspectives on our businesses and engage with a broad range of stakeholders on a variety of matters.

Shareholder engagement

Investor conferences
Individual investor meetings
Annual shareholder meeting

Additional stakeholder engagement

Regulators, policymakers, community leaders, financial institutions, public health groups, sustainability organizations, suppliers, trade partners, consumers, industry groups

Topics discussed

Business performance
Company strategies

ESG
Executive compensation Regulatory and legislative
environment Public policy issues

A variety of our executives participate in our stakeholder engagement efforts depending on the nature and topic of the engagement, including our CEO, Chief Financial Officer (“CFO”), General Counsel, Chief Human Resources Officer and Chief Compliance Officer (“CCO”), Senior Vice President, Corporate Citizenship and Chief Sustainability Officer, Corporate Secretary and representatives from our Investor Relations, Regulatory Affairs, Government Affairs and Compensation and Benefits departments. From time to time, members of our Board of Directors also participate in engagement activities. We believe that these engagements provide us with a better understanding of our stakeholders’ priorities and perspectives.

Executive Compensation Highlights

Executive Compensation Framework

In 2021, the total direct compensation of our executive officers named in the Summary Compensation Table on page 51 (“named executive officers” or “NEOs”) consisted of the following elements:

      Form of
Compensation
      Performance
Period
    Award Criteria     Company Performance Alignment
  Cash   Ongoing   Individual performance    
                 
  Cash   Annual   Company and individual performance  

  Adjusted diluted EPS growth

  Adjusted discretionary cash flow

  Total adjusted OCI

  Strategic initiatives

                 
  Cash   Three years; overlapping cycles   Company and individual performance  

  Adjusted diluted EPS growth

  Cash conversion

  Relative total shareholder return (“TSR”) multiplier

  Strategic initiatives

  Restricted Stock Units (“RSUs”)/ Performance Stock Units (“PSUs”)   Ongoing for RSUs, three years for PSUs   Individual performance and advancement potential with additional payment criteria for PSUs based on company performance  

  RSUs: Stock price appreciation

  PSUs: Company performance (adjusted diluted EPS growth, cash conversion and relative TSR multiplier) and stock price appreciation

Together, PSUs and our cash Long-Term Incentive Plan (“LTIP”) deliver over 60% of our NEOs’ target long-term incentives in performance-based forms. Our target long-term incentive mix is described under “Long-Term Incentives” on page 42.

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PROXY STATEMENT SUMMARY

Key Governance Features of Our Executive Compensation Program

The following summary highlights our commitment to executive compensation practices that align the interests of our executives and shareholders:

  What We Do What We Don’t Do    
                                                       
 

Pay for Performance
A significant portion of our NEOs’ compensation is at-risk variable compensation. Annual and long-term cash incentives and a significant portion of equity compensation are tied to performance measures.

Multiple Performance Metrics
Variable compensation is based on more than one measure to balance incentives.

Stock Holding and Ownership Requirements
All NEOs exceed our robust stock ownership requirements.

“Clawback” Policy
Our policy provides for the adjustment or recovery of compensation in certain circumstances.

Award Caps
All our variable compensation plans have caps on plan formulas.

Below Average Share Utilization
We have below average run rates for equity compensation, as compared to S&P 500 and Food, Beverage & Tobacco Indices companies.

Tally Sheets
Our Compensation and Talent Development Committee uses tally sheets when making individual compensation decisions for our NEOs.

Confidentiality and Non-Compete Agreements
All our NEOs are subject to confidentiality and non-compete agreements.

No Excessive Perquisites
Perquisites represent less than 1% of our NEOs’ compensation.

No Single-Trigger Change in Control
Our shareholder-approved 2015 Performance Incentive Plan (“PIP”) and 2020 PIP both include a double-trigger change in control provision.

No Individual Supplemental Executive Retirement Plans

No Hedging or Pledging
We do not permit our NEOs to engage in either hedging or pledging activities with respect to their Altria shares.

No Employment Agreements
All our NEOs are employed at-will.

No Tax Gross-Ups on Compensation
We do not pay tax gross-ups to our NEOs.

No Share Recycling

No PSUs for Stock Ownership Requirements
We do not include unvested PSUs toward stock ownership requirements.

     
       
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        
        
                         

   

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Board and Governance Matters

Altria Board of Directors

Our Board currently consists of 12 directors. Directors are elected annually at each annual meeting to serve until the next annual meeting and until their successors are duly elected and qualified, subject to their earlier death, resignation or removal. With the exception of Marjorie M. Connelly and R. Matt Davis, who were elected as directors by our Board on October 27, 2021, and Ian L.T. Clarke and M. Max Yzaguirre, who were nominated for election as directors by our Board, each of the nominees for director was elected by shareholders at the 2021 Annual Meeting. Biographical information and qualifications of the nominees for director are included under “Proposal 1 – Election of Directors” beginning on page 17. In October 2021 and February 2022, John T. Casteen III and Dinyar S. Devitre, respectively, notified Altria of their decision to retire from Board service following the completion of their current term. As a result, Messrs. Casteen and Devitre will not stand for election to our Board at the 2022 Annual Meeting; all other current directors are standing for election at the 2022 Annual Meeting.

Process for Nominating Directors

The Nominating, Corporate Governance and Social Responsibility Committee works with our Board to determine the appropriate mix of characteristics, skills and experience for our Board. The Committee evaluates each individual in the context of our Board as a whole, with the objective of recommending a group of directors that can best continue the success of the business and represent shareholder interests through the exercise of sound judgment using its diversity of experience.

The Committee has not established any specific minimum qualification standards for nominees to our Board; rather, in evaluating the suitability of individuals for Board membership, the Committee considers the ways in which it believes each individual can assist Altria in pursuing our Vision. The Committee takes into account many factors, including whether the individual meets requirements for independence and whether the individual will enhance the diversity of views and experiences available to our Board in its operations and in discharging its oversight responsibilities. In determining whether to recommend a director for re-election, the Committee also considers the director’s past attendance at meetings and participation in and contributions to the activities of our Board. In addition, the Committee considers whether our Board has specific needs for certain skills or attributes at a given time. Other criteria for Board membership, such as the extent of an individual’s other commitments, are set forth in our Corporate Governance Guidelines.

In identifying potential candidates for Board membership, the Committee relies on suggestions and recommendations from directors, shareholders, management and others, including from time to time executive search and board advisory firms. Messrs. Clarke and Yzaguirre and Ms. Connelly were recommended to the Committee by one of our non-management directors and Mr. Davis was brought to the attention of the Committee by an executive search firm engaged by management to identify potential director candidates. The Committee does not distinguish between nominees recommended by shareholders and other nominees. Shareholders wishing to suggest candidates to the Committee for consideration as directors must submit a written notice to our Corporate Secretary following the procedures set forth in this Proxy Statement under “Questions and Answers about Communications, Altria Documents and Shareholder Proposals – How do I communicate with our Board of Directors?” on page 78. Our Amended and Restated By-Laws (“By-Laws”) include the procedures that a shareholder must follow to nominate directors for election to our Board. The procedures are summarized under the same section in response to the question “How can a shareholder nominate a director or submit a proposal for next year’s annual meeting?” on page 78.

Altria Group, Inc. – Proxy Statement     1


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BOARD AND GOVERNANCE MATTERS

Commitment to Board Diversity

The Nominating, Corporate Governance and Social Responsibility Committee has a long-standing commitment to diversity and is guided by our diversity philosophy in its review and consideration of director nominees. In this regard, our Board and the Committee view diversity holistically and are committed to recruiting directors who help achieve the goal of a well-rounded, diverse Board. Our Corporate Governance Guidelines require that women and people of color be included in any search for potential new directors. Our Corporate Governance Guidelines also require that our Board and the Committee consider, among other factors:

whether the individual meets the applicable requirements for independence;
the individual’s general understanding of the various disciplines relevant to the success of a large publicly traded company in today’s global business environment;
the individual’s understanding of our businesses and markets;
the individual’s skills, professional expertise and educational background; and
other factors that promote diversity of views and experiences, including self-identified characteristics such as gender, race, national origin, age and sexual orientation.

                                  
     
 

The Board and

5 of 6

Board Committees are Chaired by Women or Ethnically Diverse Directors

 
   
     
                       


Board Skills and Experience and Demographic Backgrounds

Our current Board and nominees have a breadth of skills, experiences and demographic backgrounds, and our Board is committed to reviewing periodically its composition so that it continues to have the right mix of skills, background and tenure. As noted in the summary below, we believe that our Board and nominees have demonstrated leadership in a variety of positions across various professions and industries. In addition, our Board’s composition represents a balanced approach to director tenure, allowing our Board to benefit from the historic institutional knowledge of longer-serving directors combined with the perspectives of newer directors. The following chart is not intended to be an exhaustive list of each director’s and nominee’s skills, expertise, experience and personal attributes to our Board, as each of them also contributes other important skills, expertise, experience and personal attributes that are not reflected in the chart.

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Skills and Experience
Consumer Products and/or Consumer Marketing          
Industry                        
Regulated Industries    
Chief Executive Officer Experience              
Financial Expertise, including Chief Financial Officer Experience              
Public Policy                
Public Company Board Experience  
Leadership in Innovation            
Information Technology/Cybersecurity                    
Environmental, Social and Governance            
Diversity and Demographic Background
Race /Ethnicity                            
African American or Black                          
Hispanic or Latinx                        
White or Caucasian          
Asian                          
Middle Eastern                          
Gender and Other Diversity Characteristics                
Female                  
Male          
LGBTQ+                          
Other                            
Age 78 61 60 57 74 51 65 75 65 70 74 61 64 61
Tenure (1) 12 0 1 1 14 2 9 10 10 17 13 5 1 0
   
(1) Calculated from the date of initial election to the next full year of completed service prior to filing the Proxy Statement. Partial years of service exceeding six months are rounded up.
   
Board Skill       Why this Skill is Important to Our Board
Consumer Products and/ or Consumer Marketing   Our continued leadership in satisfying evolving adult tobacco consumers preferences requires that we market our products effectively and responsibly.
Industry   Experience in our industries and markets is important to understanding industry and market dynamics.
Regulated Industries   Altria operates highly regulated businesses. To enhance Board oversight of regulatory compliance and engagement, we include directors with experience in regulated industries.
Chief Executive Officer Experience   Directors who serve or have served as a chief executive (including chief executive of a significant business unit) bring leadership experience in various areas such as strategic planning, financial oversight, executive succession planning, human capital management, compliance and risk management.
Financial Expertise, including Chief Financial Officer Experience   Proficiency in finance and financial reporting processes helps our Board monitor and assess Altria’s performance and financial reporting.
Public Policy   Directors with public policy experience provide valuable insights as Altria’s businesses are subject to an array of federal, state and local laws and regulations and regularly engage with various external stakeholders.
Public Company Board Experience   Service on other public company boards promotes efficient and effective Board processes and provides insight into the corporate governance practices of other companies.
Leadership in Innovation   Directors with experience in innovation, biosciences, product development and consumer engagement promote effective oversight of product growth opportunities (including for reduced harm products), marketing strategies and capabilities, and other growth strategies.
Information Technology/Cybersecurity   Directors with insight into mitigating technology risks enhance oversight of our cybersecurity risk management program.
Environmental, Social and Governance   We believe ESG topics, including our harm reduction efforts, are important to our long-term success. Directors with experience managing or overseeing ESG efforts provide effective oversight of our ESG strategies and initiatives.

Altria Group, Inc. – Proxy Statement     3


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BOARD AND GOVERNANCE MATTERS

Director Independence Determinations

Under the listing standards of the New York Stock Exchange (“NYSE”), our Board must consist of a majority of independent directors. In making independence determinations, our Board adheres to NYSE and U.S. Securities and Exchange Commission (“SEC”) requirements and considers all relevant facts and circumstances. Our Board has also adopted categorical standards of director independence to further assist it in making these determinations. These standards are set forth in Annex A of our Corporate Governance Guidelines, which are available on our website at https://www.altria.com/governance.

On the recommendation of the Nominating, Corporate Governance and Social Responsibility Committee, our Board affirmatively determined that each of the following nominees is independent in that such nominee has no material relationship with us: Ian L.T. Clarke, Marjorie M. Connelly, R. Matt Davis, Debra J. Kelly-Ennis, W. Leo Kiely III, Kathryn B. McQuade, George Muñoz, Nabil Y. Sakkab, Virginia E. Shanks, Ellen R. Strahlman and M. Max Yzaguirre. Our Board has also affirmatively determined on the recommendation of the Committee that John T. Casteen III and Dinyar S. Devitre, who are not standing for election to our Board at the 2022 Annual Meeting, are independent. In making its recommendation to our Board, the Committee considered the following business relationships and transactions:

Business Relationships and Transactions Considered
Altria and our subsidiaries from time to time do business in the ordinary course on terms comparable to those provided to unrelated third parties with entities where Messrs. Devitre and Muñoz serve as non-executive directors or where immediate family members (as defined in our Policy on Related Person Transactions, which is discussed under “Related Person Transactions and Code of Conduct” on page 69) of Mr. Clarke, Mr. Davis, Mr. Kiely, Dr. Sakkab, Dr. Strahlman or Mr. Yzaguirre serve as non-executive directors or non-executive employees. In each case, neither the director nor the immediate family member is responsible for, or involved in, the entity’s day-to-day dealings with us, and the respective payments made by Altria and our subsidiaries to the entities in each of the last three fiscal years were significantly less than the greater of $1 million or 2% of any such entity’s consolidated gross revenues. None of Mr. Clarke, Mr. Davis, Mr. Devitre, Mr. Kiely, Mr. Muñoz, Dr. Sakkab, Dr. Strahlman or Mr. Yzaguirre, or their respective immediate family members, materially benefits directly or indirectly from these relationships.

The Committee determined that the foregoing business relationships and transactions did not affect the independence of any nominee for director.

In making its recommendation to our Board, the Committee also considered the following philanthropic relationships and transactions between Altria and our subsidiaries and various educational and other charitable entities located in or near our locations or facilities of our subsidiaries. We believe that corporate philanthropy furthers our corporate responsibility focus on supporting our people and communities, which includes investing to help make ongoing positive societal impact in priority areas that reflect the interests of our businesses, employees and communities.

Philanthropic Relationships and Transactions Considered
We have a long-standing relationship with the University of Virginia (the “University”) that has included employment recruiting and charitable donations. In 2021, Altria and our subsidiaries made charitable donations to the University in an aggregate amount of $445,000 with the significant majority supporting the University’s Youth-Nex Center, which promotes positive youth development. In addition, we made nominal ordinary course trade payments to the University. The sum of these 2021 contributions and payments represented significantly less than the greater of $1 million or 2% of the University’s consolidated gross revenues. Mr. Casteen is a former President of the University and retired Professor. Mr. Casteen’s son, John T. Casteen IV, is an Assistant Professor and Director of Studies at the University. Neither Mr. Casteen nor his son materially benefits directly or indirectly from this relationship.

We make various grants and charitable contributions, including matching gifts under our Matching Gift Program, to entities where Mr. Casteen, Ms. Connelly, Mr. Davis, Mr. Devitre and Ms. Kelly-Ennis or their respective immediate family members serve as non-executive directors or trustees or non-executive employees. In each case, payments by us in each of the last three fiscal years were significantly less than the greater of $1 million or 2% of any such entity’s consolidated gross revenues. None of Mr. Casteen, Ms. Connelly, Mr. Davis, Mr. Devitre or Ms. Kelly-Ennis, or their respective immediate family members, materially benefits directly or indirectly from these contributions.

 

The Committee determined that the foregoing philanthropic relationships and transactions did not affect the independence of any director or nominee for director.

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BOARD AND GOVERNANCE MATTERS

Board and Committee Governance

Our Board’s Role and Responsibilities

The primary responsibility of our Board is to foster our long-term success. In fulfilling this role, each director must exercise his or her good faith business judgment of the best interests of Altria and our shareholders. Our Board has responsibility for establishing broad corporate policies, setting strategic direction and overseeing management, which is responsible for our day-to-day operations.

Board Leadership Structure and Governance

Our Board believes that it is important to retain the flexibility to allocate the responsibilities of the Chair and the CEO in a way that it considers to be in the best interests of Altria and our shareholders. Our Board currently believes it is in the best interests of Altria and our shareholders to separate these positions. Our Board believes that separating the roles of Chair and CEO promotes the pursuit of our Vision by allowing our CEO, our senior-most executive, to focus on executing our strategic plan, overseeing our day-to-day operations, engaging with external stakeholders, developing our leaders and promoting employee engagement through an inclusive culture. Meanwhile, the Chair leads our Board in the performance of its duties by establishing agendas and ensuring appropriate meeting content, engaging with the CEO between Board meetings and providing overall guidance to our CEO as to our Board’s views and perspectives. Moreover, our independent directors convene at each Board meeting in an executive session led by the Chair. Our current Chair, Ms. McQuade, has served on our Board since 2012 and was elected by our Board as independent Chair in 2021 following the passing of Thomas F. Farrell II, our former independent Chair. Her extensive knowledge of our business, our management and our Board’s governance practices provided for a smooth transition to this leadership position. Ms. McQuade promotes constructive dialogue and directly, clearly and regularly communicates the views of our Board to management.

We believe that our Board’s strict adherence to sound corporate governance practices, as reflected in our Corporate Governance Guidelines, has promoted, and continues to promote, effective and independent Board leadership for Altria and our shareholders.

Altria Group, Inc. – Proxy Statement     5


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BOARD AND GOVERNANCE MATTERS

Our Board’s Oversight Role

Our Board’s oversight role extends to a broad range of topics that we believe are important to our external stakeholders and to the success of our businesses.

Strategic Oversight
Our Board actively oversees the development and execution of strategies in pursuit of our Vision. These strategies encompass both financial and operational strategies, including strategies focused on growth and innovation, legal and regulatory matters, ESG, public policy and engagement, talent development and executive succession, and strategic investments. Over the course of the year, including during meetings solely focused on strategy and long-term planning, management and our Board discuss the development and execution of our strategic plans as well as events that bear upon those plans. Our Board further monitors strategic execution through standing presentations at regular Board and Committee meetings and communications from management in between meetings. Our Board devotes several meetings each year to review our strategies and discuss them with management.

 

Risk Oversight

Our Board, both acting as a full Board and through its Committees, plays an important oversight role in our risk management processes and believes it has in place effective processes to identify and oversee key risks facing Altria and our businesses. Regular Board and Committee meetings afford our Board the opportunity to discuss with senior and mid-level management the risks facing Altria and our businesses.

Our enterprise risk management process helps us identify, prioritize and manage risks that have the potential to present the most significant obstacles to achieving business objectives. Our Risk Oversight Committee, comprised of members of senior management, including our CFO, Chief Operating Officer (“COO”), General Counsel and CCO, meets regularly to oversee efforts undertaken to identify and manage the most significant risks to Altria and our businesses. Management reports annually to our Board on this process and periodically to our Board or its Committees on the management of specific risks.

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Altria Group, Inc. – Proxy Statement     7


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BOARD AND GOVERNANCE MATTERS

Political and Public Policy Oversight

The Nominating, Corporate Governance and Social Responsibility Committee oversees our political and public policy engagement activities, including political and direct and indirect lobbying activities and related contributions and expenditures. The Committee also oversees our political activity compliance program.

We share extensive information about political and public policy activities and Board oversight of these activities in our Lobbying and Political Activity Integrity and Transparency Report and also provide disclosures related to our lobbying expenditures and political contributions on our website at https://www.altria.com/About-Altria/Government-Affairs/.

Corporate Responsibility and ESG Oversight

Leading responsibly has been the foundation of Altria’s strategy for many years, and our Board actively oversees our corporate responsibility and ESG priorities. Our approach to corporate responsibility includes seeking our shareholders’ and other stakeholders’ perspectives, aligning business practices where appropriate and measuring and communicating our progress.

Our Board regularly receives updates on our responsibility efforts. These updates include the review of topics such as trends in corporate responsibility, our underage tobacco prevention program, harm reduction initiatives, environmental initiatives, community and public policy engagement activities, talent and culture initiatives, and our monitoring and reporting of ESG progress. Our Board has delegated oversight responsibilities in these areas to the following committees:

Nominating, Corporate Governance and Social Responsibility Committee – oversees our public affairs, corporate reputation, governance and environmental and social responsibility strategies.
   
Innovation Committee – oversees our product innovation efforts and strategies that are critical to our harm reduction goals, as well as our efforts to reduce environmental impact of our manufacturing operations and products.
   
Compensation and Talent Development Committee – oversees our corporate culture and talent development activities as further discussed below.
   
Talent Development and Culture Oversight

The Compensation and Talent Development Committee oversees initiatives, programs and processes related to talent development and culture through regular updates from management.

In 2021, these updates included:

executive succession and advancement planning;
   
employee engagement survey results and management’s proposed responses to opportunity areas;
   
actions taken to protect employee health and wellness during the COVID-19 pandemic; and
   
management’s progress toward its ID&E goals.

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BOARD AND GOVERNANCE MATTERS

CEO Succession and Advancement Planning

Our Board believes that senior executive advancement and succession is one of its most important responsibilities. The Compensation and Talent Development Committee is responsible for overseeing the development and furtherance of executive succession plans, evaluating and making recommendations to our Board regarding potential candidates to become CEO, and evaluating and approving candidates to fill other senior executive positions.

Committees of Our Board of Directors

Our Board has established various standing Committees to assist it with the performance of its responsibilities. Our Board elects the members of these Committees and the Committee Chairs annually at its organizational meeting following our annual meeting of shareholders, based on the recommendations of the Nominating, Corporate Governance and Social Responsibility Committee. The Chair of each Committee develops with management the meeting agendas for that Committee. After each meeting, each Committee provides a full report to our Board.

Our Board has adopted written charters for each of its Committees. These charters are available on our website at https://www.altria.com/governance. The following charts summarize the primary responsibilities and composition of each of the Committees:

   Audit Committee 2021 Meetings: 7 Report: See page 25  
  Chair Other Members        
  George Muñoz John T. Casteen III Debra J. Kelly-Ennis Virginia E. Shanks    
    Marjorie M. Connelly Kathryn B. McQuade Ellen R. Strahlman    
 

Primary responsibilities include:

■  Assisting our Board in its oversight of (i) the integrity of our financial statements and financial reporting processesand systems of internal control, (ii) the qualifications, independence and performance of our independent registered public accounting firm, (iii) the internal auditors and the internal audit function, (iv) our risk assessment and risk management policies and practices and (v) our compliance with legal and regulatory requirements.

■  Preparing the Audit Committee report that the rules of the SEC require us to include in our proxy statement.

See “Audit Committee Matters” beginning on page 24 for further information on the Audit Committee.

The Audit Committee consists entirely of non-management directors all of whom our Board has determined are independent within the meaning of the listing standards of the NYSE and Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our Board has determined that all members of the Audit Committee are financially literate and that Ms. Connelly, Mr. Muñoz and Ms. McQuade are “audit committee financial experts” within the meaning set forth in the regulations of the SEC.

 

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   Compensation and Talent Development Committee 2021 Meetings: 4 Report: See page 28  
  Chair Other Members        
  W. Leo Kiely III John T. Casteen III Kathryn B. McQuade      
    Dinyar S. Devitre Virginia E. Shanks      
 

Primary responsibilities include:

■  Determining and approving CEO compensation and reviewing and approving the compensation of our other executive officers.

■  Overseeing the development of executive succession plans and evaluating and making recommendations to our Board regarding potential CEO candidates and evaluating and approving candidates for other senior executive positions.

■  Evaluating the design and effectiveness of our overall compensation program and monitoring risks related to such design.

■  Reviewing initiatives and programs related to corporate culture and talent development.

See “Executive Compensation” beginning on page 27 for further information on the Compensation and Talent Development Committee.

The Compensation and Talent Development Committee consists entirely of non-management directors all of whom our Board has determined are independent within the meaning of the listing standards of the NYSE and non-employee directors for the purposes of Rule 16b-3 of the Exchange Act.

 

 

   Executive Committee   2021 Meetings: 0  
  Chair Other Members        
  Kathryn B. McQuade Dinyar S. Devitre Debra J. Kelly-Ennis George Muñoz    
    William F. Gifford, Jr. W. Leo Kiely III Nabil Y. Sakkab    
  ■  Has authority to act for our Board during intervals between Board meetings to the extent permitted by Virginia law.  
       
  Finance Committee     2021 Meetings: 8  
  Chair Other Members        
  Dinyar S. Devitre R. Matt Davis George Muñoz      
    W. Leo Kiely III Nabil Y. Sakkab      
 

Primary responsibilities include:

■  Monitoring our financial condition, overseeing the sources and uses of cash flow and advising our Board with respect to financing needs, dividend policy, share repurchase programs, mergers, acquisitions, divestitures and similar capital allocation matters, and other financial matters.

 

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   Innovation Committee   2021 Meetings: 3  
  Chair Other Members        
  Nabil Y. Sakkab John T. Casteen III R. Matt Davis W. Leo Kiely III Ellen R. Strahlman  
    Marjorie M. Connelly Debra J. Kelly-Ennis Virginia E. Shanks    
 

Primary responsibilities include:

■  Assisting our Board in its oversight of the strategic goals and objectives of our subsidiaries’ innovation and marketing strategies, consumer/market understanding and brand plans, technological initiatives and research, development and engineering programs.

 
     
  Nominating, Corporate Governance and Social Responsibility Committee 2021 Meetings: 7  
  Chair Other Members        
  Debra J. Kelly-Ennis Marjorie M. Connelly Dinyar S. Devitre George Muñoz Ellen R. Strahlman  
    R. Matt Davis Kathryn B. McQuade Nabil Y. Sakkab    
 

Primary responsibilities include:

■  Identifying individuals qualified to become directors consistent with the criteria established by our Board and described in our Corporate Governance Guidelines and recommending to our Board a slate of nominees for election at each annual meeting of shareholders.

  Making recommendations to our Board concerning the appropriate size, function, needs and composition of ourBoard and its Committees.

  Reviewing non-employee director compensation and recommending any changes in compensation to our Board.

  Advising our Board on corporate governance matters.

  Overseeing the annual Board and Committee self-evaluation process.

  Providing oversight of our public affairs, corporate reputation and environmental and social responsibility strategies. The Nominating, Corporate Governance and Social Responsibility Committee consists entirely of non-management directors all of whom our Board has determined are independent within the meaning of the listing standards of the NYSE.

 

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BOARD AND GOVERNANCE MATTERS

Board Meetings and Attendance

Board Effectiveness

We believe our Board practices strengthen the effectiveness of our Board, and we assess them annually to identify opportunities for improvement.

Board and Committee Self-Evaluations

Our Board assesses annually its effectiveness and that of its Committees in discharging their responsibilities. The Nominating, Corporate Governance and Social Responsibility Committee oversees the evaluation process.

Format Topics Presentation of Findings
The Nominating, Corporate Governance and Social Responsibility Committee determines the format of the evaluations, which may include interviews conducted by the Chair, interviews conducted by the Chair of the Nominating, Corporate Governance and Social Responsibility Committee, interviews conducted by an independent third party or written surveys.

Self-evaluation topics generally include:

  Board composition and structure

  Meeting topics and process

  Information flow

  Board oversight of risk management and strategic planning

  Succession planning

  Access to management

The results of the self-evaluations are reported to our Board, which discusses the results to identify opportunities to enhance effectiveness.

Feedback Incorporated

Our Board implements enhancements and other modifications, as appropriate, identified during the self-evaluations.

Examples of actions our Board has taken in recent years in response to the annual self-evaluation process include enhanced information flow, such as additional pre-meeting materials and providing access to Committee materials for all directors, and reformatting meetings to enhance discussion on corporate strategy and other key issues.

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Board Succession Planning

The Nominating, Corporate Governance and Social Responsibility Committee has the primary responsibility for developing a succession plan for our Board. Using tools such as the annual Board and Committee self-evaluations and our Board retirement guidelines, it periodically reviews our Board composition and identifies the appropriate mix of experiences, skills, attributes and tenure for our Board as a whole in light of our strategies and needs with the objective of recommending a group of directors that can best continue our success and act in the best interests of Altria and our shareholders. The Committee and our Board are committed to developing a diverse pool of potential candidates for future Board service consideration. See “Process for Nominating Directors” and “Board Skills and Experience and Demographic Backgrounds” on pages 1 and 2, respectively, for a further discussion of our Board composition.

Board Retirement Guidelines

Our Board has adopted retirement guidelines that require a director who will have attained the age of 75 as of the date of the next annual meeting to tender his or her written resignation to our Board at least six months prior to such annual meeting. If our Board determines that continued service by the director is in the best interests of Altria and our shareholders, our Board has the discretion not to accept the resignation. As required under the retirement guidelines, Messrs. Casteen, Devitre, Kiely and Sakkab tendered their respective resignations to our Board in October 2021. We note that in October 2020, Mr. Casteen notified us of his intention to retire from our Board upon the completion of his then-current term. Following the passing of our former Chair in April 2021, Mr. Casteen agreed to stand for election to our Board at the 2021 Annual Meeting. After due consideration, our Board accepted Mr. Casteen’s resignation in October 2021, but did not accept the resignations of Messrs. Devitre, Kiely and Sakkab. In making the decision not to accept the resignations of these directors, our Board considered several factors, including their contributions, experience and qualifications, as well as Board continuity, and determined that their continued service is in the best interests of Altria and our shareholders. Subsequently, in February 2022, Mr. Devitre notified Altria of his decision to retire from our Board following the completion of his current term.

Director Education and Engagement

Upon election to our Board, new directors participate in a multi-day comprehensive on-boarding process. They are introduced to the operational aspects of our businesses, our strategies, key issues facing Altria and our Board governance processes. New directors meet individually with various members of management and visit key facilities, as appropriate, as part of the on-boarding program.

We make available to our directors third-party director education programs that provide additional perspective on various topics. We provide a list of programs, updated regularly, to our directors. They may also choose self-selected educational programs. We also periodically invite outside experts to meet with our Board to review matters relevant to corporate directors, including corporate governance.

Governance Guidelines, Policies and Codes

Our Board has adopted Corporate Governance Guidelines. In addition, our Board has adopted a Code of Business Conduct and Ethics for Directors (“Director Code”) and a policy with regard to reviewing certain transactions in which we are a participant and an officer, director or nominee for director has had or may have a direct or indirect material interest (see “Related Person Transactions and Code of Conduct” on page 69 for further information). These documents are available on our website at https:// www.altria.com/governance. Our Board has also adopted the Altria Code of Conduct (“Code of Conduct”) that applies to all our employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. The Code of Conduct is available on our website at https://www.altria.com/codeofconduct.

Director Compensation

Compensation Philosophy

Our philosophy is to provide competitive compensation necessary to attract and retain high-quality non-employee directors and appropriately compensate them for the time, expertise and effort required to serve as a director of a large publicly traded company that operates in a dynamic, highly regulated industry. Our Board believes that a substantial portion of director compensation should consist of equity-based compensation, coupled with robust stock ownership guidelines, to assist in aligning directors’ interests with the interests of shareholders. Directors who are employees of Altria receive no additional compensation for service as a director.

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Director Compensation Review

The Nominating, Corporate Governance and Social Responsibility Committee annually reviews and periodically recommends updates to the director compensation program to our Board for approval. During these reviews, the Committee considers our director compensation philosophy, the competitiveness of director compensation based on an independent benchmarking study (taking into account director compensation at our Compensation Survey Group (“CSG”) described under “Benchmarking” beginning on page 48 and at other large public companies) and current market practices. The Committee also considers the appropriateness of the form, mix and amount of director compensation. The Committee then makes a recommendation to our Board concerning such compensation with a view toward attracting and retaining qualified directors. After reviewing compensation in January 2021, the Committee determined, and our Board agreed, to leave our director compensation unchanged.

                                  
     
  Our directors’ annual stock awards have not increased since 2014, and annual cash retainers have not increased since 2016. The additional Board Chair stock award and cash retainer began in 2020 upon the separation of the roles of Chair and CEO and have remained the same since then.  
   
     
                       

Components of Compensation

The following chart presents the 2021 components of compensation for our non-employee directors:

Annual Stock Award   Annual Cash Retainers
     
Board Member (1) $175,000   Board Member (2) $110,000
Board Chair (3) $150,000   Board Chair (3) $150,000
      Committees Chair Member (4)

 

■  Audit

■  Compensation and Talent Development

$25,000 $5,000
 

■  Finance

■  Innovation

■  Nominating, Corporate Governance and Social Responsibility

$15,000
(1) The annual full value stock award is in the form of fully vested shares of Altria common stock.
(2) Paid in quarterly installments.
(3) The Board Chair also receives the annual Board member stock award, the annual Board member cash retainer and the annual Committee member cash retainers for the Committees on which he or she serves.
(4) Committee Chairs also receive the Committee member annual cash retainer.
(5) These percentages are averages and do not include the annual Board Chair stock award or annual Board Chair cash retainer.

Deferred Fee Plan

A non-employee director may elect to defer all or part of the award of shares of common stock and all or part of his or her cash retainers. Pursuant to the Deferred Fee Plan for Non-Employee Directors (“Deferred Fee Plan”), deferred retainers are credited to an unfunded bookkeeping account and may be “invested” in various “investment choices,” including an Altria common stock equivalent account. These “investment choices” parallel the investment options offered under the Deferred Profit-Sharing Plan for Salaried Employees and determine the “earnings” that are credited for bookkeeping purposes to a non-employee director’s account. The non-employee director will receive deferred awards of common stock and cash distributions of deferred retainers either prior to or following termination of service from our Board, as elected by the non-employee director.

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Matching Gift Program

Non-employee directors are eligible to participate in our Matching Gift Program. This program is available to all employees and non-employee directors. We match eligible donations of a minimum of $25 up to $30,000 per year per employee or non-employee director on a dollar-for-dollar basis to eligible non-profit organizations. In 2021, the following non-employee directors participated in this program: Mr. Casteen, Ms. Connelly, Mr. Davis, Mr. Devitre, Ms. Kelly-Ennis, Mr. Kiely, Ms. McQuade, Mr. Muñoz, Mr. Newman, Dr. Sakkab and Ms. Shanks. The aggregate amount of matching payments for these directors in 2021 was $229,606.

Other

In addition to cash payments, stock awards and matching gifts, non-employee directors are covered under our Business Travel Accident Insurance Plan, which is available generally to all employees.

The following table presents the compensation received by the non-employee directors for service as directors in fiscal year 2021.

Non-Employee Director Compensation Table

Name       Fees
Earned or
Paid in
Cash
($)
      Stock
Awards
($) (5)
      All Other
Compensation
($) (6)
      Total
($)
John T. Casteen III         125,000            175,024               2,000            302,024
Marjorie M. Connelly (1)   19,728     0       24,106     43,834
R. Matt Davis (1)   19,728     0       19,000     38,728
Dinyar S. Devitre   140,000     175,024       30,000     345,024
Thomas F. Farrell II (2)   27,500     0       0     27,500
Debra J. Kelly-Ennis   140,000     175,024       13,500     328,524
W. Leo Kiely III   150,000     175,024       30,000     355,024
Kathryn B. McQuade (3)   270,000     325,015       30,000     625,015
George Muñoz   150,000     175,024       30,000     355,024
Mark E. Newman (4)   125,000     175,024       30,000     330,024
Nabil Y. Sakkab   140,000     175,024       1,000     316,024
Virginia E. Shanks   125,000     175,024       20,000     320,024
Ellen R. Strahlman   125,000     175,024       0     300,024
(1) Ms. Connelly and Mr. Davis became directors effective October 27, 2021.
(2) Mr. Farrell passed away on April 2, 2021.
(3) Amounts include (a) annual Board member cash retainer, Committee member cash retainers and Board member stock award and (b) Board Chair cash retainer and stock award.
(4) Mr. Newman retired from service on our Board effective January 1, 2022.
(5) Pursuant to the 2015 Stock Compensation Plan for Non-Employee Directors (the “2015 Non-Employee Directors Plan”), on May 20, 2021, each non-employee director received 3,517 shares of Altria common stock with an aggregate grant date fair market value of $175,024, and Ms. McQuade received an additional 3,014 shares of Altria common stock with an aggregate grant date fair market value of $149,992 as Board Chair. The dollar value for the Board member stock award is slightly higher than $175,000 because the grant is made in whole shares. Ms. McQuade’s combined Board member stock award and Board Chair stock award was slightly higher than $325,000 because the grant is made in whole shares. The fair market value of all shares awarded of $49.765 per share was based on the average of the high and low trading prices of Altria common stock on May 20, 2021.
(6) All Other Compensation consists of matching gifts paid in 2021 under our Matching Gift Program.

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Stock Ownership Guidelines for Non-Employee Directors and Prohibition on Hedging and Pledging

Our Board believes that stock ownership guidelines further align the interests of our Board with those of our shareholders. Our non-employee directors are expected to hold shares of our common stock in an amount equal to the lesser of five times the then-current annual Board member cash retainer or 26,000 shares. Non-employee directors are expected to reach this ownership level within five years of being elected to our Board and to hold the requisite number of shares until retirement. The ownership guidelines for non-employee directors may be satisfied with all beneficially owned shares, including deferred shares and share equivalents. As of December 31, 2021, all our non-employee directors who had served on our Board for five or more years held a sufficient number of shares to satisfy these guidelines.

Our non-employee directors are not permitted to engage in hedging or pledging activities with respect to our stock. A description of Altria’s hedging and pledging policies is included under “Prohibition on Hedging and Pledging” on page 70.

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     Proposal
1
         
                 
      Election of Directors       
       Our Board recommends a vote FOR each nominee.    
           
                          

We propose that the 12 individuals named below, 11 of whom our Board has affirmatively determined to be independent, be elected as directors to hold office until the next annual meeting of shareholders and until their successors have been elected and qualified, subject to their earlier death, resignation or removal. The Nominating, Corporate Governance and Social Responsibility Committee has recommended to our Board, and our Board has approved, the individuals named below.

We provide in the biographies below information on each nominee. The Committee and our Board believe that these nominees individually and collectively provide our Board with an impressive breadth of experiences, attributes, qualifications and skills.

Although it is not anticipated that any of the individuals named below will be unable or unwilling to stand for election, in the event of such an occurrence, a proxy may be voted for a substitute designated by our Board. In lieu of designating a substitute, our Board may reduce the number of directors.

Our Board recommends a vote FOR each of the nominees for election as directors.

2022 Director Nominee Biographies and Qualifications

         
       

Position, Principal Occupation and Professional Experience:

Chief Financial Officer, Greater Toronto Airports Authority

■  Serves as Chief Financial Officer of Greater Toronto Airports Authority, operator of Toronto Pearson International Airport, Canada’s largest airport, since 2017.

■  Served as Executive Vice President and Chief Financial Officer, Business Development of Maple Leaf Sports & Entertainment Ltd. (“Maple Leaf Sports”), owner of the Toronto Maple Leafs, Toronto Raptors, Toronto FC and the Air Canada Centre, from 2004 through 2016. Mr. Clarke spent 26 years at Maple Leaf Sports in key strategic planning and financial leadership positions.

Other Current Public Directorships:

None.

Prior Public Company Directorships:
None.

Other Directorships, Trusteeships and Memberships:
AGF Management Limited (TSX:AGF.B); First Capital Real Estate Investment Trust (TSX:FCR.UN); Canadian Olympic Committee.

Director Qualifications:
The Nominating, Corporate Governance and Social Responsibility Committee believes that Mr. Clarke’s significant financial, accounting, strategic planning, business operations and risk management experience provide clear support for his nomination for election to our Board.



 

Ian L.T. Clarke

Age: 61

 
   
         
             

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Marjorie M. Connelly

Age: 60

Director Since: October 2021

Board Committees:

  Audit

  Innovation

  Nominating, Corporate Governance and Social Responsibility

   

 

Position, Principal Occupation and Professional Experience:

Retired Chief Operating Officer, Convergys Corporation

  Served as Chief Operating Officer of Convergys Corporation (now Concentrix Corporation), a publicly traded global leader in customer management, from 2014 to 2017.

■  Served as Global Chief Operating Officer at Barclaycard from 2009 to 2011.

  From 2006 to 2008, served as Chief Operating Officer of Wachovia Securities.

  Held a variety of executive positions at Capital One Financial Corporation, including Executive Vice President, Head of Infrastructure for U.S. credit card operations and interim Chief Information Officer, from 1994 to 2006.

Other Current Public Directorships:

PRA Group, Inc.

Prior Public Company Directorships:

None.

Other Directorships, Trusteeships and Memberships:

MissionOG (Advisor); The Women’s Initiative; State Council of Higher Education for Virginia.

Director Qualifications:

The Nominating, Corporate Governance and Social Responsibility Committee believes that Ms. Connelly’s extensive operational executive management experience at large publicly held consumer-oriented companies, together with her financial acumen and experience, information technology experience, general business knowledge and public company board experience, provide clear support for her nomination for election to our Board.

 
          
           
         
         
              
 

R. Matt Davis

Age: 57

Director Since: October 2021

Board Committees:

■  Finance

■  Innovation

  Nominating, Corporate Governance and Social Responsibility

   
 
 

Position, Principal Occupation and Professional Experience:

President, Driftwood Leadership, LLC and Retired President, North America, and Senior Vice President, Global Corporate Affairs, Dow Inc.

  Serves as President of Driftwood Leadership, LLC, a leadership training and consulting firm, since 2019.

  Served as President, North America, and Senior Vice President, Global Corporate Affairs of Dow Inc. (“Dow”), an innovative materials science company, from 2016 to 2019.

  Held a variety of executive corporate affairs, communications and leadership roles across the Dow organization, from 1987 to 2016.

Other Current Public Directorships:

None.

Prior Public Company Directorships:

None.

Other Directorships, Trusteeships and Memberships:

World Freerunning Parkour Federation; Saratoga WarHorse Foundation, Inc.; Michigan State University, College of Communications Arts & Sciences Alumni Board; After The Impact Fund, Inc.

Director Qualifications:

The Nominating, Corporate Governance and Social Responsibility Committee believes that Mr. Davis’ extensive public policy, business and executive leadership experiences in a highly regulated industry (including his role leading Dow’s largest operating division) provide clear support for his nomination for election to our Board.

 
            
           
         

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Position, Principal Occupation and Professional Experience:

Chief Executive Officer, Altria Group, Inc.

■  Serves as Chief Executive Officer of Altria Group, Inc. since April 2020.

■  Served as Vice Chairman and Chief Financial Officer of Altria from May 2018 to April 2020.

■  Served as Executive Vice President and Chief Financial Officer of Altria from March 2015 through May 2018.

■  Held numerous other senior leadership roles since joining the Altria family of companies in 1994.

Other Current Public Directorships:

Anheuser-Busch InBev SA/NV.

Prior Public Company Directorships:

None.

Other Directorships, Trusteeships and Memberships:

Catalyst Inc.

Director Qualifications:

The Nominating, Corporate Governance and Social Responsibility Committee believes that Mr. Gifford’s role as Altria’s CEO and his significant knowledge and understanding of Altria, our businesses and the external environment in which our businesses operate, together with his significant industry knowledge, financial expertise and leadership experiences, provide clear support for his nomination for election to our Board.

    

 

William F. Gifford, Jr.

Age: 51

Director Since: May 2020

Chief Executive Officer

Board Committees:

■   Executive Committee

 
 
         
             
              
           
         

Position, Principal Occupation and Professional Experience:

Retired President and Chief Executive Officer, Diageo Canada, Inc.

  Served as President and Chief Executive Officer of Diageo Canada, Inc., a subsidiary of Diageo plc, a global spirits, wine and beer company, from 2008 to June 2012.

  Served as Chief Marketing Officer for Diageo North America, Inc., a subsidiary of Diageo plc, from 2005 to 2008.

  Held marketing, sales and general management positions with RJR/Nabisco, Inc., The Coca-Cola Company, General Motors Corporation and Grand Metropolitan PLC.

Other Current Public Directorships:

TFI International Inc.

Prior Public Company Directorships:

Carnival Corporation & plc (2012 to January 2020); PulteGroup, Inc. (1997 to September 2016); Hertz Global Holdings, Inc. (2013 to October 2015).

Other Directorships, Trusteeships and Memberships:

Dress for Success Worldwide (Director Emeritus); Trivium Packaging B.V.

Director Qualifications:

The Nominating, Corporate Governance and Social Responsibility Committee believes that Ms. Kelly-Ennis’s leadership experiences, particularly her executive positions with several large, consumer-focused companies in multiple industries, and her significant marketing, innovation, sales and distribution experience at large publicly held companies, including companies in the consumer packaged goods industry, provide clear support for her nomination for election to our Board.

 

 

Debra J. Kelly-Ennis

Age: 65

Director Since: 2013

Board Committees:

■   Audit

■   Executive

■   Innovation

■  Nominating, Corporate Governance and Social Responsibility (Chair)

 
 
             
             

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W. Leo Kiely III

Age: 75

Director Since: 2011

Board Committees:

  Compensation and Talent Development (Chair)

  Executive

■  Finance

■  Innovation

   


Position, Principal Occupation and Professional Experience:

Retired Chief Executive Officer, MillerCoors LLC

  Retired as Chief Executive Officer of MillerCoors LLC, a joint venture combining the U.S. and Puerto Rico operations of SABMiller plc and Molson Coors Brewing Company, in July 2011, a position he had held since July 2009.

  Served as President and Chief Executive Officer of Molson Coors Brewing Company from February 2005 through July 2009.

  Held a variety of executive positions at Coors Brewing Company, including Chief Executive Officer, from March 1993 to March 2005.

■  Held executive positions with Frito-Lay, Inc., a subsidiary of PepsiCo, Inc., and Ventura Coastal Corporation, a division of Seven Up Inc., before joining Coors Brewing Company.

Other Current Public Directorships:

None.

Prior Public Company Directorships:

HC Government Realty Trust, Inc. (2016 to March 2019); Medpro Safety Products, Inc. (2009 to March 2014).

Other Directorships, Trusteeships and Memberships:

Riptide Waters, LLC. Previously served on the boards of The Denver Center for the Performing Arts and the Helen G. Bonfils Foundation.

Director Qualifications:

The Nominating, Corporate Governance and Social Responsibility Committee believes that Mr. Kiely’s extensive business, administrative and leadership experiences, particularly his various executive positions, including the role of chief executive officer, in the consumer packaged goods industry, provide clear support for his nomination for election to our Board.

      
       
              
         
         
              
 

Kathryn B. McQuade

Age: 65

Director Since: 2012

Chair of the Board

Board Committees:

■  Audit

■  Compensation and Talent Development

■  Executive (Chair)

■  Nominating, Corporate Governance and Social Responsibility

   


Position, Principal Occupation and Professional Experience:

Retired Executive Vice President and Chief Financial Officer, Canadian Pacific Railway Limited

■  Served as Senior Advisor of Canadian Pacific Railway Limited (“Canadian Pacific”), a transcontinental railway in Canada and the United States, from November 2012 to May 2013, after previously serving as Executive Vice President and Chief Financial Officer of Canadian Pacific from September 2008 until her retirement in November 2012.

■  Served as Executive Vice President and Chief Operating Officer of Canadian Pacific from June 2007 to September 2008.

■  Served as Executive Vice President – Planning and Chief Information Officer at Norfolk Southern Corporation where she spent 27 years in key information technology, strategic planning and finance leadership positions prior to joining Canadian Pacific.

Other Current Public Directorships:

None.

Prior Public Company Directorships:

None.

Other Directorships, Trusteeships and Memberships:

Previously served on the boards of TransAlta Renewables Inc. (TSX: RNW) and The College of William & Mary Foundation.

Director Qualifications:

The Nominating, Corporate Governance and Social Responsibility Committee believes that Ms. McQuade’s significant financial and accounting expertise, particularly her experience as a public company chief financial officer, her information technology experience, her general business knowledge and her management experience in a regulated industry, provide clear support for her nomination for election to our Board.

 
       
           
         

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Position, Principal Occupation and Professional Experience:
Principal, Muñoz Investment Banking Group, LLC, and Partner, Tobin & Muñoz

■  Serves as a principal of Muñoz Investment Banking Group, LLC.

■  Serves as a partner in the law firm of Tobin & Muñoz.

■  Served as President and Chief Executive Officer of the Overseas Private Investment Corporation from 1997 to January 2001.

■  Served as Chief Financial Officer and Assistant Secretary of the United States Treasury Department from 1993 to 1997.

Other Current Public Directorships:
Marriott International, Inc.; Laureate Education, Inc., BRC Inc.

Prior Public Company Directorships:
Anixter International, Inc. (2004 to June 2020); Esmark Incorporated (2007 to August 2008); Archipelago Holdings, Inc. (2004 to March 2006).

Other Directorships, Trusteeships and Memberships:
National Geographic Society; Direct Edge, Inc.

Director Qualifications:
The Nominating, Corporate Governance and Social Responsibility Committee believes that Mr. Muñoz’s accounting, financial, legal and public policy expertise, along with his background in international business and his significant professional, administrative and leadership experiences in both the private and public sectors, provide clear support for his nomination for election to our Board.



 

George Muñoz

Age: 70

Director Since: 2004

Board Committees:

■  Audit (Chair)

■  Executive

■  Finance

■  Nominating, Corporate Governance and Social Responsibility

 
 
               
             
           
         
       

Position, Principal Occupation and Professional Experience:
Retired Senior Vice President, Corporate Research and Development, The Procter & Gamble Company

■  Retired as Senior Vice President, Corporate Research and Development of the Proctor & Gamble Company, a global leader in consumer goods, in November 2007.

■  Held a variety of positions at The Procter & Gamble Company beginning in 1974.

Other Current Public Directorships:
None.

Prior Public Company Directorships:
None.

Other Directorships, Trusteeships and Memberships:
Several privately held companies. Previously served on the boards of Deinove (Euronext Growth Paris: ALDEI); Givaudan SA (SWX: GIVN); and Pharnext (Euronext Growth Paris: ALPHA).

Director Qualifications:
The Nominating, Corporate Governance and Social Responsibility Committee believes that Dr. Sakkab’s innovation expertise in the consumer packaged goods industry and his extensive overall business and global product development and commercialization knowledge, including knowledge of regulated products, provide clear support for his nomination for election to our Board.



 
 

Nabil Y. Sakkab

Age: 74

Director Since: 2008

Board Committees:

■  Executive

■  Finance

■  Innovation (Chair)

■  Nominating, Corporate Governance and Social Responsibility

 
 
           
             

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Virginia E. Shanks

Age: 61

Director Since: 2017

Board Committees:

■  Audit

■  Compensation and Talent Development

■  Innovation                             

            

 

Position, Principal Occupation and Professional Experience:
Retired Executive Vice President and Chief Administrative Officer, Pinnacle Entertainment, Inc.

■  Served as Executive Vice President and Chief Administrative Officer of Pinnacle Entertainment, Inc. (“Pinnacle”), a casino entertainment company, from July 2013 until October 2018 when Pinnacle merged with Penn National Gaming, Inc. (“Penn National”), also a casino entertainment company.

■  Served as Strategic Advisor for Penn National through December 2019 after the merger.

■  Served as Executive Vice President and Chief Marketing Officer of Pinnacle from October 2010 to June 2013.

■  Served as Chief Marketing Officer for Multimedia Games Inc. from 2008 to 2010 prior to joining Pinnacle.

■  Held senior executive positions for more than 25 years at the property, division and corporate levels of Caesars Entertainment Corp., including Senior Vice President of Brand Management, prior to 2008.

Other Current Public Directorships:
EPR Properties; Scientific Games Corporation.

Prior Public Company Directorships:
None.

Other Directorships, Trusteeships and Memberships:
None.

Director Qualifications:
The Nominating, Corporate Governance and Social Responsibility Committee believes that Ms. Shanks’s significant regulated industry and consumer-oriented marketing expertise, particularly her extensive background in brand positioning and digital and database marketing, as well as her experience in information technology and cybersecurity, provide clear support for her nomination for election to our Board.

 
           
           
         
         
       
 

Ellen R. Strahlman

Age: 64

Director Since:
November 2020

Board Committees:

■  Audit

■  Innovation

■  Nominating, Corporate Governance and Social Responsibility

        

Position, Principal Occupation and Professional Experience:
Retired Executive Vice President, Research & Development and Chief Medical Officer, Becton, Dickinson and Company

■  Served as Executive Vice President, Research & Development and Chief Medical Officer of Becton, Dickinson and Company, a leading global medical technology company, from April 2013 until her retirement in January 2018.

■  Served as a Senior Advisor to the CEO at GlaxoSmithKline from April 2012 through March 2013 after previously serving as the Senior Vice President and Chief Medical Officer from April 2008 through March 2012.

■  Held senior executive leadership roles in global product development and commercialization, medical affairs and business development at leading pharmaceutical and medical technology companies including Pfizer, Inc., Novartis AG, Virogen Limited, Bausch & Lomb, Inc. and Merck & Co., Inc. prior to 2008.

Other Current Public Directorships:
None.

Prior Public Company Directorships:
None.

Other Directorships, Trusteeships and Memberships:
Previously served on the boards of Syncona Limited (LSE: SYNC) and Syncona Partners LLP.

Director Qualifications:
The Nominating, Corporate Governance and Social Responsibility Committee believes that Dr. Strahlman’s significant experience in innovation, global product development and commercialization in regulated industries, as well as her medical background and experience in biosciences, provide clear support for her nomination for election to our Board.


            
           
         

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Position, Principal Occupation and Professional Experience:
Retired Executive Chairman, Forbes Bros. Holdings, Ltd.

■  Served as U.S. Chairman and Chief Executive Officer of Forbes Bros. Holdings, Ltd., an energy infrastructure construction company, from 2017 to 2019, and as Executive Chairman from 2019 to 2021.

■  Served as Chief Executive Officer of Yzaguirre Group, LLC, a business and public affairs strategic advisory firm, from 2006 to 2017.

■  Served as Chairman of Isolux Ingenieria USA, LLC, the U.S. operation and wholly owned subsidiary of Isolux Corsan S.A., a Spanish engineering, procurement and construction company, from 2011 to 2013, having previously served as Chief Executive Officer from 2010 to 2011.

■  Served as President of Hunt-Mexico, Inc., an investor in energy, real estate and private equity opportunities, and as President of Hunt Resources, Inc., an investor in energy production and transportation opportunities, from 2002 to 2006.

Other Current Public Directorships:
Aris Water Solutions, Inc.; Luther Burbank Corporation.

Prior Public Company Directorships:
BBVA USA Bancshares, Inc. (2009 to 2021); Texas Regional Bancshares, Inc. (2000 to 2006).

Other Directorships, Trusteeships and Memberships:
Latino Corporate Directors Association. Previously served on the boards of BBVA USA Bank and Texas State Bank.

Director Qualifications:
The Nominating, Corporate Governance and Social Responsibility Committee believes that Mr. Yzaguirre’s executive leadership experience, financial acumen, domestic and international business and public affairs experience (including with highly regulated industries) and public company board experience, provide clear support for his nomination for election to our Board.



 

 

M. Max Yzaguirre

Age: 61

 
 
                   
             

Altria Group, Inc. – Proxy Statement     23


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Audit Committee Matters

Annual Evaluation and Selection of Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) has been our independent registered public accounting firm since 1998. Prior to 1998, our independent registered public accounting firm was Coopers & Lybrand L.L.P. (until its merger with Price Waterhouse LLP in 1998). In addition to assuring the rotation of the lead audit partner every five years as required by law, the Audit Committee is responsible for selecting, reviewing and evaluating the lead partner and senior members of the audit engagement team and considers whether, in order to assure continuing auditor independence, there should be a rotation of the firm.

In selecting PricewaterhouseCoopers as our independent registered public accounting firm, the Audit Committee conducted its annual evaluation of the firm. This evaluation considers a number of factors in deciding whether to re-engage PricewaterhouseCoopers, including technical competence, knowledge of our industry and Altria, quality of services, reputation and communications with management and the Audit Committee. The Audit Committee also evaluates the firm’s independence program and quality control procedures, the results of Public Company Accounting Oversight Board (“PCAOB”) and peer reviews of the firm’s quality controls and the appropriateness of the firm’s fees. The Audit Committee also considers PricewaterhouseCoopers’s tenure and, while the Audit Committee periodically considers firm rotation, it continues to believe that extended tenure results in higher quality audit work with greater operational efficiencies through the leveraging of PricewaterhouseCoopers’s deep institutional knowledge of our operations and businesses, accounting policies and practices, and internal control over financial reporting. The Audit Committee is also mindful of the potential impacts of selecting a different firm, including the significant time commitment and expense inherent in on-boarding a new independent registered public accounting firm.

The Audit Committee and our Board believe that the continued retention of PricewaterhouseCoopers to serve as our independent registered public accounting firm is in the best interests of Altria and our shareholders.

Independent Registered Public Accounting Firm’s Fees

The Audit Committee has the sole authority to approve all engagement fees and terms associated with the retention of PricewaterhouseCoopers. As noted in the Audit Committee Report on page 25, the Audit Committee pre-approved all fees associated with the services that the firm provided in 2021.

Aggregate fees, including out-of-pocket expenses, for professional services rendered by PricewaterhouseCoopers for the fiscal years ended December 31, 2021 and 2020 were comprised of the following (in thousands):

    2021
($)
      2020
($)
Audit Fees (1)   5,775   6,761
Audit-Related Fees (2)   905   745
Tax Fees (3)   800   1,235
All Other Fees (4)   5   5
TOTAL   7,485   8,746
(1) Fees and expenses for (a) the audit of our consolidated financial statements and internal control over financial reporting, including statutory audits of the financial statements of our subsidiaries, (b) reviews of our unaudited condensed consolidated interim financial statements and (c) reviews of documents filed with the SEC.
(2) Fees and expenses for audit-related services, which include certain employee benefit plan audits, accounting consultations and procedures relating to various other audit and special reports.
(3) Fees and expenses for U.S. and foreign tax compliance and planning, and consultation and advice on tax examinations.
(4) Other fees were related to licenses for technical accounting tools.

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AUDIT COMMITTEE MATTERS

Pre-Approval Policy

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of service and is subject to a specific budget. The Audit Committee requires the independent registered public accounting firm and management to report periodically on the actual fees charged for each category of service.

During the year, it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging the independent registered public accounting firm. The Audit Committee has delegated pre-approval authority to the Chair of the Audit Committee for those instances when pre-approval is needed prior to a scheduled Audit Committee meeting. The Chair of the Audit Committee must report on such approvals at the next scheduled Audit Committee meeting.

Audit Committee Report for the Year Ended December 31, 2021

Management has the primary responsibility for Altria’s financial statements and the reporting process, including the systems of internal accounting control. The Audit Committee monitors Altria’s financial reporting processes and systems of internal accounting control, the independence and the performance of PricewaterhouseCoopers and the performance of the internal auditors.

The Audit Committee has received representations from management that Altria’s consolidated financial statements were prepared in accordance with GAAP and that Altria maintained effective internal control over financial reporting, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and PricewaterhouseCoopers. The Audit Committee has discussed with PricewaterhouseCoopers its evaluation of the accounting principles, practices and judgments applied by management, and the Audit Committee has discussed with PricewaterhouseCoopers the matters required to be discussed by applicable standards adopted by the PCAOB.

The Audit Committee has received from PricewaterhouseCoopers written disclosures and a letter required by applicable requirements of the PCAOB regarding PricewaterhouseCoopers’s communications with the Audit Committee concerning independence and has discussed with PricewaterhouseCoopers its independence from Altria and our management. The Audit Committee pre-approved all fiscal year 2021 audit and permissible non-audit services provided by PricewaterhouseCoopers and the fees for those services included on page 24. As part of this process, the Audit Committee reviewed non-audit services and fees to assure compliance with regulations prohibiting the independent registered public accounting firm from performing specified services that might impair its independence.

The Audit Committee discussed with Altria’s internal auditors and PricewaterhouseCoopers the overall scope of and plans for their respective audits. The Audit Committee has met with the internal auditors and PricewaterhouseCoopers, separately and together, with and without management present, to discuss Altria’s financial reporting processes and internal control over financial reporting. The Audit Committee has reviewed significant audit findings prepared by PricewaterhouseCoopers and those prepared by the internal auditors, together with management’s responses.

Based on the reviews and discussions referred to above, the Audit Committee recommended to our Board the inclusion of the audited consolidated financial statements in Altria’s 2021 Form 10-K.

Audit Committee:

George Muñoz, Chair
John T. Casteen III
Marjorie M. Connelly
Debra J. Kelly-Ennis
Kathryn B. McQuade
Virginia E. Shanks
Ellen R. Strahlman

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AUDIT COMMITTEE MATTERS

     Proposal
2
         
                 
      Ratification of the Selection of Independent Registered Public Accounting Firm       
       Our Board recommends a vote FOR ratification of the selection of PricewaterhouseCoopers.    
           
                          

As reflected in the Audit Committee Charter, the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit our consolidated financial statements. The Audit Committee has selected PricewaterhouseCoopers as our independent registered public accounting firm for the fiscal year ending December 31, 2022 and has directed that management submit such selection to shareholders for ratification at the 2022 Annual Meeting.

Shareholder ratification of the selection of PricewaterhouseCoopers as our independent registered public accounting firm is not required by our By-Laws or otherwise. However, we are submitting the selection of PricewaterhouseCoopers to shareholders for ratification as a matter of good corporate governance. If our shareholders fail to ratify the selection, the Audit Committee will reconsider whether to retain PricewaterhouseCoopers. Even if the selection is ratified, the Audit Committee in its discretion may appoint a different independent registered public accounting firm at any time during the year if it is determined that such a change would be in the best interests of Altria and our shareholders.

We expect representatives of PricewaterhouseCoopers will be present at the meeting. The representatives will have an opportunity to make a statement if they so desire and be available to respond to appropriate questions.

Our Board recommends a vote FOR ratification of the selection of PricewaterhouseCoopers.

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Executive Compensation – Table of Contents

Compensation and Talent Development Committee Report for the Year Ended December 31, 2021 28
Compensation Discussion and Analysis 28
Introduction 28   Post-Termination Benefits and Change in
Control Payments
46
Overview 29  
Compensation Philosophy 29   Decision Making Process 47
Business Performance 29   Role of the Compensation and
Talent Development Committee
47
Pay-For-Performance 30  
Say on Pay and Shareholder Engagement 31   Role of Consultants 48
2021 Performance of NEOs 32   Benchmarking 48
Executive Compensation Design 35   Risk Assessment 49
Principles 35   Other Considerations 50
2021 Executive Compensation Program Elements 36   Stock Ownership and Holding Requirements
and Prohibition on Hedging and Pledging
50
2021 Executive Compensation Program Decisions 38  
Salary 38   “Clawback” Policy Regarding the Adjustment or
Recovery of Compensation
50
Annual Incentives 39  
Long-Term Incentives 42   Tax and Accounting Considerations 50
Perquisites 46   Compensation and Talent Development Committee
Interlocks and Insider Participation
50
     
Compensation Tables and Other Matters       51
Summary Compensation Table 51   Non-Qualified Deferred Compensation 57
All Other Compensation 52   Defined Contribution Plans 57
Grants of Plan-Based Awards during 2021 53   DPS Plan 57
Outstanding Equity Awards as of December 31, 2021 54   BEP DPS 58
Stock Vested during 2021 54   Payments upon Change in Control or
Termination of Employment
58
Pension Benefits 55  
Defined Benefit Plans 55   Payments upon Change in Control 58
Retirement Plan 55   Termination Payments 59
BEP Pension 56   CEO Pay Ratio 61
  Proposal 3     Non-Binding Advisory Vote to Approve the Compensation of Altria’s Named Executive Officers 62

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Executive Compensation

Compensation and Talent Development Committee Report
for the Year Ended December 31, 2021
 

The Compensation and Talent Development Committee has reviewed and discussed the “Compensation Discussion and Analysis” section of this Proxy Statement with management. Based on its review and discussions with management, the Compensation and Talent Development Committee recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation and Talent Development Committee:

W. Leo Kiely III, Chair
John T. Casteen III
Dinyar S. Devitre
Kathryn B. McQuade
Virginia E. Shanks

Compensation Discussion and Analysis

Introduction

In this section, we provide a detailed description of our executive compensation program, with a focus on decisions by the Compensation and Talent Development Committee (for purposes of the “Executive Compensation” section, the “Committee”) with respect to our NEOs:

Name   Position during 2021
William F. Gifford, Jr.   Chief Executive Officer, Altria Group, Inc.
Salvatore Mancuso   Executive Vice President and Chief Financial Officer, Altria Group, Inc.
Murray R. Garnick   Executive Vice President and General Counsel, Altria Group, Inc.
Jody L. Begley   Executive Vice President and Chief Operating Officer, Altria Group, Inc.
Heather A. Newman   Senior Vice President, Corporate Strategy, Altria Group, Inc.

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EXECUTIVE COMPENSATION

Overview

Compensation Philosophy

Our goal is to design our executive compensation program to align the interests of our executive officers with the interests of our shareholders. We believe this requires:

clear articulation of corporate and individual performance goals      a competitive, financially disciplined executive compensation program that rewards past success and creates the appropriate incentives for future business success      transparent measurement against both corporate and individual performance goals

Business Performance

Our business performance is a key factor in determining executive compensation. Altria delivered outstanding results in 2021 across our businesses, including strong financial performance, progress toward our Vision and advancements in our ESG efforts. The following graphs summarize our one- and three-year performance against key performance measures:

Adjusted Diluted EPS (1) (12/31/2018 – 12/31/2021) ($)        Dividend Rate (1) (8/22/2019 – 8/26/2021) ($)

(1)  2018 and 2019 adjusted diluted EPS amounts were recast to reflect changes to ABI special items.

(2)  Compound annual growth rate (“CAGR”) based on 2018 adjusted diluted EPS of $4.02.

   

(1)  Annualized dividend based on quarterly dividend rate per share of Altria common stock declared during each year.

(2)  CAGR based on the annualized dividend rate per share of Altria common stock of $3.20 that was declared in August 2018.

       
       
2021 TSR (1) (12/31/2020 – 12/31/2021) (%)     Three-Year TSR (1) (12/31/2018 – 12/31/2021) (%)

(1)  FactSet Daily Return (December 31, 2020–December 31, 2021). Assumes reinvestment of dividends as of the ex-dividend date.

   

(1)  FactSet Daily Return (December 31, 2018–December 31, 2021). Assumes reinvestment of dividends as of the ex-dividend date.

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EXECUTIVE COMPENSATION

Pay-For-Performance

The following graph illustrates the relationship between our CEO’s total direct compensation (including annualized LTIP compensation) and our indexed TSR:

(1) CEO pay reflects an annualized allocation of the actual award for the 2017 — 2019 LTIP performance cycle for 2019 and allocations of the target awards for the three-year LTIP award performance cycles commencing in 2020 and 2021. The 2020 and 2021 cycles include transition multipliers as discussed under “Long-Term Incentives: 2021 – 2023 LTIP Awards” on page 44.
(2) Indexed TSR reflects a December 31, 2018 starting point (with a nominal value of 100) and represents the total growth (including dividends) from that date through each December 31.
(3) 2019 represents the total direct compensation of our former CEO, Mr. Howard A. Willard III.
(4) 2020 represents Mr. Gifford’s total direct compensation, which was a mix of his total direct compensation as CFO (January 1 through April 15) and as CEO (April 16 through December 31).
(5) 2021 represents Mr. Gifford’s total direct compensation.

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EXECUTIVE COMPENSATION

Say on Pay and Shareholder Engagement

                       

At the 2021 Annual Meeting, over

85%

of the votes cast approved our NEO compensation on an advisory basis.

We provide our shareholders with an annual advisory vote (“say on pay”) on the compensation of our NEOs. While this vote is not binding on us, our Board or the Committee, the Committee takes the results of say on pay votes and shareholders’ perspectives and feedback into consideration when making future decisions with respect to our executive compensation program.

The Committee is committed to regularly reviewing our executive compensation program in the context of our compensation philosophy.

 

   

      

                       

 

 

We periodically engage with large investors to discuss our executive compensation program. We value the perspectives we gain from these conversations. As evidence of our responsiveness to prior shareholder feedback, best practices and market trends, the Committee or management made changes to Altria’s executive compensation program over the past several years. Examples of these changes include:

Year       Change
2021  

  The Committee adopted new guidelines related to executive officers departing Altria for reasons other than normal retirement, death, disability or change of control:

■  The Committee will not accelerate vesting or make payments for forfeited long-term performance-based awards (such as PSUs granted after 2020 and LTIP cash payments) based on target performance. Rather, the Committee will base such vesting or payments on actual performance either for the full cycle or through the date of separation. The guidelines further specify that such vesting or payments will typically be prorated for the period that the executive officer worked during the performance cycle(s).

■  As a general proposition, special separation payments for voluntary departures are disfavored and will only be paid under unusual circumstances. If unusual circumstances exist that warrant additional payment, the Committee will disclose the rationale, and total severance payments may not exceed three times the executive’s base salary.

■  The Committee modified our executive stock ownership guidelines to exclude unvested PSUs as counting towards ownership requirements.

2020   

■  The Committee transitioned our cash-based LTIP from three-year end-to-end performance cycles to three-year overlapping cycles, with a new performance cycle introduced each year, aligning our pay design with that of our peers and enabling the Committee to re-prioritize financial or strategic focus areas as needed to successfully pursue our Vision.

■  Management eliminated physical exams as an executive perquisite.

The Committee intends to continue its consistent practice of designing executive compensation programs that:

align the interests of shareholders and executives;
deliver executive pay that is aligned with company performance;
focus executives on creating value in both the short- and long-term; and
do not encourage unnecessary or excessive risk-taking.

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EXECUTIVE COMPENSATION

2021 Performance of NEOs

The Committee considered several factors in approving each element of 2021 executive compensation. For the 2021 Annual Incentive Award plan, the Committee primarily evaluated our financial and strategic performance, as described under “Business Performance” on page 29 The Committee also considered the individual performance of each NEO for purposes of approving salary increases, annual cash incentive awards and equity awards. Executives receive variable elements of short- and long-term compensation only after the relevant performance period has ended and the Committee has assessed Altria’s actual performance relative to stated goals established at the beginning of the period. In addition, the Committee considers industry compensation market data and tally sheets for each of the NEOs that include their total cash and long-term compensation for the last three years.

The Committee evaluated each of our NEO’s progress against their performance goals and the relationship of their performance to our overall 2021 results. We discuss the 2021 performance of each NEO below.

       
 

 

William F. Gifford, Jr.

 

Chief Executive Officer

 

Key Responsibilities

Mr. Gifford provided strategic leadership to the executive team and employees in a dynamic, competitive and highly regulated environment. He also served as one of our designated directors on the board of directors of ABI.

2021 Achievements

Mr. Gifford:

■  Maintained employee focus on our Vision to responsibly lead the transition of adult smokers to a smoke-free future, Our Cultural Aspiration and Inclusion & Diversity Aiming Points as Altria navigated a dynamic, highly competitive environment;

■  Led Altria in achieving 5.7% adjusted diluted EPS growth and 3.3% total adjusted OCI growth for 2021; (1)

■  Championed the expansion of our internal talent development system that gives employees new opportunities for growth and our people leaders broader exposure to talent throughout the enterprise;

■  Oversaw our significant ESG accomplishments, including being the first U.S. tobacco company to issue a standalone Task Force on Climate-related Financial Disclosures report, receiving a double ‘A’ rating from CDP for tackling climate change and protecting water security, and sponsoring TruAge™, a digital age verification system to help prevent underage use of tobacco products; and

■  Provided executive sponsorship of our MOSAIC (LGBTQ+) employee resource group.

     
                                         
   
(1) Adjusted diluted EPS growth and total adjusted OCI growth are non-GAAP financial measures. See Exhibit A to this Proxy Statement for information regarding non-GAAP financial measures and reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures.

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EXECUTIVE COMPENSATION

       
 

 

Murray R. Garnick

 

Executive Vice President and General Counsel

 

Key Responsibilities

Mr. Garnick’s responsibilities included leading Altria’s Law and Regulatory Affairs functions and overseeing the development and execution of legal and regulatory strategies.

2021 Achievements

Mr. Garnick:

■  Managed complex litigation matters, including the Federal Trade Commission administrative trial in connection with our investment in JUUL, product liability and securities cases, Engle-progeny cases and litigation/arbitration relating to the Master Settlement Agreement and previously settled state agreements;

■  Oversaw the preparation and filing of numerous tobacco product applications with the FDA;

■  Led legal strategy and support in connection with our existing investments, including Cronos and JUUL, and potential opportunities to accelerate progress toward our Vision;

■  Led our advancement of science- and evidence-based regulatory policies to promote the availability of reduced risk products; and

■  Championed numerous ID&E initiatives, including expanding diversity among outside counsel.

     
                                         
       
 

 

Salvatore Mancuso

 

Executive Vice President and Chief Financial Officer

 

Key Responsibilities

Mr. Mancuso’s responsibilities included overseeing Altria’s Tax, Treasury, Audit, Financial Planning & Analysis and Controller functions, while also overseeing Corporate Security & Procurement and Philip Morris Capital Corporation.

2021 Achievements

Mr. Mancuso:

■  Oversaw cash returns to shareholders of more than $8.1 billion through dividends and share repurchases;

■  Directed the analysis of our strategic options in light of the expiration of our five-year transfer restrictions on shares of ABI;

■  Oversaw a liability management transaction to extend long-term debt maturities at favorable rates;

■  Oversaw supply chain efforts to maintain uninterrupted supply of goods and services for our operating and service companies during the COVID-19 pandemic and manage related inflation risks;

■  Oversaw the continued wind-down of Philip Morris Capital Corporation;

■  Provided executive sponsorship of our black employee resource group (UNIFI); and

■  Provided executive sponsorship of our ESG efforts, including a renewable electricity virtual power purchase agreement. 

     
                                         

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EXECUTIVE COMPENSATION

       
 

 

Jody L. Begley

 

Executive Vice President and Chief Operating Officer

 

Key Responsibilities

Mr. Begley led Altria’s core tobacco businesses as well as Altria Group Distribution Company, Engineering, Quality and Product Development support.

2021 Achievements

Mr. Begley:

■  Led both the smokeable and oral tobacco products segments in delivering excellent financial results, while maintaining the strength of Marlboro, Copenhagen and Black & Mild in a difficult macro-economic environment;

■  Oversaw further expansion of on! oral nicotine pouches, including retail share growth, expanded retail distribution and achieving unconstrained manufacturing capacity;

■  Advanced our innovation system and adult smoker transition marketing capabilities to accelerate the growth of smoke-free product platforms;  

■  Strengthened trade programs in support of Revenue Growth Management and Adult Smoker Transition efforts; and

■  Provided executive sponsorship of our black employee resource group (UNIFI). 

     
                                         
       
 

 

Heather A. Newman

 

Senior Vice President, Corporate Strategy

 

Key Responsibilities

Ms. Newman’s responsibilities included leading Altria’s Corporate & International Development, Strategy & Consumer Marketplace Insights, Investor Relations, Corporate Communications and Digital & Technology functions. In addition, Ms. Newman led the development and execution of Altria’s Enterprise Initiatives and Long-Term Strategic Plan.

2021 Achievements

Ms. Newman:

■  Oversaw key corporate transactions, including the purchase of the remaining 20% of the global on! business and the sale of Ste. Michelle Wine Estates;

■  Oversaw and executed our enterprise initiatives and long-term strategic planning process geared at accelerating progress toward our Vision while managing complex strategic matters;

■  Oversaw and executed several organizational enhancements, including creating a new Digital & Technology Organization and expanding our international footprint; 

■  Oversaw our management and governance of our investments in Cronos and JUUL; and

■  Provided executive sponsorship for our Rise employee resource group for employees impacted by disabilities.

     
                                         

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EXECUTIVE COMPENSATION

Executive Compensation Design

Principles

Our executive compensation program includes multiple performance metrics to assess the efforts of all executives in pursuing our strategies. Specifically, our program is designed to satisfy the following objectives:

promote pursuit of business strategies that are aligned with our Vision, intended to create long-term value for shareholders and executed with integrity;
reward responsible and quality execution by making a significant portion of our executives’ compensation dependent on the achievement by Altria of key financial and strategic goals and their individual performance;
align the interests of shareholders and executives through equity and cash performance-based long-term incentive awards, stock ownership and holding requirements and anti-hedging and anti-pledging policies with respect to our stock;
build leadership capabilities and culture to achieve our Vision and Our Cultural Aspiration; and
promote internal fairness and a disciplined qualitative and quantitative assessment of performance.

The elements of our executive compensation program serve these objectives with the following design principles (as shown in the chart below), including a mix of:

fixed and at-risk variable performance-based compensation, with executives at higher levels subject to a higher proportion of variable compensation;
short- and long-term compensation to appropriately reward and motivate the achievement of both annual and long-term goals and objectives;
cash and equity compensation that seeks to discourage actions solely driven by our stock price to the detriment of strategic goals and to minimize the potentially dilutive nature of equity compensation on shareholder value; and
equity compensation consisting of RSU and PSU awards.

2021 CEO and Other NEOs Pay Mix (1)(2)

(1) Includes 2021 salary range midpoint, target award under the 2021 Annual Incentive Award plan, target value of 2021 equity awards and target 2021–2023 LTIP award.
(2) Due to rounding, percentages may not total 100%.

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EXECUTIVE COMPENSATION

The target Long-Term Cash Incentive percentages in the chart above reflect target award amounts approved by the Committee before application of the 117% transition multiplier that is described under “Long-Term Incentives: 2021 – 2023 LTIP Awards” on page 44. Presenting the target award amounts before the application of the multiplier is intended to better illustrate the mix of compensation without the distortive effects of the transition multiplier. Application of the transition multiplier would yield the following percentages:

CEO: Salary (11%), Annual Incentive (17%), Long-Term Cash Incentive (32%), PSUs (16%) and RSUs (24%);
   
Band B: Salary (18%), Annual Incentive (17%), Long-Term Cash Incentive (29%), PSUs (15%) and RSUs (22%); and
   
Band C: Salary (23%), Annual Incentive (18%), Long-Term Cash Incentive (26%), PSUs (13%) and RSUs (20%).

2021 Executive Compensation Program Elements

The table below summarizes the elements and objectives of the 2021 executive compensation program for the NEOs. The general objective of each element is to attract and retain world-class leaders.

  Annual Compensation           

Salary

Fixed cash compensation based on role at Altria.

     

■  Provide financial stability

■  Recognize individual role, experience, responsibility and performance

Annual Incentive Awards

Cash-based incentive plan based on performance during the plan year.

 

  Recognize annual company financial and strategic performance after it is delivered

■  Recognize annual individual performance after it is delivered

 

  Long-Term Incentive Compensation      
Equity Awards

RSU and PSU awards based on prior year’s individual performance and advancement potential, vesting after a three-year period. PSU payout amount tied to achievement of company financial performance measures.

     

■  Align NEOs’ interests with shareholders through company performance and building stock ownership

  Recognize individual performance after it is delivered and advancement potential

■  For PSUs, recognize company financial performance after it is delivered

■  Retain talented leaders

Long-Term Incentive Plan

Cash-based incentive plan based on three-year financial and strategic goals.

 

  Align NEOs’ interests with shareholders

  Recognize long-term company financial and strategic performance after it is delivered

  Retain talented leaders

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EXECUTIVE COMPENSATION

  Post-Termination Benefits and Change in Control Payments    

Defined Benefit Plans

Retirement plans providing for the continuation of a portion of compensation upon retirement or separation from service. Generally, employees hired prior to January 1, 2008 are eligible.

     

■  Provide opportunity for financial security in retirement

 

 

Defined Contribution Plans

Annual cash contribution based on a formula related to adjusted diluted EPS growth and, for employees not participating in a defined benefit plan, a supplemental contribution and matching contributions. Includes an Altria stock investment option.

 

■  Provide opportunity for financial security in retirement

■  Provide additional opportunity to build stock ownership 

 

     

Change in Control Payments

Payments to executives in connection with a defined change in the ownership of Altria. Change in control provisions are contained in our 2015 PIP and 2020 PIP.

 

■  Allow NEOs to focus on delivering shareholder value in a period of uncertainty

■  Allow NEOs to receive awards granted for periods of performance before a change in control

Termination Payments

For certain types of involuntary separations, potential for severance benefits (including continuation of salary and medical coverage based on years of service). Our NEOs are eligible for the same severance benefits as our other salaried employees.

 

■  Provide opportunity for protection upon an unexpected event

     
  Perquisites      
For all NEOs, a vehicle allowance (which terminates in 2023). For the CEO, a home security system and, subject to an annual allowance, personal use of company aircraft.       ■  Provide personal security  
     
  Other Benefits      
Medical coverage, group life insurance and other welfare benefits generally available to all salaried employees.       ■  Promote health and financial security

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EXECUTIVE COMPENSATION

2021 Executive Compensation Program Decisions

Changes to Annual Incentive Measures

The Committee regularly reviews the measures used for purposes of Altria’s performance-based compensation. In 2021, the Committee modified the measures for the annual incentive cycle as follows:

Previous Measures (weighting) New Measures (weighting)
Adjusted diluted EPS growth (75%) Adjusted diluted EPS growth (30%)
Adjusted discretionary cash flow (25%) Adjusted discretionary cash flow (25%)
  Total adjusted OCI (30%)
  Strategic initiatives (15%)

The Committee believes that the financial measures above align with our financial goals and the interests of our shareholders. Regarding strategic initiatives, the Committee previously made discretionary adjustments to the Annual Incentive Award rating based on performance against those initiatives. In 2021, performance against strategic initiatives was included directly in the determination of the Annual Incentive Award rating to incentivize progress towards our Vision. The Committee also (i) added total adjusted OCI as a financial measure, reflecting the importance of operating company profitability for investments in our Vision and (ii) reduced the weight of adjusted diluted EPS growth (which is also a measure used in the components of our long-term incentives) to allow for the addition of the strategic initiatives and total adjusted OCI measures to the formula.

Salary

The Committee considers several factors when reviewing and setting salaries for our NEOs, including each executive’s individual performance, level of responsibility and experience, the relationship between salaries paid to other Altria executives and the position of the executive’s salary within the applicable salary range. Additionally, the Committee periodically compares the salaries of our NEOs to others holding comparable positions at Compensation Survey Group (“CSG”) companies. The Committee analyzes all these factors in the aggregate in determining NEO salaries.

Salaries are relevant in establishing annual and, for executives in bands A and B, long-term cash incentive award targets, and factor into retirement, group life insurance and certain other benefits available to all salaried employees. The Committee reviews salaries for our NEOs other than our CEO on an annual basis and reviews our CEO’s salary approximately every two years. Generally, any adjustments are effective March 1.

The Committee increased the salaries of our NEOs based on the criteria noted above as follows:

2021 Salary Changes

        2021 Salary Range   2020   2021    
Name      Band      Minimum
($)
     Maximum
($)
     Salary
($)
     Salary
($)
     Increase
(%)
William F. Gifford, Jr.   A       910,000           2,090,000             1,250,000             1,250,000           0.0    
Salvatore Mancuso   B     501,700       1,153,900       650,000       676,700       4.1  
Murray R. Garnick   B     501,700       1,153,900       902,000       924,600       2.5  
Jody L. Begley   B     501,700       1,153,900       650,000       676,700       4.1  
Heather A. Newman   C     408,800       940,200       500,000       520,500       4.1  

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EXECUTIVE COMPENSATION

Annual Incentives

The Annual Incentive Award plan is a cash-based, pay-for-performance plan for salaried employees, including our NEOs. Participants have an annual award target based on salary band and expressed as a percentage of salary. The Committee annually reviews our benchmarking process establishing award targets and reviews and approves any target changes for employees in salary band I and above. Annual incentive awards are paid only after both business and individual results are assessed against targeted levels of performance. No individual is guaranteed an award. In the event of a salary band change during the performance cycle, award targets are adjusted on a prorated basis. Each of our NEOs remained in their same salary band during 2021.

At the conclusion of each year, the Committee reviews Altria’s performance against financial measures and strategic initiatives and assigns a rating from 0% to 130%. The measures used in 2021 (and the respective weightings) are identified above under “Changes to Annual Incentive Measures.”

In determining Altria’s performance in 2021 against the measures, the Committee considered the following:

Annual Incentive Award Measures ($ in millions, except per share data)

        Results and Rating
(from 0% - 130%)
      Weighting       Weighted
Result
Adjusted Diluted EPS Growth (1)
(Rating Range)
    30%   34.0%
Adjusted Discretionary Cash Flow (1)
(Rating Range)
    25%   32.4%
Total Adjusted OCI (1)
(Rating Range)
    30%   30.0%
Strategic Initiatives
(Rating Range)
    15%   16.5%
(1) Adjusted diluted EPS, adjusted discretionary cash flow and total adjusted OCI are non-GAAP financial measures. See Exhibit A to this Proxy Statement for information regarding non-GAAP financial measures and reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures.

Altria Group, Inc. – Proxy Statement     39


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EXECUTIVE COMPENSATION

The 2021 strategic initiatives against which the Committee evaluated Altria’s performance, as shown above, were designed to promote our long-term success. Those initiatives and results are below:

Strategic Initiative       Result
Enhance the employee experience and build ownership and accountability in achieving our Vision, Inclusion & Diversity Aiming Points and talent and culture objectives.   Altria exceeded expectations by enhancing the diversity and capability of our talent through a new system designed to improve fairness, transparency and inclusiveness in the internal hiring and promotion process and delivering training and resources to support cultural objectives; continuing to support employees through the COVID-19 pandemic with employee well-being resources and remote working practices; making progress toward the Inclusion & Diversity Aiming Points with respect to people of color; and achieving strong engagement survey results.
Invest to develop and expand our portfolio of FDA authorized non-combustible products and actively convert adult smokers to them.   Altria met expectations, making progress in developing our innovative tobacco product platform, acquiring the remaining 20% of the global on! business and conducting thorough science-based engagement and advocacy in pursuit of tobacco harm reduction.
Evolve our data, analytics and technology capabilities to accelerate and transform critical opportunities and increase efficiencies to grow OCI, while building an enterprise-wide digital and technology strategy.   Altria met expectations by designing and rolling-out a new digital and technology strategy to accelerate our digital transformation, identify new value creation opportunities and optimize value in our traditional tobacco businesses.
Maximize the long-term profitability of our cigarette, cigar and moist smokeless tobacco businesses while shifting resources and infrastructure to accelerate non-combustible product growth.   PM USA, JMC and USSTC exceeded expectations, delivering strong financial results benefitting in part from wholesale and retail trade program enhancements and protecting the portfolio from an increased federal excise tax.
Achieve the dollar share objective under the IQOS distribution agreement to maintain exclusive distribution rights in the U.S.   PM USA achieved the dollar share objective to maintain its exclusive license and distribution rights for IQOS in the U.S. based on the performance of IQOS in the Charlotte, N.C. market.
Expand IQOS retail infrastructure to additional markets and broaden product availability.   PM USA’s IQOS team suspended this initiative due to the International Trade Commission’s orders banning the importation, sale, distribution and marketing of IQOS and Marlboro HeatSticks.

Increase on! velocity in distributed stores by achieving specified volume or share objectives.

  The Helix team exceeded expectations, achieving volume and share that exceeded both objectives through achieving unconstrained manufacturing capacity and expanding retail store distribution.
Build a marketing plan with supporting initiatives to drive on! trial and adoption through actions such as core tobacco direct-marketing vehicles and audience segmentation.   The Helix team met expectations by increasing on! awareness through enhanced retail visibility and new marketing channels, and by driving trial among adult tobacco consumers through unique promotional offerings.
Prepare for on! modified risk tobacco product (“MRTP”) filing in 2022.   The Helix team met expectations by delivering a pre-submission package to the FDA and completing key elements of the MRTP filing planned for 2022.

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EXECUTIVE COMPENSATION

Based on the sum of the weighted results for the financial measures and the strategic initiatives, the Annual Incentive Award rating for 2021 was 113%.

2021 Annual Incentive Award Measures (weighting)   Weighted Result (%)
Adjusted diluted EPS growth (30%)         34.0  
Adjusted discretionary cash flow (25%)   32.4  
Total adjusted OCI (30%)   30.0  
Strategic initiatives (15%)   16.5  
2021 Annual Incentive Award Rating (rounded)   112.9  (113)

As part of our ID&E efforts and to drive accountability for cultural fluency among people leaders, our NEOs, along with all people leaders, were assessed ID&E ratings as part of the 2021 performance management process. A rating of at least Ally or Advocate was required to receive our highest individual performance rating for purposes of the Annual Incentive Award formula. 

ID&E Rating Descriptor
Advocate Proactively leads change to create a more equitable and inclusive environment, and helps others deepen their advocacy
Ally Supports change to advance ID&E
Aware Recognizes the need for change to advance ID&E
Inactive Does not demonstrate support for change to advance ID&E

The Committee used the Annual Incentive Award business performance rating, together with individual performance of the NEOs in determining the 2021 awards below. See “2021 Performance of NEOs” beginning on page 32. The following formula was the basis for determining awards under the 2021 Annual Incentive Award plan:

Salary x Target
(% of salary)
x Business
Performance
Rating
x Individual
Performance
Multiplier
= Annual
Incentive
Award

2021 Annual Incentive Award Target Percentages, Award Ranges and Actual Awards

                    Target   2021
Business
Performance
    Individual
Performance
    Actual Award for
2021 Performance
 
Name       Band       Salary
($)
      Target
(%)
        Award (1)
($)
      Rating (2)
(%)
        Multiplier (3)
(%)
        ($)       (% of
target)
 
William F. Gifford, Jr.   A       1,250,000       150         1,875,000       113     130         2,754,000         147  
Salvatore Mancuso   B     676,700     95       642,865     113     115       835,400       130  
Murray R. Garnick   B     924,600     95       878,370     113     115       1,141,400       130  
Jody L. Begley   B     676,700     95       642,865     113     130       944,400       147  
Heather A. Newman   C     520,500     80       416,400     113     130       611,700       147  
   
(1) Assumes 100% business and individual performance.
(2) The business performance rating can range from 0% to 130%.
(3) The individual performance multipliers for our NEOs other than the CEO are based on individual performance on a four-point scale and can range from 0% to 150%. The individual performance multiplier for our CEO is determined at the Committee’s discretion and can range from 0% to 175%.

Altria Group, Inc. – Proxy Statement     41


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EXECUTIVE COMPENSATION

Long-Term Incentives

We award long-term incentives to executive officers through a combination of equity awards and performance-based cash incentive awards under the LTIP. For equity awards, executives received a mix of 60% RSUs and 40% PSUs. Together, PSUs and the LTIP deliver over 60% of our NEOs’ target long-term incentives through performance-based elements, with the remainder comprised of time-based RSUs.

Target Long-Term Incentive Mix (1)

(1) This chart reflects the percentage of long-term incentives attributable to the 2021 – 2023 LTIP performance cycle without applying the 117% transition multiplier. The transition multiplier is described under “Long-Term Incentives: 2021 – 2023 LTIP Awards” on page 44.
   

Long-Term Incentives: Equity Awards

 

Equity awards are intended to focus executives on increasing long-term shareholder value, enhance executive retention and promote executive stock ownership. Award amounts recognize prior year performance and, for our NEOs other than our CEO, advancement potential. Vesting amounts reflect any stock appreciation and, for PSUs, performance against the financial measures during the vesting period. The awards generally vest three years after the date of the award, subject to earlier vesting on death, disability, retirement on or after age 65 or potentially in connection with a change in control. This vesting period is intended to retain and motivate executives, while promoting long-term performance. The number of PSUs granted to an executive represents a target number of shares; for PSUs awarded in 2021, the actual share payout can range from 0% to 156% of the target based on company performance against specified measures.

For RSUs, recipients receive cash dividend equivalents during the vesting period. For PSUs, dividends are accrued and paid out at the end of the performance period based on the final number of PSUs that vest, if any. The Committee annually reviews equity award targets against competitive data.

From time to time, the Committee grants special equity awards to select executives in key roles or with high advancement potential for purposes of retention and to align with benchmarking data. These special equity awards generally have a longer vesting period of five years. No special equity awards were granted to our NEOs in 2021.

 

                                                            
 

2021 Equity Award Highlights

  60% RSUs / 40% PSUs

  Vesting period of at least three years

  RSUs: Cash dividend equivalent payments

  PSUs: Dividend equivalents not paid until end of performance period and based on shares actually earned

  NEO grant award values based on:

  Executive’s individual performance in year prior to the grant;

  Executive’s advancement potential at the time of grant (other than CEO);

  Committee discretion; and

  Competitive benchmarking.

  Number of RSUs and PSUs awarded is based on fair market value of our stock on the grant date

  Strong stock holding requirements

     
       
 
 
 
 
 
 
 
 
 
 
 
 
       
       
              


 

The Committee grants equity awards to our CEO based on its assessment of his performance, Altria’s performance and competitive data. For our NEOs other than our CEO, the Committee establishes an appropriate range of equity awards, which is based on the NEO’s salary band, advancement potential, individual performance and competitive data. The Committee then approves awards based on advancement potential and individual performance. Individual awards are generally granted on the date of Committee approval and capped under our 2015 PIP and our 2020 PIP. No individual is guaranteed an award.

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EXECUTIVE COMPENSATION

The targets and actual equity awards for grants made to our NEOs in 2021 were as follows:

Name       Band at
Grant Date
      Equity
Target
($)
      Equity
Award Range
($)
      Actual Equity
Award (1)(2)
($)
William F. Gifford, Jr.   A       5,400,000           3,240,000-8,100,000            6,000,059     
Salvatore Mancuso   B     1,750,000       1,050,000-2,625,000       2,012,526  
Murray R. Garnick   B     1,750,000       1,050,000-2,625,000       2,012,526  
Jody L. Begley   B     1,750,000       1,050,000-2,625,000       2,012,526  
Heather A. Newman   C     990,000       594,000-1,485,000       1,188,045  
   
(1) The amount shown is the aggregate grant date fair value of stock awards determined pursuant to Financial Accounting Standards Board (“FASB”) Codification Topic 718. The number of RSUs and PSUs awarded in 2021, together with the grant date values and vesting terms of the RSUs and the PSUs awarded, is disclosed in the Grants of Plan-Based Awards during 2021 table on page 53.
(2) Annual equity awards consist of 60% RSUs and 40% PSUs.

Financial Performance Measures for 2021 PSUs

For the PSUs granted in 2021 with a 2021 – 2023 performance cycle, the Committee designated the following performance measures:

(1) adjusted diluted EPS growth (weighted 75%); and
(2) cash conversion (1) (weighted 25%).
   
(1) Defined as the portion of our adjusted net earnings that is converted to discretionary free cash flow, which excludes certain items such as tobacco and health litigation payments.

The weighted result of these measures will be subject to a potential increase or decrease of up to 20% based on relative TSR versus the S&P 500 Food, Beverage & Tobacco Index (defined as the companies that comprised the S&P 500 Food, Beverage & Tobacco Index as of January 1, 2021 and remain in the Index as of December 31, 2023).

The score of the financial measures, adjusted by the TSR multiplier, determines the aggregate score and the number of shares payable under the PSU awards. The aggregate score may not exceed 156% of target. The Committee believes that the combination of these measures provides solid alignment between Altria’s business strategies and our shareholders’ interests.

2019 PSU Performance

The PSUs granted in January 2019 with a 2019 – 2021 performance cycle (“2019 PSUs”) were measured against adjusted diluted EPS growth and relative TSR versus the S&P 500 Food, Beverage & Tobacco Index. The tables below reflect the performance of the 2019 PSUs against each measure, followed by the final determination of the number of shares of Altria common stock delivered to each NEO at the end of the three-year performance period.

      Metric Rating %                 Weighted
Financial Metrics         0       70       80       100       120       130 (1)             Result       Rating       Weighting       Result
2019 – 2021 Adjusted Diluted EPS Growth (%)     ≤(3.0)       5.0   6.9-7.3   8.0   ≥8.4     4.7%   76.6   50%   38.3%
Relative TSR Percentile (2)(3)     <25th   25th       50th       ≥75th     15th   0   50%   0%
2019 PSU Rating                                           38%
   
(1) Rating for each metric cannot exceed 130%.
(2) Versus the companies that comprised the S&P 500 Food, Beverage & Tobacco Index as of January 1, 2019 and remained in the Index as of December 31, 2021.
(3) Altria’s three-year TSR for the period ending December 31, 2021 was 20.2%.

Altria Group, Inc. – Proxy Statement     43


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EXECUTIVE COMPENSATION

The 2019 PSUs granted and number of shares of Altria common stock delivered to our NEOs in February 2022 were as follows:

Name       2019 PSUs
Granted
(#)
      2019 PSU
Performance Rating
(%)
      Altria Shares
Delivered
(#)
William F. Gifford, Jr.   17,212       38   6,541
Salvatore Mancuso   5,289     38   2,010
Murray R. Garnick   17,212     38   6,541
Jody L. Begley   5,086     38   1,933
Heather A. Newman   2,739     38   1,041

Long-Term Incentives: 2021 – 2023 LTIP Awards

The 2021 – 2023 LTIP is a long-term cash incentive performance plan that uses a three-year performance cycle (January 1, 2021 to December 31, 2023), an approach consistent with our long-term strategic planning process. At the beginning of each performance cycle, the Committee approves long-term financial and strategic performance goals, to be measured after completion of the performance cycle. The financial goals and the strategic goals are each weighted 50%. Each executive has an award target based on his or her salary band. Awards are payable in cash after the end of the three-year performance cycle based on the Committee’s assessment of Altria’s actual performance against the financial and strategic performance goals during the entire award cycle. The Committee retains the discretion to adjust individual awards upward or downward, and no individual is guaranteed an award.

                                                            
 

2021 – 2023 LTIP Highlights

  Three-year performance cycle

  Awards based on our performance against long-term financial and strategic goals and individual performance

     
       
 
       
       
              

The Committee considers each of our NEO’s earnings opportunity under the LTIP when setting compensation each year; however, those opportunities remain at risk until the Committee’s final assessment after the end of the three-year performance cycle.

The financial measures for the 2021 – 2023 LTIP performance cycle are the same financial measures for the 2021 PSUs discussed above:

(1) adjusted diluted EPS growth (weighted 75%); and
(2) cash conversion (weighted 25%).

As with the 2021 PSUs, the weighted result of these measures will be subject to a potential increase or decrease of up to 20% based on relative TSR versus the S&P 500 Food, Beverage & Tobacco Index (defined the same as for the 2021 PSUs). However, whereas the 2021 PSUs are based entirely on these financial measures, the financial measures count for half of the 2021 – 2023 LTIP rating, with performance against the strategic initiatives counting for the other half.

Specific details regarding the strategic performance initiatives are provided to executives, but are not disclosed publicly before the end of the cycle because they are competitively sensitive. We expect to disclose the relevant performance metrics for the 2021 – 2023 LTIP performance cycle, as appropriate, after the compensation decisions for the then-current NEOs have been made.

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EXECUTIVE COMPENSATION

Following the conclusion of the 2021 – 2023 LTIP performance cycle, the Committee will assess Altria’s performance against the financial (adjusted by the TSR multiplier) and strategic measures to determine the final LTIP rating, which can range from 0% to 143%. The Committee, with respect to the CEO, and the CEO, with respect to the other NEOs, will also assess the individual performance of each executive to determine the executive’s individual performance factor, which can range from 0% to 150%.

A new three-year performance cycle commences each January 1. The Committee believes overlapping performance cycles align with market practices and are consistent with our three-year PSU performance cycles and appropriate for our increasingly dynamic business environment. In connection with the change to overlapping LTIP performance cycles in 2020, the Committee implemented transition multipliers of 183% and 117% of the annual award target for the 2020 – 2022 and 2021 – 2023 LTIP performance cycles, respectively, which are intended to mitigate the cash flow impact to our executives and maintain the retentive value of the LTIP program, while maintaining the same annual accrual as the prior end-to-end cycle approach used prior to 2020. See “Use of Overlapping LTIP Performance Cycles” beginning on page 40 of our Proxy Statement for our 2021 Annual Meeting (filed with the SEC on April 8, 2021) for further explanation.

The following formula is the basis for determining the final 2021 – 2023 LTIP awards for the NEOs:

Salary x Target % (1)
(Band A and B)
  Business
Performance
Rating
  Individual
Performance
Assessment
  Three-Year
LTIP Award
Or   x     x     =  
Dollar Target (1)
(Below Band B)
     
   
(1) In the event of a salary or band change during the performance cycle, the award target will be adjusted on a prorated basis.

The award targets for our NEOs for the 2021 – 2023 LTIP performance cycle before the application of the business performance rating and individual performance assessment, which will not be applied until after the end of the three-year performance cycle, are:

Name      Band      Salary
($)
     Target
(% of Salary for
bands A and B,
$ for band C)
     Individual
Award
Target (1)(2)
($)
William F. Gifford, Jr.   A   1,250,000   250%       3,656,250    
Salvatore Mancuso   B   676,700   140%     1,106,078  
Murray R. Garnick   B   924,600   140%     1,512,500  
Jody L. Begley   B   676,700   140%     1,106,078  
Heather A. Newman   C   520,500   $676,500     791,505  
   
(1) Award targets reflect the LTIP transition multiplier of 117%, which takes into account the change from three-year end-to-end performance cycles to overlapping performance cycles.
(2) The award targets reflect prorated amounts for Messrs. Mancuso, Garnick and Begley due to salary changes during 2021.

Altria Group, Inc. – Proxy Statement     45


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EXECUTIVE COMPENSATION

Perquisites

The perquisites we provided to our NEOs in 2021 are set forth in the All Other Compensation table on page 52. In addition to these perquisites, our NEOs received the same benefits that were available to our salaried employees generally.

Mr. Gifford is required to use our aircraft for all air travel for purposes of security. The Committee approved a 2021 allowance of $125,000 for Mr. Gifford’s personal aircraft usage. However, Mr. Gifford did not use any of that allowance in 2021. The amount attributed to the personal use of our aircraft would include incremental costs, including trip-related crew hotels and meals, in-flight food and beverages, landing and ground handling fees, hourly maintenance contracts, hangar or aircraft parking, fuel (based on the average monthly cost of fuel per hour flown) and other smaller variable costs. For purposes of calculating incremental costs, we would include the incremental costs of any deadhead flights, or portions thereof, made in connection with personal travel. Fixed costs incurred in any event to operate our aircraft (e.g., aircraft purchase costs, depreciation, maintenance not related to personal trips and flight crew salaries) would not be included. Mr. Gifford is required to pay his own taxes on imputed taxable income resulting from personal use of our aircraft. The allowance and Mr. Gifford’s obligation to pay for personal use of the aircraft above the allowance are reflected in a time-sharing agreement with Altria. The Committee considers the potential value of personal aircraft usage in determining the other components of Mr. Gifford’s total compensation.

Post-Termination Benefits and Change in Control Payments

We provide post-termination benefits to our NEOs, including retirement benefits and termination payments, if applicable, as well as payments in connection with a change in control.

Retirement Benefits. Our NEOs participate in certain qualified and non-qualified retirement plans, which we believe promote executive retention and provide the opportunity for financial security in retirement. These retirement benefits are discussed in more detail in the narrative following the Pension Benefits table on page 55 and the Non-Qualified Deferred Compensation table on page 57.
   
Change in Control Payments. Our 2015 PIP and our 2020 PIP includes a double-trigger provision for vesting or payment of annual incentive awards, equity awards and long-term incentive cash awards, provided that the successor entity continues or assumes the plans and awards or replaces them with substantially similar awards. The details of these provisions are discussed under “Payments upon Change in Control or Termination of Employment” beginning on page 58.
   
Termination Payments. The Severance Pay Plan for Salaried Employees (“Severance Plan”), which is generally applicable to all salaried employees, provides an opportunity for financial protection against the unexpected event of an involuntary termination of employment. This plan is discussed further under “Payments upon Change in Control or Termination of Employment” beginning on page 58.

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EXECUTIVE COMPENSATION

Decision Making Process

Role of the Compensation and Talent Development Committee

                                  
     
  The Committee determines and approves CEO compensation and reviews and approves the compensation of the other executive officers.  
   
     
                       

The Committee:

Reviews and approves
   
  our overall executive compensation philosophy and design.
     
  corporate and individual goals and objectives relevant to the compensation of our CEO, evaluates the performance of our CEO in light of these goals and objectives and determines and approves the compensation of our CEO based on this evaluation.
     
  the compensation of all executive officers.
     
Makes recommendations to our Board with respect to incentive compensation plans and equity-based plans, administers and makes awards under such plans and reviews the cumulative effect of its actions.
   
Monitors compliance by executives with our stock ownership and holding requirements.
   
Monitors risks related to the design of our compensation program.
   
Determines ratings for Altria’s performance for the annual and long-term incentive award formulas.
   
Reviews the results from a survey of CSG companies conducted by Aon plc (“Aon”) that shows compensation data and competitive practices.
   
Reviews initiatives and programs related to corporate culture and enterprise-wide talent development.

Committee Compensation Decisions for Executive Officers (other than the CEO)

Early each year, our CEO presents to the Committee compensation recommendations for our executive officers other than himself. The Committee reviews and discusses these recommendations with our CEO and, exercising its discretion, makes the final decision with respect to the compensation of these individuals.

Committee Establishment of CEO Performance Goals and CEO Performance Evaluation

At the beginning of each year, our CEO proposes annual individual performance goals to the Committee for its consideration. The Committee establishes final goals and reviews them with our Board. Following the end of the year, the Committee discusses with the CEO his performance against the goals established the prior year and then, in its sole discretion, determines and approves the CEO’s compensation. Other than discussing his prior year performance with the Committee, our CEO has no role in setting his own compensation.

Altria Group, Inc. – Proxy Statement     47


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EXECUTIVE COMPENSATION

Role of Consultants

                                  
     
  As part of our annual compensation process, management engages Aon. The Committee considers data provided by Aon as part of the Committee’s executive compensation decision making process.  
   
     
                       

Aon:

Conducts a survey of CSG companies. The survey collects compensation data and competitive practices.
   
Based on parameters developed by management, provides competitive compensation information focused on chief executive officer pay primarily from public filings, including annual proxy filings, by companies within our CSG.
   
Provides background information on companies as reference for evaluating our CSG.
   
Reviews our risk assessment process with respect to our executive compensation program.

Aon provides neither advice nor recommendations on the form or amount of our executive or director compensation, nor does Aon attend any Board or Committee meetings.

Benchmarking

Compensation Strategy

We design our executive compensation program to deliver total compensation (salary, annual and long-term cash awards, equity awards and benefits) at levels between the 50th and the 75th percentiles of compensation paid to executives in the CSG. We believe that this approach has contributed to our industry leadership position and is important to attract and retain world-class leaders, particularly given the unique challenges of our industry. Actual total compensation can exceed the 75th percentile or be below the 50th percentile depending on business and individual performance.

Compensation Survey Group

We annually compare our executive compensation program with the programs of the CSG companies. The purpose of this annual review is to assure that our executive compensation program supports our ability to attract and retain executive talent. When determining the companies to include in the CSG, the Committee identifies companies that have all or most of the following characteristics:

revenues generally between $5 and $75 billion;
   
market capitalization of at least $10 billion;
   
primarily focused on consumer products;
   
limited business segments;
   
businesses generally focused within the United States; and
   
compete with us for executive talent.
   

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EXECUTIVE COMPENSATION

Based on these criteria, the Committee included the following companies in the 2021 CSG and used this list for compensation-related decisions for 2021.

3M Company       General Mills, Inc.       Merck & Co., Inc.
Bristol-Myers Squibb Company   The Hershey Company   Molson Coors Brewing Company
Campbell Soup Company   Kellogg Company   Mondelēz International, Inc.
The Coca-Cola Company   Keurig Dr Pepper Inc.   PepsiCo, Inc.
Colgate-Palmolive Company   Kimberly-Clark Corporation   Philip Morris International Inc.
Conagra Brands, Inc.   The Kraft Heinz Company    
Eli Lilly and Company   McDonald’s Corporation    

Risk Assessment

A cross-functional team of executives in the Human Resources & Compliance, Law, Corporate Audit and Finance departments periodically reviews our compensation program (executive and non-executive) to identify features that could encourage excessive risk-taking by program participants and to assess the potential that such risks could have a material adverse effect on Altria. In 2021, management requested that its external compensation consultant, Aon, review this risk assessment process to confirm consistency with prevailing best practices. Aon’s review focused on features generally recognized as potentially encouraging excessive risk-taking, features of our programs that mitigate risk and management’s assessment of those features.

After reviewing management’s assessment in 2021, the Committee believes that neither the compensation program’s design nor the individual elements of executive compensation encourage employees, including our NEOs, to take unnecessary or excessive risks. The executive compensation program also incorporates risk-mitigating features such as those shown in the chart on the right, which the Committee considered as part of its assessment. We believe that any risks arising from our compensation policies and practices are not likely to have a material adverse effect on Altria.

                                                            
 

Risk-Mitigating Features

  Appropriate compensation mix of fixed versus at-risk variable pay, annual versus long-term pay, cash versus equity and performance-based versus non-performance-based pay

  Multiple objective performance factors used for annual and long-term incentive awards, coupled with the Committee’s discretion to approve awards at lower than target

  Caps on annual and long-term incentive plan formulas

  Peer company benchmarking

  Significant stock ownership, holding requirements and anti-hedging/anti-pledging policies

  A “clawback” policy providing for the adjustment or recovery of executive compensation upon the restatement of our financial statements

  Individual performance assessments that align our interests with the interests of shareholders

     
       
 
 
 
 
 
 
 
 
       
       
              


 

Altria Group, Inc. – Proxy Statement     49


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EXECUTIVE COMPENSATION

Other Considerations

Stock Ownership and Holding Requirements and Prohibition on Hedging and Pledging

The Committee has established stock ownership requirements under which all executives are expected to hold our common stock in an amount equal to a multiple of salary, as determined by their salary band, while they are employed by the Company. If the stock price declines, an executive may satisfy the requirement by holding a fixed number of shares based on the stock price at the beginning of the executive’s acquisition period. For our NEOs, the Committee set the requirements as follows:

Band       Multiple of Salary
A   12
B   6
C   5

Additionally, we require executive officers to hold any shares received as compensation until they meet their stock ownership requirement.

We expect NEOs to meet their ownership requirement within five years of becoming subject to the requirement (or three years from a subsequent promotion date that results in an increased ownership requirement). Unvested RSUs count toward the stock ownership requirement; however, as of October 26, 2021, unvested PSUs no longer count toward the requirement. As of December 31, 2021, all our NEOs satisfied their stock ownership requirement.

We have policies prohibiting our NEOs from engaging in hedging and pledging activities with respect to our shares, as described under “Prohibition on Hedging and Pledging” on page 70.

“Clawback” Policy Regarding the Adjustment or Recovery of Compensation

We have a “clawback” policy providing for the adjustment or recovery of compensation in certain circumstances. If our Board or an appropriate committee of our Board determines that, as a result of a restatement of our financial statements, an executive received more compensation than would have been paid absent the incorrect financial statements, our Board or the Committee, in its discretion, will take such action as it deems necessary or appropriate to address the events that gave rise to the restatement and to prevent its recurrence. Such action may include, to the extent permitted by applicable law, in appropriate cases, requiring partial or full reimbursement of any bonus or other incentive compensation paid to the executive, causing the partial or full cancellation of RSUs or PSUs, adjusting the future compensation of such executive and dismissing or taking legal action against the executive, in each case as our Board or the Committee determines to be in the best interests of Altria and our shareholders. Our RSU and PSU award agreements also include “clawback” provisions.

Tax and Accounting Considerations

In addition to our executive compensation objectives and design principles, we consider tax and accounting treatment when designing and administering our compensation programs. One consideration is Internal Revenue Code Section 162(m), which limits our ability to deduct compensation paid to each covered officer for tax purposes to $1.0 million annually, subject to an exception for certain compensation granted or accrued before 2018. Covered officers include any officer who for any year after 2016 was the principal executive officer, principal financial officer or one of the next three highest-paid officers.

Although the Committee considers tax deductibility and other tax and accounting treatment in making its compensation program decisions, the Committee’s primary consideration is whether the compensation program promotes our Vision and aligns the interests of executives with those of our shareholders.

Compensation and Talent Development Committee Interlocks and Insider Participation

During 2021, no Altria executive officer served on the board of directors or compensation committee of any company that employs a member of our Board. No member of the Committee at any time during 2021 or at any other time had any relationship with us that would be required to be disclosed as a related person transaction under applicable SEC rules.

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EXECUTIVE COMPENSATION

Compensation Tables and Other Matters

Summary Compensation Table

The following table provides the compensation information of our NEOs for 2021, 2020 and 2019.

                Non-Equity
Incentive Plans
           
Name and Principal
Position during 2021
    Year     Salary
($)
    Stock Awards
Grant Value (1)
($)
    Annual
Incentive
Plan
($)
    Long-Term
Incentive
Plan
($)
    Change in
Pension
Value (2)
($)
    All Other
Compensation (3)
($)
    Total
($)
William F. Gifford, Jr.,
Chief Executive Officer,
Altria Group, Inc.
  2021   1,250,000   6,000,059   2,754,000     2,487,905   135,008   12,626,972
  2020   1,144,167   5,707,085   2,100,000     3,162,720   124,425   12,238,397
  2019   871,667   2,200,099   890,500   2,851,200   2,456,241   104,052   9,373,759
Salvatore Mancuso,
Executive Vice
President and Chief
Financial Officer, Altria
Group, Inc.
  2021   672,250   2,012,526   835,400     548,562   77,233   4,145,971
  2020   616,333   2,791,174   616,700     3,727,756   71,641   7,823,604
  2019   514,950   676,039   555,300   1,008,500   1,538,272   74,421   4,367,482
Murray R. Garnick,
Executive Vice
President and
General Counsel,
Altria Group, Inc.
  2021   920,833   2,012,526   1,141,400       148,133   4,222,892
  2020   897,667   2,207,049   890,700       148,258   4,143,674
  2019   871,667   2,200,099   890,500   2,887,900     149,855   7,000,021
Jody L. Begley,
Executive Vice
President and Chief
Operating Officer,
Altria Group, Inc.
  2021   672,250   2,012,526   944,400     713,170   77,233   4,419,579
  2020   583,667   1,291,147   603,300     1,668,880   68,375   4,215,369
  2019   507,500   650,089   610,000   821,400   1,034,722   79,036   3,702,747
Heather A. Newman,
Senior Vice President,
Corporate Strategy,
Altria Group, Inc.
  2021   517,083   1,188,045   611,700     502,963   61,716   2,881,507
   
(1) The amount shown is the aggregate grant date fair value of stock awards determined pursuant to FASB Codification Topic 718. The number of RSUs and PSUs awarded in 2021, together with their grant date values and vesting terms, is disclosed in the Grants of Plan-Based Awards during 2021 table on page 53. The assumptions we used in calculating the grant date fair values of the RSUs and the PSUs awarded in 2021 are described in Note 11 “Stock Plans” to our consolidated financial statements in the 2021 Form 10-K. The table below provides the grant date fair value of the PSUs awarded in 2021 for each of our NEOs assuming the maximum performance level is achieved.
   
  William F.
Gifford, Jr.
($)
      Salvatore
Mancuso
($)
      Murray R.
Garnick
($)
      Jody L.
Begley
($)
      Heather A.
Newman
($)
  3,744,060   1,255,803   1,255,803   1,255,803   741,346
   
(2) The amounts show the change in the present value of each NEO’s pension benefits for each year from December 31 of the prior year to December 31 of the applicable year. The change in 2021 was due to a variety of factors, including growth in benefit due to additional pay and service, passage of time and a change in the discount rate and mortality assumptions. Mr. Garnick was hired after January 1, 2008 and, therefore, is not covered under our pension plans.
   
(3) Details of other compensation for each of our NEOs appear in the All Other Compensation table shown below.

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EXECUTIVE COMPENSATION

All Other Compensation

Name       Year       Allocation to
 Defined
 Contribution
 Plans (a)
 ($)
      Car
 Expenses (b)
 ($)
      Executive
 Physicals
 ($)
      Total
 ($)
William F. Gifford, Jr.   2021   125,000   10,008     135,008
    2020   114,417   10,008     124,425
    2019   87,167   13,285   3,600   104,052
Salvatore Mancuso   2021   67,225   10,008     77,233
    2020   61,633   10,008     71,641
    2019   51,495   19,326   3,600   74,421
Murray R. Garnick   2021   138,125   10,008     148,133
    2020   134,650   10,008   3,600   148,258
    2019   130,750   15,505   3,600   149,855
Jody L. Begley   2021   67,225   10,008     77,233
    2020   58,367   10,008     68,375
    2019   50,750   24,686   3,600   79,036
Heather A. Newman   2021   51,708   10,008     61,716
   
(a) Amounts represent allocations to tax-qualified and non-qualified supplemental defined contribution plans.
   
(b) Car expenses for 2020 and 2021 reflect an annual cash vehicle allowance. For 2019, car expenses reflect the annual cost of providing a leased vehicle and operating expenses, including insurance, maintenance and repairs or, alternatively, a vehicle allowance.

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EXECUTIVE COMPENSATION

Grants of Plan-Based Awards during 2021

        Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
  Estimated Future Payouts
Under Equity Incentive Plan
Awards (3) 
  All Other
Stock Awards:
Number of
Shares of
Stock
or Units (4) 
(#)
  Grant Date
Fair Value
of Stock
Awards (5) 
($)
Name     Grant Date     Threshold
($)
    Target
($)
    Maximum
($)
      Threshold
(#)
    Target
(#)
    Maximum
(#)
       
William F.         1,875,000   10,000,000 (1)                     
Gifford, Jr.         3,656,250   24,000,000 (2)                     
    2/25/2021                   50,468   78,730       2,400,041
    2/25/2021                             80,190   3,600,018
Salvatore         642,865   10,000,000 (1)                     
Mancuso         1,106,078   24,000,000 (2)                     
    2/25/2021                   16,928   26,407       805,023
    2/25/2021                             26,897   1,207,503
Murray R.         878,370   10,000,000 (1)                     
Garnick         1,512,500   24,000,000 (2)                     
    2/25/2021                   16,928   26,407       805,023
    2/25/2021                             26,897   1,207,503
Jody L.         642,865   10,000,000 (1)                     
Begley         1,106,078   24,000,000 (2)