Philip Morris CEO Quits; 2 Officers to Split His Duties
The head of Philip Morris Cos. abruptly quit over the weekend in a stunning shake-up at the nation’s biggest tobacco concern.
Chairman and Chief Executive Michael A. Miles, a veteran of the company’s food business who has been criticized by tobacco partisans for being unresponsive to attacks on the cigarette industry, is being replaced by two executives with long experience on the tobacco side of the business.
The changes at the helm of New York-based Philip Morris come as the entire U.S. tobacco industry is reeling from assaults by politicians and anti-smoking activists. Tobacco company profits also have suffered until recently from a price war fueled by Philip Morris last year when it slashed the price of its Marlboro cigarettes.
Even so, the shake-up at Philip Morris favors the tobacco side of the company over its vast food and beer operations, which include Kraft General Foods and Miller Brewing Co. Miles, 54, who is stepping down after nearly three years as the head of Philip Morris, was the first nonsmoker to run the company and was Kraft’s chief executive when the food processing giant was acquired by the tobacco concern in 1988.
By contrast, Miles’ replacements--R. William Murray, 58, and Geoffrey C. Bible, 56--are both longtime tobacco executives, with a combined 50 years of experience at Philip Morris. Murray, Philip Morris’ president and chief operating officer until he was named vice chairman for food last month, now becomes chairman of the entire company.
Bible, who had been vice chairman of tobacco, was elevated to president and chief executive of the entire company. Although the title of CEO would suggest that Bible is now the most powerful executive at Philip Morris, a company spokesman said that he will report to Murray.
In a letter of resignation submitted late Friday but not disclosed by Philip Morris until Sunday, Miles said he is leaving with “full confidence” that the decisions made during his tenure “will be proven right by our results in 1994 and beyond.”
“Now, however, with the resurgence of our U.S. tobacco business and the continued strong growth in international tobacco, it makes sense to again have a career Philip Morris executive in the top job,” he added.
Neither Miles nor his successors could be reached for comment. Spokesmen for the company said Miles was not pressured to leave, but he is widely believed to have run into strong opposition from other directors and major investors.
His main nemesis may have been Philip Morris’ former chairman, Hamish Maxwell, who is said to have plunged back into the company’s operations recently. When a proposal believed to have been pushed by Miles to split Philip Morris’ tobacco and food operations was considered by the board last month, Maxwell is believed to have played a strong role in shooting it down. Splitting the company had many fans on Wall Street, where the investment community hoped such a move would both yield greater value for shareholders and insulate a separate food business from tobacco liability.
Philip Morris stock is one of America’s most widely held and is included in many pension funds. The company’s shares climbed from about $80 when Miles took over in September, 1991, to a high of just over $86 a year later, but they have plunged since--they closed at $50.375 on Friday--costing investors more than $30 billion since 1992. Industrywide turmoil gets much of the blame, however.
The overall value of the company on Wall Street fell by nearly $13 billion one day last year, after investors were caught off guard by an announcement that the company was slashing premium cigarette prices to stave off competition from cheaper brands.
Although Miles’ departure does not appear to be directly related to rising protests by anti-smoking activists, he is believed to have frustrated those close to the company with his barely visible profile in the current national debate. Miles rarely gives interviews to the news media or speaks before Wall Street analysts who follow the company’s stock.
But John C. Maxwell Jr., an analyst with Wheat First Securities in Richmond, Va., said he believes the company is positioned to do well in coming years--unless substantial new taxes or other strong regulatory controls are placed on tobacco sales.
