Robert A. McCarter III

About Robert A. McCarter III

Executive Vice President and General Counsel of Altria Group, Inc. (MO) since April 1, 2024, with responsibility for Law and Regulatory Affairs, complex litigation strategy, intellectual property disputes, and product regulatory filings . 2024 company performance metrics that directly inform his incentive payouts included adjusted diluted EPS growth (+3.4%), adjusted discretionary cash flow ($9,091 million) and total adjusted OCI ($12,319 million), with pay also modified by relative TSR in multi‑year awards . Key 2024 achievements under his remit: resolution of remaining JUUL state AG and tribal litigation, ITC patent actions (JUUL vs. NJOY), affirmation of damages/royalty against R.J. Reynolds on e‑vapor patent, and FDA marketing order for menthol e‑vapor, alongside PMTA filings for on! PLUS and NJOY ACE 2.0 .

Past Roles

Fixed Compensation

Performance Compensation

• Policy changes for 2024 awards: negative EPS growth yields 0% for the EPS measure; PSU and LTIP financial measure maxima increased to 200%; LTIP individual performance multiplier removed .

Equity Ownership & Alignment

• Stock ownership guideline: Band B executives must hold Altria stock equal to 6x salary; unvested RSUs count, unvested PSUs do not; all NEOs met requirements as of Dec 31, 2024 .
• Hedging and pledging of Altria shares are prohibited for directors/executives .

Note: Market values based on $52.29 closing price on Dec 31, 2024; PSU values assume target performance .

Employment Terms

• At-will employment; no individual employment agreements; no tax gross‑ups; no single‑trigger change in control .
• Severance: salaried employees (including NEOs) eligible under Severance Pay Plan for involuntary separation (excluding misconduct), with salary/medical continuation based on years of service; Committee retains discretion for prorated incentive/equity vesting in certain terminations (e.g., early retirement) .
• Change-in-control: double-trigger required (plan assumed/replaced AND termination without cause or for good reason within 2 years) for accelerated treatment; RSUs/PSUs vest at target and are cashed out at change-in-control price or FMV at termination; options/SARs fully vest; annual and long-term cash incentives paid pro rata (annual: greater of target or average last 3 years; long-term: target) .
• Clawbacks: Dodd‑Frank compliant recoupment for restatements (3-year lookback) and a broader policy enabling clawbacks for misconduct even absent a restatement; awards subject to recoupment per PIP terms .

Performance & Track Record

• Under McCarter’s oversight in 2024: resolved remaining JUUL-related state AG and tribal litigation; litigated ITC patent disputes between JUUL and NJOY; affirmed damages/royalty against RJR on e‑vapor patent; advanced FDA/PMTA submissions including on! PLUS and NJOY ACE 2.0; obtained FDA marketing order for menthol e‑vapor .
• Company performance inputs to pay:
  • Adjusted diluted EPS +3.4% in 2024; annualized dividend $4.08; >$10.2B returned to shareholders through dividends/repurchases .
  • Adjusted Discretionary Cash Flow $9,091M (2024) .
  • Total Adjusted OCI $12,319M (2024) .
  • Relative TSR factor used in PSUs/LTIP; 2022–2024 relative TSR factor 116% .

Governance and Shareholder Feedback (Program Context)

• Say‑on‑pay approval: 95.1% support at 2024 annual meeting ; approved again at 2025 annual meeting (986,172,109 For; 50,685,554 Against; 8,305,182 Abstain; broker non‑votes present) .
• 2025 Performance Incentive Plan approved, including double‑trigger CIC, 25M share authorization, minimum 12‑month vesting, and award limits/recoupment provisions .

Compensation Structure Analysis

• Promotion-driven cash and equity uplift: salary moved from $599,600 to $700,000 (+16.7%) on elevation to EVP & GC (band D→B), with a $1.5M five‑year special RSU for retention/market alignment—tilting mix toward longer‑duration equity and increasing at‑risk pay tied to performance and service .
• Annual incentive rigor increased (2024): negative EPS growth yields 0% for that component; PSU/LTIP maxima raised to 200%, enhancing sensitivity to upside performance while capping TSR‑driven adjustments .
• Low perquisites profile; defined contribution allocations only (no pension eligibility for post‑2008 hires) .

Risk Indicators & Red Flags

• Alignment positives: robust stock ownership/holding requirements (band B 6x salary; met); anti‑hedging/anti‑pledging; double‑trigger CIC; no individual employment agreements or tax gross‑ups; strong clawback framework extended to misconduct .
• Potential selling pressure windows: multi‑year vesting dates in 2025, 2026, 2027 and 2029 could drive tax‑withholding sales around vest events; no options outstanding disclosed for McCarter (equity is RSU/PSU) .

Investment Implications

• Pay-for-performance linkage is tight: McCarter’s cash and equity payouts hinge on EPS, cash conversion, adjusted OCI, and relative TSR—aligning legal/regulatory execution with shareholder outcomes; 2024 business rating at 106% and individual multiplier at 115% produced a moderate cash bonus uplift (122% of target) .
• Retention risk appears contained: a sizable five‑year special RSU (vests 2029) and ongoing RSU/PSU ladders establish meaningful unvested equity, plus strict ownership/holding rules and double‑trigger CIC reduce near‑term exit incentives .
• Trading signals: watch vesting dates (1/28/2025; 2/27/2025; 2/26/2026; 2/26/2027; 3/29/2029) for mechanical selling pressures, though hedging/pledging prohibitions limit leveraged dynamics; no option overhang from this officer .