(Updates throughout with spokeswoman comment and other
background)
By Anjali Cordeiro and Matt Jarzemsky
Reynolds American Inc.'s (RAI) board approved a 2-for-1 stock
split and said Daniel Delen, the head of its largest subsidiary,
will take over as chief executive next year as the tobacco maker's
current head retires.
The tobacco company announced an 8.9% increase in the quarterly
dividend and said Susan M. Ivey, currently chairman and chief
executive has notified the board that she plans to retire on Feb.
28. Delen, who heads the company's R.J. Reynolds cigarette
subsidiary, will take on the chief executive role effective Jan 1.
Thomas Wajnert, the board's lead director, will become chairman on
Nov. 1. A spokeswoman said that Ivey's departure was her own
decision.
In his new role, a key challenge for Delen will be to find ways
to offset the declines in cigarette sales. The cigarette industry
across the U.S. has seen sales decline in the last few years as
Americans have smoked less. Reynolds American has turned to its
smokeless tobacco business, which includes brands like Grizzly and
other newer products like its Camel Snus smokeless offerings.
Reynolds also faces greater regulatory scrutiny with the Food and
Drug Administration recently taking over the regulation of the
tobacco industry.
The second-largest U.S. tobacco company behind Altria Group Inc.
(MO) has been expanding smokeless-tobacco manufacturing operations
while making its operations more efficient. It has also moved to
focus on a few key brands, as industrywide cigarette volume has
been shrinking.
Ivey became president and CEO in 2004 and was named chairman two
years later. Her plans to retire at the end of February come after
30 years in the tobacco industry.
The stock split plan will leave about 583 million shares
outstanding. The dividend was raised to 49 cents from 45 cents on a
split-adjusted basis. It would cost the company an additional $93
million a year.
-By Anjali Cordeiro and Matt Jarzemsky, Dow Jones Newswires;
212-416-2240; matthew.jarzemsky@dowjones.com