Monday, August 31, 2009

Tobacco Maker Names Chairman

British American Tobacco PLC on Wednesday tapped former Bank of Ireland PLC Governor Richard Burrows as its new chairman.

Mr. Burrows will take over from Jan du Plessis, who will become chairman of Rio Tinto PLC, on Nov. 1.

Mr. Burrows resigned from the Bank of Ireland in May, following a troubled fiscal year in which the bank's net profit dropped to €69 million ($97.5 million) from €1.7 billion a year earlier and had to seek €3.5 billion in financial assistance from the Irish government. Mr. Burrows apologized to investors at the time for the loss of shareholder value and the cancellation of the company's dividend.

BAT, meanwhile, demonstrated the resilience of the tobacco industry last month when it posted a 16% rise in first-half net profit to £1.45 billion ($2.4 billion).

Sales of cigarettes are continuing to hold up pretty well in the recession because smokers are reluctant to give up tobacco. Also, any dropoff in volume can be offset with price increases. The company's shares have risen 3.4% in the past year.

Analysts weren't concerned by Mr. Burrows's Bank of Ireland record, concentrating instead on his highly successful career in the fast-moving consumer-goods industry.

He was chief executive of Irish Distillers from 1978 until its takeover by Pernod Ricard SA in 1988. He continued to work within the French drinks company and eventually served as co-chief executive of Pernod Ricard from 2000 to 2005.

The BAT chair is a nonexecutive position, but a higher-profile role than at other similarly sized companies. During his five years in the job, Mr. du Plessis took responsibility for commenting on any political issues -- such as antismoking legislation -- leaving Chief Executive Paul Adams to concentrate on operational matters.

Mr. Burrows will be paid an annual salary of £525,000 and will work a two-day week for BAT. The salary is below the £686,000 Mr. du Plessis received to reflect the short working week, the company said.