The workforce of Reynolds American Inc. and its subsidiaries was cut by more than 10% last year to 4,405, according to the 2021 annual report from parent company British American Tobacco Plc.

BAT is the world’s largest publicly traded tobacco manufacturer, having completed in July 2017 its $54.5 billion purchase of the 57.8% of Reynolds it did not already own. Legacy Reynolds shareholders own 19% of BAT.

Reynolds was reported with 4,921 employees in the 2020 annual report.

The workforce is down 20% from about 5,500 on Dec. 31, 2016 — the last Reynolds corporate annual report.

BAT and Reynolds officials could not be immediately reached for comment on where the workforce reductions have taken place.

Reynolds has not provided a local workforce count in several years, but has been estimated by local economic officials at about 2,500 employees in Forsyth County, primarily at its Tobaccoville manufacturing plant.

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Jack Bowles, CEO for BAT

Bowles




Executive compensation

BAT disclosed the total compensation for chief executive Jack Bowles and another top executive in the 2021 report.

Bowles’ total compensation was just under $9.8 million, up 50.7% from $6.5 million in fiscal 2020.

The compensation figures are based on current dollar to British pound sterling rates.

Bowles received a 4.8% increase in salary to $1.73 million for fiscal 2021. He received $419,720 in what BAT termed as “taxable benefits.” Pension contributions were worth $258,390.

Like most U.S. corporate executives in recent years. Bowles received the bulk of his 2021 compensation in stock awards, although BAT referred to the compensation as short- and long-term incentives that were worth a combined $7.39 million, up from $4.21 million a year ago.

The other named executive for compensation purposes is financial and transformation officer Tadeu Marroco. He was paid $1.05 million in salary, $2.48 million in incentive pay and total compensation of $3.83 million, up from $3.64 million in 2020.

BAT reported that fiscal 2021 revenue finished up 0.4% to $33.92 billion.

Reynolds’ profit from operations was up 11.9% to $7.3 billion. Sales increased 1.9% to just under $15.33 billion.

Sales were broken down as: up 0.9% to $13.13 billion for R.J. Reynolds Tobacco Co. and Santa Fe Natural Tobacco Co.; down 4.3% to $1.41 billion for American Snuff Co.; and up 43% to $739.7 million for “new categories” that includes electronic cigarette Vuse with R.J. Reynolds Vapor Co. and its modern oral and snus products.

Litigation expenses

BAT said it had $70.8 million in litigation costs during fiscal 2021, primarily related to Engle progeny smoker lawsuits facing Reynolds in the U.S. The litigation expenses were down from $114.1 million in 2020 and $309.5 million in 2019.

BAT said that as of Dec. 31, there were 1,071 Engle progeny lawsuit pending involving Reynolds and in its role as successor owner of Lorillard Inc. and Brown & Williamson Corp.

Engle progeny lawsuits sprang from a decision in 2006 by the Florida Supreme Court that decertified a $145 billion class-action lawsuit initially filed by Howard Engle.

The decertification means that former class members are now limited to filing individual lawsuits stating that cigarettes caused their respective illnesses.

From Jan. 1, 2019, through Dec. 31, 2021, Reynolds was involved in 41 Engle progeny lawsuit trials, of which 21 were won by plaintiffs. The combined compensatory damages were $65.4 million, while the punitive damages were $159.5 million.

Reynolds has appealed 13 of the jury awards, which halted the payment of damages in those cases, while Reynolds still has time to file an appeal in four cases.

An additional three plaintiff victories can no longer appealed.

During 2021, Reynolds or Lorillard paid $15.4 million in compensatory or punitive damages in Engle cases.

“With the exception of the Engle progeny cases, the group continues to win the majority of tobacco-related litigation claims that reach trial,” the manufacturer said in the report.

“A very high percentage of the tobacco-related litigation claims brought against them, including Engle progeny cases, continue to be dismissed at or before trial.

“Based on their experience in tobacco-related litigation and the strength of the defenses available to them in such litigation, the group’s companies believe that their successful defense of tobacco-related litigation in the past will continue in the future.”

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