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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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FORTUNE BRANDS, INC.
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(Name of Registrant as Specified In Its Charter)
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SEC 1913 (02-02)
[Letter to Institutional Stockholders]
April 17, 2003
Re: Fortune Brands' Annual Stockholders' Meeting
Dear
We are writing to seek your support for Fortune Brands' director
nominees at this year's Annual Stockholders' Meeting on April 29, 2003. Based on
the performance of the Company and the qualifications and demonstrated track
record of our Board, discussed below, we believe that a vote for our nominees is
in the best interests of Fortune Brands stockholders.
As you may know, the proxy advisory firm Institutional Shareholder
Services (ISS) has recommended you withhold your vote for these directors, even
though the Board carefully considered the shareholder proposal approved last
year and implemented a meaningful reform to the company's Shareholder Rights
Plan in response. We strongly disagree with ISS's recommendation and hope you
will independently review the record.
The suggestion by ISS that the Board's thoughtful consideration
and initiation of significant reform in response to last year's vote represents
"failure or unwillingness to respond" is simply wrong. In direct response to
last year's shareholder vote, and consistent with its responsibility to act in
the best interest of our shareholders, our Board carefully reviewed the Rights
Plan and the benefits it provides to stockholders. After this review, the Board
adopted a significant reform to the Rights Plan, adding a three-year independent
director evaluation (TIDE) provision to the Rights Plan. The TIDE provision
ensures an independent review of the Rights Plan on an ongoing basis to
determine if it remains in shareholders' interest, and preserves the primary
benefit of the Plan: namely that studies have shown the existence of a Rights
Plan results in increased value for stockholders and higher premiums for target
companies. We believe that the adoption of the TIDE provision is a reasonable,
balanced and meaningful response to last year's stockholder vote.
Let me also set the record straight regarding other misleading
suggestions in the report you may have received from ISS.
o ISS suggests last year's stockholder proposal regarding the company's
Rights Plan was approved by a "clear mandate" of shareholders, when in fact
the proposal received 50.15% of the Company's outstanding shares, a slight
majority that hardly represents a "clear mandate."
o ISS fails to note the independence of one of our Directors as defined under
the New York Stock Exchange Listing Rules.
The mission of Fortune Brands' Board of Directors, as stated in
the Company's recently adopted Corporate Governance Principles, is to oversee
the performance of the Company's management for the benefit of its stockholders
and to maximize stockholder value. The Board's achievement of this mission is
evident, we believe, in the consistent increases in the Company's earnings,
dividends and shareholder returns. The Company's directors, 9 of 10 of whom are
outside directors and 8 of 10 of whom are independent under both current and
pending NYSE listing rules, are committed to further maximizing stockholder
value. Based on this record, we believe that the Company's director nominees
merit your full support.
Thank you for letting us set the record straight.
Sincerely,
Craig Omtvedt
Senior Vice President
and Chief Financial Officer