Ex-CEO Susan Ivey Cameron returning to Reynolds

The Reynolds building in Winston-Salem.

The Reynolds building in Winston-Salem.

WINSTON-SALEM, N.C. — Susan Ivey Cameron is returning as Reynolds American Inc.’s top executive on May 1, succeeding her successor, Daan Delen.

Cameron, 55, retired as Reynolds’ chairwoman in December 2010 and as its chief executive and president in February 2011, at which time Delen assumed both roles. Cameron said at that time she stepped down to spend more time with her husband and family, and on philanthropic efforts.

Delen, 48, said in a letter submitted Wednesday to Reynolds’ board that he is retiring voluntarily April 30, and also resigning from the company’s board of directors. He has agreed to serve as a management consultant for two years. Reynolds said Delen will receive a lump sum payment of $13.4 million on June 16.

Cameron first renewed her ties with Reynolds in December when she rejoined the board. Reynolds said there are no plans to have Cameron replace Thomas Wajnert as its chairman.

Reynolds has offered Cameron a two-year contract, with a mutual renewal, at a base salary of $1.3 million and with a $500,000 “sign-on” bonus.

“Being back on the board of directors for the last five months gave me the opportunity to dive back into the businesses,” Cameron said. “RAI’s strategic mission to transform the tobacco industry is a fascinating journey. I’m looking forward to the opportunity to not just advance, but accelerate, that momentum as CEO.”

Delen said that after 25 years in the industry, “I have the opportunity to pursue new interests, and I will do so knowing that the RAI companies and their employees are in the best possible hands to see that journey through.”

Delen received a 9.8 percent salary increase in 2013 to just under $1.1 million after another solid fiscal financial performance. Total compensation was up 20.8 percent to $10.4 million.

Analysts said Cameron’s return to the Reynolds helm could foreshadow Reynolds’ future, in particular its relationship with its largest shareholder, British American Tobacco.

Cameron served as Brown & Williamson’s top executive from 2001 to 2004 before taking over at Reynolds. Brown & Williamson served as the U.S. subsidiary of BAT before Reynolds bought it for $4.4 billion in a deal that closed July 30, 2004.

Part of the deal was BAT gaining a 42.04 percent ownership stake in Reynolds, five Reynolds board seats, and a 10-year moratorium on buying more Reynolds stock that expires July 30, 2014.

Bonnie Herzog, an analyst with Wells Fargo Securities, said she believes Cameron’s leadership return “could increase the chances for, and signals, a potential strategic partnership with BAT.”

The questions now are whether BAT will move to increase its stake in Reynolds, perhaps to a majority share – and what such a move would mean for Winston-Salem.

Reynolds and BAT officials have declined to comment about the looming expiration of the moratorium.

But with BAT’s profit levels much greater than that of Reynolds – $25.2 billion in fiscal 2012 for BAT compared with adjusted profit of $1.27 billion for Reynolds – BAT would not have to stretch too far financially to acquire at least enough Reynolds shares to become the majority stakeholder.

That’s the main reason why several analysts and media outlets have speculated that a formal BAT acquisition is inevitable, which likely would turn Reynolds into a U.S. subsidiary of BAT.

Herzog said Cameron’s return also increases the odds that Reynolds could acquire Lorillard for up to $80 a share. Rumors of a potential Reynolds deal for Lorillard were red-hot in early March and have been simmering since. Other analysts have projected an offer price of $60 to $62 a share.

Wajnert said Cameron’s 30 years of experience with Brown & Williamson and Reynolds, in particular her previous leadership roles, “make her an exemplary choice for this key leadership position,” Wajnert said in a statement.

Wajnert praised Delen’s leadership in keeping Reynolds focused on expanding its tobacco product mix to include Vuse, an electronic cigarette that currently is in distribution in Colorado and Utah. There are plans to begin national distribution in the second half of the year.

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