Policy On Related Person Transactions
1. Introduction
This Policy regarding Related Person Transactions has been adopted by the Board of Directors of Philip
Morris International Inc. and its subsidiaries (the “Company”). This policy is intended to provide guidance
to the executive officers and directors of the Company to help them recognize and deal with actual orapparent conflicts of interests. Conflicts may arise when an executive officer or director, or a member orthe officer of director’s immediate family, has or could have a direct or indirect material interest in atransaction with the Company in which such person participates. The policy also sets forth the guidelines
under which certain transactions must be reviewed and approved or ratified by a committee comprised ofindependent members of the Board of Directors and the disclosure requirements for these transactions.
2. Definitions
For the purposes of this Policy, the following definitions apply:(a) “Related Person” means any:(i) director or executive officer of the Company;(ii) nominee for director;(iii) immediate family member(s) of directors, executive officers, or nominees for director; or(iv) a beneficial owner (other than a financial or investment institution) of more than 5% of theCompany’s voting securities.
(b) “Related Person Transaction” means a transaction in which the Company was, or is proposed to be aparticipant and in which a Related Person has, had or may have a direct or indirect material interest.
(c) “Immediate Family Member” means any child, stepchild, parent, stepparent, spouse, sibling, motherin-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, and any person(other than a tenant or employee) sharing the household of any director, nominee for director orexecutive officer of the company.
(d) “Transaction” means any financial contract, arrangement or relationship, (including any indebtedness
or guarantee of indebtedness) or any series of similar contracts, arrangements or relationships.
(e) “Transaction in the Ordinary Course” means any Transaction in the ordinary course of the Company’sbusiness on terms comparable to those provided to unrelated third parties.
3. Reporting Related Person Transactions
Each director, director nominee and executive officer shall promptly notify the Corporate Secretary in
writing of any interest that such person or an immediate family member of such person had, has or may
have, in a potential Related Person Transaction. Any such notice shall include (i) the person’s interest in
the Transaction; (ii) whether the Company is a party to the Transaction, and if not, the nature of theCompany’s participation in the Transaction; (iii) the parties to the Transaction; (iv) the purpose and timingof the Transaction; and (v) the approximate dollar value of both the Transaction and the Related Person’sinterest in the Transaction.
4. Determination(a) The Corporate Secretary, in consultation with outside counsel, to the extent appropriate, shalldetermine whether a potential Transaction with a Related Person constitutes a “Related PersonTransaction” requiring review under this Policy (including whether the Company or the Related
Person has a material interest, based on review of all facts and circumstances). The Transactions set
forth in Section 4(c) below have been determined not to be Related Person Transactions, and,
therefore, such Transactions are not subject to this Policy.
(b) If the Corporate Secretary determines that (i) the proposed Transaction constitutes a Related PersonTransaction or (ii) it would be beneficial to further review the Transaction under this Policy, then, ineither case, the Transaction will be referred to the chief executive officer (“CEO”) or the Nominatingand Corporate Governance Committee (the “Committee”) of the Board of Directors for consideration
as provided under Section 5 of this Policy.
(c) The following types of transactions are deemed not to create a direct or indirect material interest for
the Related Person and therefore will not be reviewed by the Committee nor require approval or
ratification:(i) Transactions not in the Ordinary Course, involving amounts that do not exceed $10,000 whenaggregated with all similar Transactions, with the same Related Person;(ii) Transactions in the Ordinary Course, involving amounts that do not exceed $120,000;(iii) Transactions where the Related Person’s interest derives solely from his or her service as adirector of another corporation or organization that is a party to the Transaction;(iv) Transactions where the Related Person’s interest in the transaction derives solely from his or her
direct or indirect ownership in another person (other than a general partnership) which is a party
to the Transaction, which ownership interest (when aggregated with the ownership interests of allother Related Persons described in 2(a) (i)-(iii) above) is less than a ten percent equity interest insuch other person;(v) Executive officer compensation arrangements approved by the Company’s Compensation andLeadership Development Committee;(vi) Director compensation arrangements approved by the Committee; and(vii) Transactions available to all employees generally.
5. Review, Approval or Ratification(a) Proposed Related Person Transactions involving executive officers (and/or their Immediate FamilyMembers) other than the CEO or the Corporate Secretary will be referred to the CEO and theCorporate Secretary for approval or ratification, as applicable. Proposed Related Person Transactions
involving the Corporate Secretary (and/or the Corporate Secretary’s Immediate Family Members) will
be referred to the CEO for approval. Proposed Related Person Transactions involving 5%
stockholders, directors, director nominees or the CEO (and/or their Immediate Family Members) will
be referred to the Committee for approval. Those reviewing proposed Related Person Transactions
shall be provided with full details of the proposed Related Person Transaction. All determinations bythe CEO and the Corporate Secretary under this Policy shall be reported to the Committee at its next
regularly scheduled meeting.
(b) When evaluating a proposed Related Person Transaction, the CEO, the Corporate Secretary or theCommittee shall consider all relevant facts and circumstances, including (if applicable) without
limitation:• the commercial reasonableness of the terms of the proposed Transaction;• the benefit to the Company• the availability and/or opportunity costs of alternate Transactions;• the materiality and character of the Company’s and the Related Person’s direct or indirect interest;• whether the Transaction would, or would be perceived to, present an improper conflict of interest for
the Related Person, taking into account: (i) the size of the Transaction; (ii) the overall financial
position of the Related Person; (iii) the direct or indirect nature of the Related Person’s interest inthe Transaction; (iv) whether the Transaction is of an ongoing nature; and (v) any other relevant
factors; and• if the Related Person is a director (or an Immediate Family Member of a director), the impact on thedirector’s independence as relevant.
The reviewer will not approve or ratify a Related Person Transaction unless it shall have determined that,upon consideration of all relevant information, the Transaction is not opposed to the best interests of theCompany. If, after the review described above, the reviewer determines not to approve or ratify a Related
Person Transaction (whether such Transaction is being reviewed for the first time or has previously been
approved and is being reviewed again), the Transaction will not be entered into or continued, as thereviewer shall direct.
(c) If a proposed Related Person Transaction involves a Related Person who is a director or an
Immediate Family Member of a director, such director shall abstain from voting regarding theTransaction, but may participate, to the extent requested by the Committee Chair, in the Committee’sdiscussions regarding such Transaction.
(d) If it is impractical to convene a meeting of the Committee prior to consummation of a proposed
Related Person Transaction for which Committee review is required under Section 5(a) of this Policy,
the Committee Chair may review and approve or ratify such Transaction in accordance with thecriteria set forth herein. Any such action shall be reported to the Committee at its next meeting.
6. Transactions Not Previously Approved
If the Company becomes aware of a Related Person Transaction that has not been approved under thisPolicy, the Related Person Transaction shall be reviewed under this Policy. A Related Person Transaction
entered into without approval under this Policy shall not be deemed to violate this Policy, or to be invalid
or unenforceable, so long as the Transaction is reviewed in accordance with this Policy as soon asreasonably practical after the Company becomes aware of the Transaction. When reviewing a Related
Person Transaction that has not been approved under this Policy, the reviewer shall consider all therelevant facts and circumstances respecting the Transaction, and shall evaluate all options available tothe Company, including ratification, revision or termination of such Transaction, and shall take suchcourse of action as the reviewer deems appropriate under the circumstances.
7. Coordination
In connection with administering this Policy, management and the Committee shall coordinate with suchother committees of the Board of Directors as may be advisable (e.g., to ensure appropriate considerationof accounting or financial reporting implications).
8. Disclosure
All Related Person Transactions shall be disclosed in the Company’s applicable filings to the extent
required by the Securities Act of 1933 and the Securities Exchange Act of 1934 and related rules.
9. Questions
Any questions regarding the interpretation or application of this Policy shall be directed to the Corporate
Secretary.