[RJR NABISCO LOGO]
March 6, 1996
Dear Fellow Shareholder:
Enclosed is your copy of RJR Nabisco's proxy materials, which includes
important information concerning the company's annual meeting of shareholders on
April 17, 1996.
As you know, a group controlled by corporate raiders Bennett LeBow and Carl
Icahn has nominated an alternate slate of directors to replace your company's
board and give the LeBow/Icahn group control of RJR Nabisco. WE DO NOT BELIEVE
THAT ELECTING THE LEBOW/ICAHN SLATE OF DIRECTORS IS IN YOUR INTEREST. There are
a number of well-known companies where LeBow or Icahn gained control only to
bankrupt them, use corporate assets for their personal gain or take other
actions that benefited themselves but not other shareholders.
THIS YEAR'S ANNUAL MEETING VOTE REQUIRES YOU TO MAKE AN IMPORTANT CHOICE:
between a board slate that was hand-picked by Bennett LeBow and Carl Icahn,
whose careers are marked by self-dealing transactions (LeBow), greenmailing
activities (Icahn) and self-enrichment (both), or YOUR CURRENT BOARD OF
DIRECTORS, A BOARD COMMITTED TO MAXIMIZING VALUE FOR ALL SHAREHOLDERS AND TO
MANAGING RJR NABISCO RESPONSIBLY, FOR YOUR BENEFIT. WE STRONGLY URGE YOU NOT TO
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SIGN OR RETURN THE BLUE PROXY CARDS SENT TO YOU BY THE LEBOW/ICAHN GROUP OR ITS
AGENTS, INCLUDING BROOKE GROUP.
The company has finally gotten out from under billions of dollars of debt
from the leveraged buy-out in 1989 and is focused on delivering the solid
operating and financial performances which are essential to improving the
company's share price. The board has adopted a policy to return increased levels
of RJR Nabisco's free cash flows to shareholders. This policy will result in two
immediate actions:
. A 23 PERCENT INCREASE IN THE COMPANY'S ANNUAL COMMON DIVIDEND, TO $1.85 PER
COMMON SHARE FROM $1.50 PER COMMON SHARE ($.4625 PER COMMON SHARE FROM $.375
PER COMMON SHARE ON A QUARTERLY BASIS, EFFECTIVE AS OF THE APRIL 1, 1996
DIVIDEND PAYMENT). The increase in the dividend rate is equivalent to the
amount of dividend income the company currently receives from its 80.5 percent
interest in Nabisco Holdings Corp. We believe this approach is the responsible
means of allowing shareholders to participate in the dividend income the
company receives from Nabisco until we can achieve a spin-off.
. THE ADOPTION OF A SHARE REPURCHASE OBJECTIVE OF APPROXIMATELY 10 MILLION
COMMON SHARES OVER THE NEXT SEVERAL YEARS BASED ON THE ACHIEVEMENT OF
PERFORMANCE TARGETS, AND THE AUTHORIZATION BY THE BOARD FOR THE COMPANY TO
REPURCHASE UP TO $100 MILLION OF STOCK IN 1996. The board intends to regularly
review repurchases to determine appropriate additional activity, based on
improving cash flows.
We took these actions because we recognize the tremendous earnings potential
our company has that can be put to work immediately for shareholders. In recent
months, we've met with and heard from many of our shareholders, large and small.
Many told us they took the opportunity to vote in the recent consent
solicitation to tell RJR Nabisco in no uncertain terms to take immediate action
to improve the performance of their investment, including finding a responsible
way to spin off Nabisco as soon as we can.
<PAGE>
THE DIVIDEND AND SHARE REPURCHASE ACTIONS MARK AN IMPORTANT STEP IN OUR
EFFORT TO ADD VALUE TO YOUR INVESTMENT IN RJR NABISCO BUT WE WANT YOU TO KNOW
THAT THIS IS NOT THE LAST STEP. YOUR BOARD OF DIRECTORS IS COMMITTED TO SPINNING
OFF NABISCO AS SOON AS WE BELIEVE THAT IT CAN BE DONE SUCCESSFULLY. A SPIN-OFF
REMAINS A 'FRONT-BURNER' ISSUE FOR RJR NABISCO. OVERALL, WE BELIEVE THESE
ACTIONS ALLOW US TO BE RESPONSIVE TO OUR SHAREHOLDERS' NEEDS WHILE MANAGING THE
COMPANY IN A RESPONSIBLE MANNER.
Over the past 18 months, RJR Nabisco has evolved from a company controlled
by one leveraged buy-out investment group to a company with broad common stock
ownership. THE BOARD RECENTLY VOTED TO FORM A NEW CORPORATE GOVERNANCE AND
NOMINATING COMMITTEE TO PROVIDE A FORMAL MEANS TO DETERMINE WHAT ADDITIONAL
STEPS ARE NECESSARY TO COMPLETE THE COMPANY'S TRANSITION AS WELL AS TO STEP UP
EFFORTS TO RECRUIT ADDITIONAL OUTSTANDING OUTSIDE DIRECTORS.
The new committee assumes responsibility for recruiting and nominating new
directors, reviewing corporate governance issues, and, in coordination with the
company's compensation committee, recommending changes to director compensation
and incentives. Only outside directors of the company will be members of the
committee, which will be chaired by Ambassador Rozanne Ridgway, co-chair of the
Atlantic Council of the United States.
THE STEPS THE BOARD IS TAKING TO ADD IMMEDIATE VALUE TO YOUR INVESTMENT,
ALONG WITH THE PROGRESS THE COMPANY IS MAKING IN ITS OPERATING PERFORMANCE,
UNDERSCORE OUR COMMITMENT TO MANAGING RJR NABISCO FOR THE BENEFIT OF ALL
SHAREHOLDERS. WE ALSO ARE FIRMLY COMMITTED TO A NABISCO SPIN-OFF AS SOON AS IT
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CAN BE DONE RESPONSIBLY.
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We do not believe that a board hand-picked by Bennett LeBow and Carl Icahn
will represent your interests versus their personal financial interests. LeBow
and Icahn have well-publicized records of imposing self-serving policies that
enrich them but leave other shareholders out in the cold.
We strongly urge you to vote for the company's current board at the annual
meeting and to vote on the other proposals in the manner recommended by your
board of directors. WE ASK YOU TO SIGN, DATE AND RETURN THE ACCOMPANYING WHITE
CARD, USING THE ENCLOSED POSTAGE-PAID ENVELOPE, INDICATING YOUR SUPPORT OF THE
COMPANY'S BOARD AND MANAGEMENT. If you have any questions or need assistance in
completing the enclosed WHITE card, please call our solicitors: MacKenzie
Partners, Inc., toll free, at 1-800-322-2885 or D.F. King & Co., Inc., toll
free, at 1-800-290-6430.
On Behalf of your Board of Directors,
/s/ Charles M. Harper /s/ Steven F. Goldstone
CHARLES M. HARPER STEVEN F. GOLDSTONE
Chairman President and
Chief Executive Officer
