UST Inc. Mark L. Mitchell University of Chicago Janet Mitchell Merrill Lynch INTRODUCTION In the spring of 1993, Louis F. Bantle, chairman and chief executive officer of UST Inc. (formerly known as United States Tobacco Co.) for 20 years, quietly revealed his decision to step down by year-end and pass the reins to the executive who would lead UST Inc. into the twenty-first century. The heir apparent, Vincent A. Gierer Jr., joined UST Inc. in 1978 and has been President since 1990.

Together, Bantle and Gierer oversee one of the most profitable corporations in the United States. According to a 1993 Fortune survey, UST Inc. is the second most-admired corporation based on financial performance.1 While Fortune observes that a very close relationship generally exists between a corporation’s financial performance and its overall reputation, UST deviates from the norm as its overall reputation based on the Fortune survey ranks only 94. UST’s low overall reputation relative to financial performance may stem from the nature of its core business—UST is the dominant producer of the moist, smokeless tobacco marker, controlling 86% of industry sales with brand names such as Copenhagen and Skoal.

It is also worth noting that UST has spent most of its focus on the bottom line rather than efforts to promote corporate image. UST’s history traces back more than 170 years to America Tobacco, a trust that held over 90% of the tobacco market during the nineteenth century.

The trust-busting activities by the United States government in the early part of this century led to the formation of United State Tobacco Co., along with that of R.J. Reynolds, Liggett & Myers, and British American Tobacco. Since its inception as an independent corporation in 1911, United States Tobacco Co. has had remarkable success.

Even through the turbulent depression era and subsequent recessions, management at UST has always steered the company in the direction of high profitability as witnessed by an uninterrupted