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________________________________________________________________________________
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
------------------------
TIME WARNER INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
------------------------
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:.........
2) Aggregate number of securities to which transaction applies:............
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):..............
4) Proposed maximum aggregate value of transaction:........................
5) Total Fee Paid..........................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:.................................................
2) Form, Schedule or Registration Statement No.:...........................
3) Filing Party:...........................................................
4) Date Filed:.............................................................
________________________________________________________________________________
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[Logo]
March 23, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of Time Warner Inc. on Thursday, May 14, 1998, beginning at 10:00 A.M., local
time, in the International Ballroom of the Omni Hotel at the CNN Center in
Atlanta, Georgia 30335. Please enter at 190 Marietta Street. A map indicating
directions and the location of parking facilities is on the back cover of the
Proxy Statement. I look forward to greeting as many of you who attend the
Meeting as I can.
Please vote on all the matters listed in the enclosed Notice of Annual
Meeting of Stockholders. Your Board of Directors recommends a vote 'FOR' the
proposals listed as items 1 and 2 in the Notice and described in the enclosed
Proxy Statement.
Whether or not you plan to attend in person, it is important that your
shares be represented and voted at the Meeting. After reading the enclosed
Notice and Proxy Statement, please sign, date and mail the enclosed proxy card
or voting instructions in the envelope provided.
Because of security procedures required for access to the Omni Hotel, if
you plan to attend the Meeting in person, you must bring the Admission Ticket
(which admits two people) included with the enclosed Notice and Proxy Statement
or a Time Warner employee identification card. YOU WILL NOT BE PERMITTED INTO
THE MEETING WITHOUT ONE OF THESE. If you have not received an Admission Ticket,
please contact the Shareholder Relations Department at (212) 484-6971.
Sincerely,
GERALD M. LEVIN
Chairman of the Board
and Chief Executive Officer
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TIME WARNER INC.
75 Rockefeller Plaza
New York, NY 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1998
The Annual Meeting (the 'Annual Meeting') of Stockholders of Time Warner
Inc., a Delaware corporation (the 'Company'), will be held on Thursday, May 14,
1998 in the International Ballroom of the Omni Hotel at the CNN Center, 190
Marietta Street, Atlanta, Georgia 30335, commencing at 10:00 A.M., local time,
for the following purposes:
1. To elect 13 directors for a term of one year and until their
successors are duly elected and qualified.
2. To approve the appointment by the Board of Directors of the firm of
Ernst & Young LLP as independent auditors of the Company for 1998; and
3. To transact such other business as may properly come before the
Annual Meeting.
Only holders of the Company's common stock and certain series of preferred
stock at the close of business on March 23, 1998, the record date, are entitled
to vote on some or all of the matters listed in this Notice of Annual Meeting.
TIME WARNER INC.
PETER R. HAJE
Secretary
March 23, 1998
THE ANNUAL MEETING WILL START PROMPTLY AT 10:00 A.M. TO AVOID DISRUPTION,
ADMISSION MAY BE LIMITED ONCE THE MEETING STARTS. PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED PRE-ADDRESSED REPLY
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. ANY RECORD
HOLDER WHO IS PRESENT AT THE MEETING MAY VOTE IN PERSON INSTEAD OF BY PROXY,
THEREBY CANCELING ANY PREVIOUS PROXY. YOU MAY NOT APPOINT MORE THAN THREE
PERSONS TO ACT AS YOUR PROXY AT THE MEETING.
YOU WILL BE REQUIRED TO SHOW THE ENCLOSED ADMISSION TICKET OR A COMPANY ID CARD
TO ATTEND THE ANNUAL MEETING.
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TIME WARNER INC.
75 Rockefeller Plaza
New York, NY 10019
PROXY STATEMENT
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Time Warner Inc., a Delaware corporation
(the 'Company'), for use at the Annual Meeting of the Company's stockholders
(the 'Annual Meeting') to be held on Thursday, May 14, 1998 in the International
Ballroom of the Omni Hotel at the CNN Center, 190 Marietta Street, Atlanta,
Georgia 30335, commencing at 10:00 A.M., local time, and at any adjournment or
postponement, for the purpose of considering and acting upon the matters set
forth in the accompanying Notice of Annual Meeting of Stockholders. References
to the Company prior to the October 1996 merger (the 'TBS Merger') with Turner
Broadcasting System, Inc. ('TBS') are to its predecessor.
This Proxy Statement and accompanying forms of proxy and voting
instructions are first being mailed on or about March 25, 1998 to stockholders
entitled to vote at the Annual Meeting.
VOTING AT THE ANNUAL MEETING; RECORD DATE; CONFIDENTIAL VOTING
Only holders of record of the Company's voting stock at the close of
business on March 23, 1998, the record date, are entitled to notice of and to
vote at the Annual Meeting. At that time, the number of shares entitled to vote
and their voting rights were:
532,707,059 shares of Common Stock, par value $.01 per share ('Common
Stock'), each of which is entitled to one vote on all matters properly
submitted at the Annual Meeting;
57,061,942 shares of Series LMCN-V Common Stock, par value $.01 per share
('Series LMCN-V Stock'), each of which is entitled to 1/100 of a vote on
the election of directors; and
29,201,504 shares of six series of Convertible Preferred Stock, par value
$.10 per share, consisting of 11,000,000 shares of Series D Preferred,
3,146,185 shares of Series E Preferred, 2,981,811 shares of Series F
Preferred, 3,559,000 shares of Series G Preferred, 5,250,000 shares of
Series I Preferred and 3,264,508 shares of Series J Preferred
(collectively, the 'Voting Preferred Stock'), each of which is entitled to
two votes on all matters properly submitted at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast at the Annual Meeting is necessary to constitute a
quorum.
In accordance with the Company's confidential voting policy, all
stockholder proxies, ballots and voting materials will be confidentially
inspected and tabulated by independent inspectors of election and will not be
disclosed to the Company except under certain limited circumstances.
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REQUIRED VOTE
A plurality of the votes duly cast is required for the election of
directors. The affirmative vote of a majority of the votes duly cast by the
holders of Common Stock and Voting Preferred Stock, voting together as a single
class, is required to approve the other matters to be acted upon at the Annual
Meeting.
An abstention is deemed 'present' but is not deemed a 'vote cast.' As a
result, abstentions and broker 'non-votes' are not included in the tabulation of
the voting results on the election of directors or issues requiring approval of
a majority of the votes cast and, therefore, do not have the effect of votes in
opposition. A broker 'non-vote' occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power on that item and has not received
instructions from the beneficial owner. Broker 'non-votes' and the shares as to
which a stockholder abstains are included in determining whether a quorum is
present.
PROXIES
All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting, and not revoked, will be voted as
instructed on those proxies. If no instructions are indicated, the shares will
be voted as recommended by the Board of Directors. No stockholder of record may
appoint more than three persons to act as his or her proxy at the Annual
Meeting.
If any other matters are properly presented at the Annual Meeting for
consideration, the persons named in the enclosed form of proxy will have
discretion to vote on those matters in accordance with their own judgment to the
same extent as the person signing the proxy would be entitled to vote. In
accordance with the Company's By-laws, the Annual Meeting may be adjourned,
including by the Chairman, in order to permit the solicitation of additional
proxies. The Company does not anticipate that any other matters will be raised
at the Annual Meeting.
Any proxy may be revoked at any time before it is voted by (i) filing with
the Secretary of the Company, at or before the taking of the vote at the Annual
Meeting, a written notice of revocation or a duly executed proxy, in either case
later dated than the prior proxy relating to the same shares or (ii) attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not of itself revoke a proxy). Any written notice of revocation or
subsequent proxy should be sent so as to be delivered to Time Warner Inc., 75
Rockefeller Plaza, New York, NY 10019, Attention: Secretary, or hand delivered
to the Secretary, before the taking of the vote at the Annual Meeting.
A copy of the Company's Annual Report to Stockholders for the year 1997,
including financial statements, has been sent simultaneously with this Proxy
Statement or has been previously provided to all stockholders entitled to vote
at the Annual Meeting.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the election of the nominees
for election as directors and FOR approval of the appointment of Ernst & Young
LLP as independent auditors of the Company for 1998.
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CORPORATE GOVERNANCE
ELECTION OF DIRECTORS
The Company believes that, in the best interest of its stockholders, a
majority of the members of its Board of Directors should, in the Board's
judgment, have no direct or indirect material economic relationship with the
Company other than as a result of customary directors' compensation or stock
ownership ('Unaffiliated Directors'). Under the Company's By-laws, when the
Board sets the slate of director nominees for election at an annual meeting of
stockholders, it must determine that a majority of its members will be
independent directors within the meaning of the By-laws, assuming the election
of such slate. The Company also has a policy limiting the eligibility for
nomination by the Board of Directors as a non-employee director to persons who
would be less than 70 years old at the time of election. As a result of this
policy, Donald S. Perkins and Raymond S. Troubh are retiring as members of the
Board of Directors at the Annual Meeting.
As a result of the stockholders' 1997 approval of an amendment to the
Company's restated certificate of incorporation requiring the annual election of
all the members of the Board of Directors, the terms of all of the Company's
directors will expire at the Annual Meeting. The nominees for director at the
Annual Meeting will be elected to serve until the next annual meeting of
stockholders and until their successors have been duly elected and qualified.
Each of the nominees, except for John C. Danforth, is currently a director of
the Company, and, except for R.E. Turner, who became a director in connection
with the TBS Merger in 1996, was elected by the stockholders. Assuming the
election of these nominees, there will be 13 directors, of whom ten will be
Unaffiliated Directors and three will be Affiliated Directors.
The persons named in the enclosed proxy intend to vote such proxy for the
election of each of the 13 nominees named below, unless the stockholder
indicates on the proxy that the vote should be withheld from any or all of the
nominees. Each nominee elected will continue in office until his successor has
been duly elected and qualified, or until his earlier death, resignation or
retirement.
The Company expects each nominee for election as a director at the Annual
Meeting to be able to accept such nomination. If any nominee is unable to accept
such nomination, proxies will be voted in favor of the remainder of those
nominated and may be voted for substitute nominees.
Set forth below is the principal occupation of, and certain other
information regarding, the 13 nominees.
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NOMINEES FOR ELECTION AT THE ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Merv Adelson ....................... 68 CHAIRMAN OF EAST-WEST CAPITAL ASSOCIATES AND FORMER CHAIRMAN AND
1989 CHIEF EXECUTIVE OFFICER OF LORIMAR TELEPICTURES. Mr. Adelson has
served as Chairman of East-West Capital Associates (private
investment company) since April 1989. Mr. Adelson served as Vice
Chairman and a director of Warner Communications Inc. ('WCI') from
January 1989 through August 1991. Prior to that, Mr. Adelson served
as Chairman and Chief Executive Officer of Lorimar Telepictures
Corporation from February 1986 until its acquisition by WCI in
January 1989. He is also a director of 7th Level, Inc. and
Faroudja, Inc. Mr. Adelson is an Unaffiliated Director.
J. Carter Bacot .................... 65 RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE BANK OF NEW YORK.
1996 Mr. Bacot served as Chairman and Chief Executive Officer of The
Bank of New York Company, Inc. and Chairman of The Bank of New York
from 1982 until February 8, 1998 and currently serves as a director
and consultant. He is also a director of Atlantic Mutual Companies,
Associates First Capital Corporation, Phoenix Home Life Mutual
Insurance Company and Woolworth Corporation. Mr. Bacot is an
Unaffiliated Director.
Stephen F. Bollenbach .............. 55 PRESIDENT AND CHIEF EXECUTIVE OFFICER OF HILTON HOTELS CORPORATION.
1997 Mr. Bollenbach has served as President and Chief Executive Officer
of Hilton Hotels Corporation (hotels and gaming) since February
1996. Prior to that, Mr. Bollenbach was Senior Executive Vice
President and Chief Financial Officer of The Walt Disney Company
(entertainment) from April 1995 until February 1996; President and
Chief Executive Officer of Host Marriott Corporation (lodging) from
October 1993 to April 1995; and Chief Financial Officer of Marriott
Corporation (lodging) from March 1992 until October 1993. He is
also a director of America West Airlines, Inc., Hilton Hotels
Corporation, Kmart Corporation and Ladbroke Group PLC. Mr.
Bollenbach is an Unaffiliated Director.
</TABLE>
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<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
John C. Danforth ................... 61 PARTNER, BRYAN CAVE LLP AND FORMER UNITED STATES SENATOR. Mr.
Danforth has been a partner at Bryan Cave LLP (attorneys) since
January 1995. Prior to that, Mr. Danforth served as a United States
Senator representing the state of Missouri from 1976 until January
1995. He is also a director of Cerner Corporation, The Dow Chemical
Company and General American Life Insurance Company. Mr. Danforth
will be an Unaffiliated Director.
Beverly Sills Greenough ............ 68 CHAIRMAN OF LINCOLN CENTER FOR THE PERFORMING ARTS. Mrs. Greenough
1989 served as a director of WCI from 1982 to 1990. Mrs. Greenough has
served as the Chairman of Lincoln Center for the Performing Arts
since June 1994, having served as a Managing Director of The
Metropolitan Opera from 1991. She is also a director of American
Express Company and Human Genome Sciences Inc. Mrs. Greenough is an
Unaffiliated Director.
Gerald Greenwald ................... 62 CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF UAL CORPORATION AND UNITED
1997 AIRLINES, INC. Mr. Greenwald has served as Chairman and Chief
Executive Officer of UAL Corporation (airline holding company) and
United Airlines, Inc. since July 1994. Prior to that, he served as
Chairman of Tatra, a Czech republic truck manufacturer, from March
1993 to July 1994. His previous experience was primarily in the
auto sector, at Chrysler Corporation, where he served from 1979 to
1990, including as Vice Chairman. He is also a director of Aetna
Inc. Mr. Greenwald is an Unaffiliated Director.
Carla A. Hills ..................... 64 CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF HILLS & COMPANY AND FORMER
1993 UNITED STATES TRADE REPRESENTATIVE. Ambassador Hills became
Chairman and Chief Executive Officer of Hills & Company
(international trade and investment consultants) in March 1993,
having served in President Bush's Cabinet as the United States
Trade Representative from February 1989 to January 20, 1993.
Ambassador Hills is also a director of American International
Group, Inc., Chevron Corporation, Lucent Technologies Inc. and
Trust Company of the West. Ambassador Hills is an Unaffiliated
Director.
</TABLE>
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<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Gerald M. Levin .................... 58 CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER OF THE
1988 COMPANY. Mr. Levin became Chairman of the Board of Directors and
Chief Executive Officer of the Company on January 21, 1993, having
served as President and Co-Chief Executive Officer from February
20, 1992. He previously served as a director of the Company from
1983 until January 1987. He is also a member of the Board of
Representatives of Time Warner Entertainment Company, L.P. Mr.
Levin is an Affiliated Director.
Reuben Mark ........................ 59 CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF COLGATE- PALMOLIVE COMPANY.
1993 Mr. Mark has served as the Chief Executive Officer of
Colgate-Palmolive Company (consumer products) since May 1984. In
May 1986, he was elected Chairman. Mr. Mark is also a director of
Citicorp, Pearson plc and The New York Stock Exchange, Inc. Mr.
Mark is an Unaffiliated Director.
Michael A. Miles ................... 58 FORMER CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF PHILIP
1995 MORRIS COMPANIES INC. Mr. Miles served as Chairman of the Board and
Chief Executive Officer of Philip Morris Companies Inc. (consumer
products) from September 1991 until July 1994. He is also a
director of Allstate Corp., Dell Computer Corporation, Morgan
Stanley, Dean Witter, Discover & Co. and Sears, Roebuck and Co. and
is a Special Limited Partner in Forstmann Little & Co. Mr. Miles is
an Unaffiliated Director.
Richard D. Parsons ................. 49 PRESIDENT OF THE COMPANY. Mr. Parsons became President of the Company
1991 on February 1, 1995. Prior to that, Mr. Parsons served as the
Chairman and Chief Executive Officer of The Dime Savings Bank of
New York, FSB from January 1991. He served as a director of
American Television and Communications Corporation, then an
82%-owned subsidiary of the Company, from 1989 until 1991 and is
currently also a director of Citicorp, the Federal National
Mortgage Association and Philip Morris Companies Inc. and a member
of the Board of Representatives of Time Warner Entertainment
Company, L.P. Mr. Parsons is an Affiliated Director.
R.E. Turner ........................ 59 VICE CHAIRMAN OF THE COMPANY. Mr. Turner became Vice Chairman of the
1996 Company upon consummation of the TBS Merger on October 10, 1996.
Prior to that, Mr. Turner served as Chairman of the Board and
President of TBS from 1970. Mr. Turner is an Affiliated Director.
</TABLE>
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<TABLE>
<CAPTION>
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Francis T. Vincent, Jr. ............ 59 CHAIRMAN OF VINCENT ENTERPRISES. Mr. Vincent has been a private
1993 investor at Vincent Enterprises since January 1, 1995. Prior to
that, Mr. Vincent served as the Commissioner of Major League
Baseball from September 1989 until September 1992. He is also a
director of General Cigar Holdings, Inc., Oakwood Homes Corporation
and Westfield America Corporation. Mr. Vincent is an Unaffiliated
Director.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has designated four principal standing committees.
The Company believes that it is in the best interest of the Company's
stockholders that each of the Audit, Compensation and Nominating and Governance
Committees be composed of at least a majority of Unaffiliated Directors. As
noted below, each of the four standing Board committees is composed entirely of
Unaffiliated Directors. The current members and functions of the Board's
committees are as follows:
Audit Committee. The Audit Committee is composed entirely of Unaffiliated
Directors. Its members are Messrs. Bacot, Greenwald, Miles (Chair) and Perkins.
The functions of the Audit Committee, which met three times during 1997, include
(i) the review of the professional services and independence of the Company's
independent auditors; (ii) in consultation with the independent auditors and
management, the review of material changes in accounting policies and financial
reporting practices and material developments in financial reporting standards;
(iii) the review of the plan and scope of the annual external audit as
recommended by the independent auditors; (iv) the review, in consultation with
the independent auditors and the Company's chief internal auditor, of the
adequacy of the Company's internal accounting controls and the results of
material internal audits; (v) the review, in consultation with management and
the independent auditors, of the Company's annual financial statements and the
results of each external audit; and (vi) the review, in consultation with the
Company's independent auditors and the Company's principal financial officer and
principal accounting officer, of the auditing and accounting principles and
practices to be used in the preparation of the Company's financial statements.
The Audit Committee has authority to consider the qualification of the
Company's independent auditors and make recommendations to the Board of
Directors as to their selection, approve any material non-audit services to be
rendered to the Company and review and resolve any differences of opinion
between such independent auditors and management relating to the preparation of
the annual financial statements.
Compensation Committee. The Compensation Committee is composed entirely of
Unaffiliated Directors. Its members are Mr. Bollenbach, Ambassador Hills and
Messrs. Mark (Chair), Troubh and Vincent. The Compensation Committee, which met
six times during 1997, has authority to engage independent compensation
consultants to assist the Committee in its review of the Company's executive
compensation. The Compensation Committee also has authority, as delegated by the
Board of Directors, to review and approve the Company's employee benefit plans
and administer its executive compensation plans. The Compensation Committee,
after receiving and considering the recommendations of the Company's Chief
Executive Officer, approves the salaries and incentive compensation (including
the grant of stock options) and employment
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agreements of the executive officers of the Company. See 'Compensation Committee
Report on Compensation of Executive Officers of the Company.'
Nominating and Governance Committee. The Nominating and Governance
Committee is composed entirely of Unaffiliated Directors. Its members are Mr.
Adelson, Mrs. Greenough and Messrs. Perkins and Vincent (Chair). The Nominating
and Governance Committee, which met five times during 1997, has authority to
review the size and composition of the Board of Directors and recommends
nominees to serve on the Board of Directors and considers the qualifications of
candidates for election as directors. Nominees to the Board of Directors are
selected on the basis of recognized achievements and their ability to bring
various skills and experience to the deliberations of the Board of Directors. In
carrying out its responsibilities, the Nominating and Governance Committee will
consider candidates recommended by other directors, employees and stockholders.
Written suggestions for nominees should be sent to the Secretary of the Company.
The Company's By-laws provide that any stockholder of record who is
entitled to vote for the election of directors may nominate persons for election
as directors only if timely written notice in proper form of the intent to make
a nomination at a meeting of stockholders is received by the Secretary of Time
Warner at 75 Rockefeller Plaza, New York, NY 10019. To be timely and in proper
form under the By-laws, the notice generally must be delivered not less than 70
nor more than 120 days prior to the date of the meeting at which directors are
to be elected and must contain prescribed information about the proponent and
each nominee, including such information about each nominee as would have been
required to be included in a proxy statement filed pursuant to the rules of the
Securities and Exchange Commission had such nominee been nominated by the Board
of Directors.
Finance Committee. The Finance Committee is composed entirely of
Unaffiliated Directors. Its members are Messrs. Adelson (Chair), Bacot and
Bollenbach, Mrs. Greenough and Messrs. Greenwald, Perkins and Troubh. The
Finance Committee, which met four times during 1997, has authority to review and
make recommendations to the Board of Directors concerning the financial
structure and financial condition of the Company and its subsidiaries, including
annual budgets, long-term financial plans, corporate borrowings, investments,
capital expenditures, long-term commitments and the issuance of stock. The
Finance Committee also has the authority to approve such matters that are
consistent with the general financial policies and direction from time to time
determined by the Board of Directors.
During 1997, the Board of Directors met seven times and no director
attended fewer than 75% of the total number of meetings of the Board of
Directors and the committees of which he or she was a member.
DIRECTOR COMPENSATION
Directors who are not officers or employees of the Company or any of its
subsidiaries ('Eligible Directors') currently receive $60,000 as an annual
retainer, half of which is paid in cash and the remaining half in shares of
Common Stock under the 1988 Restricted Stock Plan for Non-Employee Directors
(the 'Directors' Restricted Stock Plan'), and an award of stock options under
the Time Warner 1996 Stock Option Plan for Non-Employee Directors (the
'Directors' Option Plan'). No additional compensation is paid for service as a
committee chair or for attendance at special meetings of the Board or a Board
committee. Eligible Directors are also reimbursed for expenses incurred in
attending Board and committee meetings, including those for travel, food and
lodging.
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Directors who are officers of or employed by the Company or any of its
subsidiaries are not additionally compensated for their Board and committee
activities.
Under the Directors' Restricted Stock Plan, which was approved by
stockholders of the Company, each Eligible Director is generally issued an
annual grant of shares of Common Stock ('Restricted Shares') having a market
value of $30,000. During the restriction period provided under the Directors'
Restricted Stock Plan, the Eligible Director votes the Restricted Shares,
receives and retains all regular cash dividends and exercises all other rights
as a holder of Common Stock, but may not dispose of the Restricted Shares, and
the Company retains custody of the stock certificates and all distributions
other than regular cash dividends.
The restriction period ends, and all Restricted Shares (including any
distributions retained by the Company) vest, upon the termination of the
Eligible Director's service on the Board of Directors on account of (i)
mandatory retirement; (ii) failure to be reelected by stockholders; (iii) death
or disability; and (iv) the occurrence of certain transactions involving a
change in control of the Company; and, with the approval of the Board on a case
by case basis, under certain other designated circumstances. If an Eligible
Director leaves the Board of Directors for any other reason, then all his or her
Restricted Shares are forfeited to the Company. In 1997, each Eligible Director
received 665 Restricted Shares under the Directors' Restricted Stock Plan.
The Company also has a deferred compensation plan for Eligible Directors.
Under this plan, Eligible Directors may elect each year to defer payment of 25%,
50%, 75% or 100% of their cash compensation payable during the next calendar
year. Amounts deferred under the plan are increased based on an interest factor
or the hypothetical investment in shares of Common Stock and dividends thereon,
with the higher valuation used to determine the amount paid upon distribution.
Amounts deferred are payable in a lump-sum or in installments, generally upon
attainment of age 70 or cessation of service as a director of the Company for
certain enumerated reasons.
Each Eligible Director currently receives an annual award of nonqualified
stock options ('Options') to purchase 1,500 shares of Common Stock (and related
limited stock appreciation rights ('Limited SARs') that may be exercised only
during a prescribed period following the occurrence of certain transactions
involving a change in control of the Company) pursuant to the Directors' Option
Plan. Under the Directors' Option Plan, which was approved by the Company's
stockholders, the Options and related Limited SARs are automatically awarded on
the tenth New York Stock Exchange trading day after each annual meeting of the
Company's stockholders. The purchase price of the shares of Common Stock covered
by each Option is equal to the fair market value of the Common Stock on the date
of grant. Each Option (and the related Limited SAR) becomes exercisable
(cumulatively to the extent not previously exercised) at the rate of one-third
of the aggregate number of shares covered thereby at the end of each successive
one-year period following the date of grant and expires ten years after the date
of grant.
The Directors' Option Plan also provides that awards become immediately
exercisable in full (i) when the director leaves the Board of Directors for any
reason, except that upon removal for cause all unexercised Options immediately
terminate, or (ii) if certain 'change-in-control' transactions occur. Options
remain exercisable for one year after the director dies and for five years after
the director leaves the Board of Directors for any reason other than death or
removal for cause (but not beyond the ten-year term of the Option).
The Directors' Option Plan replaced the Company's retirement plan (the
'Directors Retirement Plan') for its Eligible Directors and no benefits accrue
under this Plan after May 1996. Under the Directors Retirement Plan, each
Eligible Director who serves as such for at least three years will receive an
annual retirement benefit commencing after the later of stepping down from
9
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<PAGE>
the Board of Directors or attaining age 60 (or earlier in the event such
Eligible Director becomes disabled) equal to $30,000, which benefit will be paid
for the number of years of service as an Eligible Director through May 16, 1996.
Service as an outside director of WCI prior to July 24, 1989 is considered
credited service under the Directors Retirement Plan. In the event an Eligible
Director dies prior to the commencement or completion of payment of benefits
under the Directors Retirement Plan, a lump-sum cash payment will be made in an
amount equal to the total benefits or remaining benefits the Eligible Director
would have been entitled to receive had he or she not died. The Chief Executive
Officer of the Company may accelerate payment of the annual retirement benefit
accrued to an Eligible Director under the Plan.
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth as of February 1, 1998 for each current
director, each nominee for election as a director, each of the executive
officers named in the Summary Compensation Table below and for all current
directors and executive officers as a group, information concerning the
beneficial ownership of Common Stock.
As of February 1, 1998, the approximate aggregate market value of the
Common Stock held by certain persons as set forth in the table below (exclusive
of shares subject to stock options) was as follows: 11 current Unaffiliated
Directors -- $51 million; and all current directors -- $3.9 billion. In
addition, as of December 31, 1997, the trusts maintained pursuant to the
Company's qualified employee benefit plans, other than pension plans, held
Common Stock valued at approximately $1.13 billion in accounts for the benefit
of employees of the Company and its subsidiaries.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY OWNED(1)
-------------------------------------
NUMBER OF OPTION PERCENT OF
NAME SHARES SHARES(2) CLASS
- ----------------------------------------------------------------------- ---------- --------- ----------
<S> <C> <C> <C>
Merv Adelson........................................................... 700,808 500 *
J. Carter Bacot........................................................ 1,665 *
Stephen F. Bollenbach.................................................. 665 *
Richard J. Bressler (9)................................................ 5,587 280,803 *
John C. Danforth (3)................................................... 2,875 *
Beverly Sills Greenough (4)............................................ 22,752 500 *
Gerald Greenwald (5)................................................... 2,665 *
Peter R. Haje (9)...................................................... 9,960 720,000 *
Carla A. Hills......................................................... 4,452 500 *
Gerald M. Levin (6)(9)................................................. 434,085 2,670,935 *
Reuben Mark............................................................ 11,852 500 *
Michael A. Miles....................................................... 10,669 500 *
Richard D. Parsons (9)................................................. 11,278 500,000 *
Donald S. Perkins...................................................... 15,542 500 *
Raymond S. Troubh (7).................................................. 10,912 500 *
R.E. Turner (8)(9)..................................................... 60,147,310 433,335 11.7%
Francis T. Vincent, Jr. ............................................... 18,852 500 *
All current directors and executive officers (19 persons) as a group
(4)-(9).............................................................. 61,478,989 5,149,378 12.7%
</TABLE>
- ------------
* Represents beneficial ownership of less than one percent of issued and
outstanding stock on February 1, 1998.
(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 of the Securities and Exchange Commission
('SEC'). Unless otherwise indicated, beneficial ownership includes both
sole
(footnotes continued on next page)
10
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<PAGE>
(footnotes continued from previous page)
voting and sole investment power. This table does not include, unless
otherwise indicated, any shares of Common Stock or other equity securities
of the Company which may be held by pension and profit-sharing plans of
other corporations or endowment funds of educational and charitable
institutions for which various directors and officers serve as directors or
trustees. As of February 1, 1998, the only equity securities of the Company
beneficially owned by the named persons or group were shares of Common
Stock and options to purchase Common Stock.
(2) Reflects shares of Common Stock subject to options to purchase Common Stock
issued by the Company which, on February 1, 1998, were unexercised but were
exercisable within 60 days from that date. These shares are excluded from
the column headed 'Number of Shares.'
(3) Consists of shares of Common Stock held by two trusts of which Mr. Danforth
is a beneficiary and as to which he shares voting and investment control.
(4) Includes 10,240 shares of Common Stock held by a trust of which Mrs.
Greenough is the beneficiary but as to which she has no voting or
investment control.
(5) Includes 2,000 shares of Common Stock held by Mr. Greenwald's wife, as to
which Mr. Greenwald disclaims any beneficial ownership.
(6) Includes 15,000 shares of Common Stock held by Mr. Levin's wife, as to
which Mr. Levin disclaims any beneficial ownership.
(7) Includes 3,200 shares of Common Stock held beneficially by Mr. Troubh's
wife, as to which Mr. Troubh disclaims any beneficial ownership.
(8) Includes (a) 839,942 shares of Common Stock owned by a corporation wholly
owned by Mr. Turner, (b) 1,416,690 shares of Common Stock held by a trust
over which Mr. Turner has sole voting and dispositive control, (c)
3,564,448 shares of Common Stock held by a limited partnership of which Mr.
Turner is the sole general partner, (d) 2,000,000 shares of Common Stock
that, on May 12, 2000, Mr. Turner has the right to put to a broker at
$39.63 per share and the broker has a right to call from Mr. Turner at
$60.10 per share (which call Mr. Turner may settle in cash), (e) 386,000
shares of Common Stock owned by Mr. Turner's wife and (f) 2,500,000 shares
of Common Stock held by the Turner Foundation, Inc., of which Mr. Turner is
one of six trustees. Mr. Turner disclaims beneficial ownership of shares
held by his spouse and the Turner Foundation, Inc.
(9) Includes (a) an aggregate of approximately 36,686 shares of Common Stock
held by a trust under the Time Warner Savings Plan for the benefit of
current directors and executive officers of the Company (including 4,452
shares for Mr. Bressler, 3,472 shares for Mr. Haje, 10,964 shares for Mr.
Levin, 115 shares for Mr. Parsons and 71 shares for Mr. Turner) and (b) an
aggregate of 406,600 shares of Common Stock beneficially owned by certain
relatives of such persons.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is the name, address, stock ownership and voting power of
each person or group of persons known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock, Series LMCN-V Stock or any
series of Voting Preferred Stock, and, unless otherwise indicated, is based on
information provided to the Company as of February 1, 1998 by the beneficial
owner.
<TABLE>
<CAPTION>
SHARES OF
STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY PERCENT OF VOTING
OF BENEFICIAL OWNER OWNED CLASS(1) POWER(2)
- ----------------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
COMMON STOCK (3)
The Capital Group Companies, Inc. (4) ................................. 55,672,790 10.6% 8.7%
333 South Hope Street
Los Angeles, CA 90071
FMR Corp. (5) ......................................................... 36,327,065 6.9 5.4
82 Devonshire Street
Boston, MA 02109
R.E. Turner (6) ....................................................... 60,147,310 11.7 10.3
c/o Turner Broadcasting System, Inc.
One CNN Center
Atlanta, GA 30303
SERIES LMCN-V STOCK
Tele-Communications, Inc. (7) ......................................... 57,061,942 100.0 *
5619 DTC Parkway
Englewood, CO 80111
</TABLE>
(table continued on next page)
11
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY PERCENT OF VOTING
OF BENEFICIAL OWNER OWNED CLASS(1) POWER(2)
- ----------------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
SERIES D PREFERRED STOCK
Houston Industries Incorporated ....................................... 11,000,000 100.0 3.8
1111 Louisiana
Houston, TX 77002
SERIES E AND F PREFERRED STOCK
Alan Gerry (8) ........................................................ SERIES E
Loomis Road 3,107,956 98.8
Liberty, NY 12754 2.4
SERIES F
2,503,580 84.0
FW Strategic Partners, L.P. ........................................... SERIES F
201 Main Street 442,000 14.8 *
Fort Worth, TX 76102
SERIES G PREFERRED STOCK
ITOCHU Corporation (9) ................................................ 6,200,000 100.0 2.1
5-1, Kita-Aoyama 2-chome
Minato-Ku, Tokyo 107-77
Japan
SERIES I PREFERRED STOCK
Toshiba Corporation (10) .............................................. 7,000,000 100.0 2.4
1-1, Shibaura 1-chome
Minato-Ku, Tokyo 105
Japan
SERIES J PREFERRED STOCK (11)
Trust for the benefit of Gordon Gray, Jr. ............................. 769,043 23.6 *
Trust for the benefit of C. Boyden Gray................................ 473,967 14.5 *
Trust for the benefit of Burton C. Gray................................ 674,046 20.6 *
Trust for the benefit of Bernard Gray ................................. 697,035 21.4 *
c/o Wachovia Bank, N.A.
P.O. Box 3099
Winston-Salem, NC 27150
Nancy Maguire Gray, Trustee of the
Nancy Maguire Gray Trust u/a dated 12/16/94 ......................... 188,336 5.8 *
P.O. Box 3199
Church Street Station
New York, NY 10008
Belvedere Equity Fund LLC ............................................. 166,978 5.1 *
c/o Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
Greene Street Exchange Fund L.P. (12) ................................. 166,635 5.1 *
c/o Goldman, Sachs & Co.
One New York Plaza
New York, NY 10004
</TABLE>
- ------------
* Less than 1%.
(1) Each share of Voting Preferred Stock is currently convertible into 2.08264
shares of Common Stock. Of the holders of Voting Preferred Stock identified
in this table, none could be deemed beneficially to own more than 5% of the
Common Stock pursuant to Rule 13d-3. Under certain circumstances, each
share of Series LMCN-V Stock is convertible into one share of Common Stock;
such circumstances are not currently present.
(2) Each share of Voting Preferred Stock has two votes. Each share of Series
LMCN-V Stock currently has 1/100 of a vote on certain limited matters.
(footnotes continued on next page)
12
<PAGE>
<PAGE>
(footnotes continued from previous page)
(3) The Seagram Company Ltd. has filed with the SEC Amendment No. 10, dated
February 9, 1998, to its statement on Schedule 13D to report that as a
result of the sale of 15 million shares of its beneficially owned Common
Stock on February 5, 1998, it is no longer a beneficial owner of more than
5% of the Common Stock.
(4) Beneficial ownership is as of December 31, 1997. The Capital Group
Companies, Inc., a holding company, has filed with the SEC Amendment No.
11, dated February 10, 1998, to its statement on Schedule 13G to the effect
that (a) it (directly or indirectly) has sole dispositive power over all
these shares, (b) it has sole voting power over 7,006,810 of these shares,
(c) these shares are held principally by Capital Research and Management
Company, an investment adviser, (d) the shares of Common Stock reported as
beneficially owned include 1,388,090 shares of Common Stock issuable upon
conversion of $178,900,000 principal amount of the Company's Liquid Yield
OptionTM Notes ('LYONs') due 2013 and 3,158,500 shares of Common Stock
reported as issuable upon the conversion of 3,822,000 shares of 7.00%
automatic common exchange securities due 2000 of Houston Industries
Incorporated (the 'Houston ACEs') (these shares have been excluded from the
calculation of voting power), (e) all of the reported shares are held for
the benefit of its clients and (f) it and each of its subsidiary investment
management companies acts separately in exercising investment discretion
over its managed accounts.
(5) Beneficial ownership is as of December 31, 1997. FMR Corp., a holding
company, has filed with the SEC a statement on Schedule 13G dated February
14, 1998 to the effect that (a) it (directly or indirectly) has sole
dispositive power over all these shares, (b) it has sole voting power over
1,702,010 of these shares and no shared voting power, (c) these shares are
held principally by Fidelity Management & Research Company, an investment
adviser, (d) the shares of Common Stock reported as beneficially owned
include 3,248,647 shares of Common Stock issuable upon conversion of
$418,694,000 principal amount of the Company's LYONs and 1,249,100 shares
of Common Stock reported as issuable upon the conversion of 1,249,100
shares of Houston ACEs (these shares have been excluded from the
calculation of voting power), (e) these shares are, for the most part, held
by investment companies and institutional accounts managed by subsidiaries
of FMR Corp. and (f) the family of Edward C. Johnson 3d, including Mr.
Johnson, the Chairman of FMR Corp., and his daughter Abigail Johnson, a
director, and trusts for the family members' benefit may be deemed to form
a controlling group with respect to FMR Corp.
(6) Includes (a) 839,942 shares of Common Stock owned by a corporation wholly
owned by Mr. Turner, (b) 1,416,690 shares of Common Stock held by a trust
over which Mr. Turner has sole voting and dispositive control, (c)
3,564,448 shares of Common Stock held by a limited partnership of which Mr.
Turner is the sole general partner, (d) 2,000,000 shares of Common Stock
that, on May 12, 2000, Mr. Turner has the right to put to a broker at
$39.63 per share and the broker has a right to call from Mr. Turner at
$60.10 per share (which call Mr. Turner may settle in cash), (e) 386,000
shares of Common Stock owned by Mr. Turner's wife and (f) 2,500,000 shares
of Common Stock held by the Turner Foundation, Inc., of which Mr. Turner is
one of six trustees; and excludes 433,335 shares of Common Stock subject to
options to purchase Common Stock issued by the Company which, on February
1, 1998, were unexercised but were exercisable within 60 days from that
date (but such shares are included in the percent-of-class calculation but
not voting power). Mr. Turner disclaims beneficial ownership of shares held
by his spouse and the Turner Foundation, Inc.
(7) Consists of shares controlled by Tele-Communications, Inc. through its
direct and indirect subsidiaries; excludes 279,533 shares of Common Stock
held by TCI TKR of Southern Kentucky, Inc. as to which Tele-Communications,
Inc. disclaims beneficial ownership.
(8) Includes (a) 1,174,460 shares of Series F Preferred held by four limited
partnerships of which Mr. Gerry is the general partner and (2) 440,000
shares of Series F Preferred held by the Gerry Foundation Inc., of which
Mr. Gerry is the President and one of five family members on the Board of
Directors. Voting power includes 2,904,392 shares of Common Stock
beneficially owned by Mr. Gerry (of which 300,000 shares are held by the
Gerry Foundation Inc.). Mr. Gerry disclaims beneficial ownership of shares
held by the Gerry Foundation Inc.
(9) Includes 1,200,000 shares of Series G Preferred held by a wholly owned
subsidiary of ITOCHU Corporation. ITOCHU Corporation and such subsidiary
also hold an aggregate of 1,800,000 shares of the Company's Series H
Convertible Preferred Stock, par value $.10 per share ('Series H
Preferred'); each share of Series H Preferred is generally convertible into
2.08264 shares of Common Stock beginning in September 2000 and has no
voting rights. See 'Additional Information.'
(10) Includes 177,500 shares of Series I Preferred held by a wholly owned
subsidiary of Toshiba Corporation. See 'Additional Information.'
(11) The trusts for the benefit of each of Gordon Gray, Jr. and C. Boyden Gray
each also holds 215,890 shares of Common Stock and those trusts and the
trusts for the benefit of each of Burton C. Gray and Bernard Gray each also
holds 146,870 shares of Common Stock in an escrow account subject to
restrictions on disposition. The Nancy Maguire Gray Trust also holds 89,476
shares of Common Stock. These shares of Common Stock are included in the
voting power of the beneficial owners.
(12) Voting and dispositive control is shared with Goldman Sachs Asset
Management, a separate operating division of Goldman, Sachs & Co.
13
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON COMPENSATION OF EXECUTIVE OFFICERS OF THE
COMPANY
The Compensation Committee of the Board of Directors furnished the
following report on executive compensation.
The Company's executive compensation philosophy, which is expressed below,
has not changed. What did change in 1997 was the accomplishment of certain
strategic and financial milestones and the investment community's recognition of
those accomplishments. In the Committee's view, these results are in part due to
the Company's renewed emphasis on financial discipline and cash flow generation
and in part due to initiatives begun several years earlier but which only began
to be recognized during 1997, a year in which the Company's stock price
appreciated over 65%. These accomplishments, as discussed in greater detail
below, are the reasons for the significant increases in 1997 bonuses for the
Company's senior management.
Compensation Philosophy
The Company's executive compensation programs are principally designed to
give executives strong incentives to focus on and achieve the Company's business
objectives, the principal ones being to increase free cash flow and long-term
stockholder value. Key elements of the incentive compensation programs are an
annual performance-based incentive bonus, which seeks to recognize individual
performance each year, and stock options, which provide substantial long-term
financial reward to an executive only if the stockholders also gain long-term
stock price appreciation over the option period.
The Company's executive officers are employed under employment agreements
providing for their services for an extended period. The terms of the employment
agreements of the principal executive officers are outlined under 'Employment
Arrangements.' While the minimum salary is contractually specified, the largest
elements of executive compensation, the annual bonus and stock option awards,
are generally subject to the discretion of the Compensation Committee, which is
comprised entirely of Unaffiliated Directors.
The Compensation Committee, with the assistance of a leading outside
compensation consultant, reviewed total compensation for the Company's executive
officers in the context of total compensation packages awarded to executives
with similar responsibilities at selected public companies in the consumer
product, entertainment and media businesses. The Compensation Committee believes
that the Company's most direct competitors for executive talent are composed of
a broader range of companies than those with which the Company would ordinarily
be compared for stock performance purposes. Thus, the compensation comparison
group included companies that are not included in the peer group index in the
graph that appears below.
1997 Annual Bonus Determinations
Annual Bonus Plan. The Compensation Committee's determination of the annual
incentive bonus for Mr. Levin and each other executive officer of the Company
named in the Summary Compensation Table appearing below starts with the
calculation of his 1997 maximum bonus under the stockholder-approved Annual
Bonus Plan. This calculation is based on a percentage of the amount by which the
Company's 1997 earnings before interest, taxes, depreciation and amortization
('EBITDA'), as adjusted pursuant to the Annual Bonus Plan, exceeded the
Company's average EBITDA for the preceding three years. This calculation
resulted in maximum individual annual bonuses substantially in excess of the
actual bonuses paid, as shown in the Summary Compensation Table below.
1997 Accomplishments. The Compensation Committee considered a variety of
factors in making its compensation decisions and no specific weighting was
assigned to any one of those
14
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<PAGE>
factors. The accomplishments that the Committee thinks contributed to a
successful 1997 included:
The Company achieved the 1997 budgeted EBITDA at almost all divisions
and set record EBITDA and cash flow levels on a Company-wide basis.
The Company achieved those results while growing its operating
businesses, reducing Company-wide net debt (by approximately $850
million as of December 31, 1997) and reducing interest rates by
refinancing existing debt.
The Company met or exceeded targets in improved leverage ratio (total
net debt to adjusted EBITDA) and coverage ratio (adjusted EBITDA to
total interest and preferred dividend expense), thereby strengthening
credit ratings.
The Company established a cross-divisional, collaborative, long-term
business plan that focuses on (i) financial returns, cost controls,
capital allocation and generation of free cash flow for debt
reduction and, in time, stock repurchase and (ii) growing all of the
operating businesses at sustainable rates.
The Company implemented a Company-wide cost management program that
realized over $150 million in savings in 1997 and is expected to
continue in 1998 and beyond at even greater amounts.
The Company successfully integrated the TBS businesses and realized
cost-savings, efficiencies and revenue enhancements in doing so.
The Company sold or exchanged certain non-clustered cable systems and
agreed to enter into strategic ventures that will decrease its
economic exposure to cable while increasing the number of cable
subscribers under the Company's management.
Mr. Levin's Annual Bonus. Mr. Levin's 1997 annual incentive bonus as
Chairman of the Board and Chief Executive Officer was determined by the
Compensation Committee and ratified by all the Unaffiliated Directors. In
determining his bonus, the Committee reviewed the calculation of his maximum
bonus payable under the Annual Bonus Plan, the level of achievement of his 1997
financial performance goals (based on operational targets for divisional and
Company-wide EBITDA and cash flow), the Company's other accomplishments during
1997, as described above, and the substantial increase in the market value of
the Company's Common Stock. The Committee took into account that Mr. Levin's
annual bonus had been held flat for the preceding four years, during which much
of the groundwork for the 1997 results had been put in place. The increase in
Mr. Levin's 1997 bonus reflects the Compensation Committee's belief that Mr.
Levin's performance warranted placing his total cash compensation for 1997 in
the upper quartile of compensation paid to the chief executives in the
comparison group discussed above. This determination was based on the
Committee's overall evaluation of Mr. Levin's stewardship of the Company during
1997, the leadership he was providing and his positioning of the Company, its
management, product lines and services for the future.
Early in 1998, the Compensation Committee, determining that it would be in
the Company's best interest, recommended, and Mr. Levin agreed to, an extension
of Mr. Levin's employment agreement to December 31, 2003. Included in this
agreement was an increase, effective January 1, 1998, in his annual salary to
$1,000,000. Mr. Levin's previous annual salary was $700,000 and had been at that
level since 1990. The Compensation Committee took into account the time since
Mr. Levin's last salary increase and considered competitive compensation
comparisons and the Company's performance discussed in more detail above.
On March 18, 1998, the Compensation Committee awarded Mr. Levin a special
grant of performance-based stock options, in addition to his regular annual
grant. This special grant covers 350,000 shares of Common Stock with an exercise
price equal to the fair market value on the date of the award. These options
will vest only if the Common Stock price doubles within five years of
15
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<PAGE>
the award. Specifically, the Common Stock price must reach $144.12, twice the
fair market value on the award date, by the fifth anniversary of the award for
these options to vest and become exercisable. If the Common Stock price does not
double by the fifth anniversary, these stock options do not vest and therefor
terminate worthless.
Annual Bonuses for Executive Officers Other than the Chief Executive
Officer. The Chief Executive Officer reviewed with the Compensation Committee
the 1997 performance of each other executive officer, and recommended an annual
bonus for each such executive (within the limits imposed by the Annual Bonus
Plan). These recommendations primarily reflected individual qualitative
executive contributions based upon the level of the executive's
responsibilities, the efficiency and effectiveness with which he oversaw the
matters under his supervision, and the degree to which he contributed to the
accomplishment of the Company's goals. Since these officers have overall
corporate policy-making and administrative responsibilities, and, except for Mr.
Turner, do not directly oversee principal operating units of the Company, the
Compensation Committee's assessment of these executives relates generally to the
accomplishment of their personal goals and the Company's achievements as a
whole. However, the Company's financial performance was a key factor that
affected the overall bonus level for all executive officers.
Stock Option Awards
During 1997, each of the Company's executive officers was awarded stock
options. These awards were made after a review of the exercise prices, numbers
and dates of their previous option awards and the option awards made to other
executives at the Company and in the comparison group. Although there are no
precise targets with respect to the number of stock options for executive
officers, the Compensation Committee believes that the higher the level of an
executive's responsibilities, the larger the stock-based component of his
compensation should be, and that compensation based on stock price performance
should be paid via stock-based compensation. Each of Messrs. Levin, Turner and
Parsons was awarded stock options, one quarter of which have exercise prices 25%
above the fair market value of the Common Stock on the date of grant and one
quarter of which have exercise prices 50% above such fair market value. Mr.
Turner's award of stock options in 1997 was made pursuant to the terms of his
employment agreement with the Company and approved by the Compensation
Committee.
Section 162(m) Considerations
The Company expects that the compensation paid to executive officers under
the Annual Bonus Plan will qualify for income tax deductibility under Section
162(m) of the Internal Revenue Code. In addition, the Company has adopted a
general policy of awarding stock options to its executive officers only pursuant
to plans that the Company believes will satisfy the requirements of Section
162(m). In 1997, the Company did not pay its executive officers compensation
that would not be deductible as a result of the Section 162(m) deductibility
limit.
Members of the Compensation Committee
Reuben Mark (Chair)
Stephen F. Bollenbach
Carla A. Hills
Raymond S. Troubh
Francis T. Vincent, Jr.
16
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION SUMMARY TABLE
The following table sets forth information concerning total compensation
paid to the Chief Executive Officer and each of the four most highly compensated
executive officers of the Company who served in such capacities on December 31,
1997 (the 'named executive officers') for services rendered to the Company
during each of the last three fiscal years in their capacities as executive
officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION(6)
--------------------------------------- ---------------
OTHER SECURITIES
NAME AND PRINCIPAL ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY(4) BONUS COMPENSATION(5) OPTIONS AWARDED COMPENSATION(7)
- ------------------------------ ---- ---------- ---------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gerald M. Levin............... 1997 $1,050,000 $6,500,000 $ 198,554 350,000 $ 108,701
Chairman of the Board and 1996 1,050,000 4,000,000 209,624 350,000 109,773
Chief Executive Officer 1995 1,050,000 4,000,000 153,930 -- 107,039
R.E. Turner................... 1997 $1,050,000 $5,000,000 $ -- 300,000 $ 88,085
Vice Chairman (1) 1996 235,246 1,000,000 -- 1,300,000 18,219
Richard D. Parsons............ 1997 $ 900,000 $2,750,000 $ 117,593 150,000 $ 106,299
President (2) 1996 900,000 2,000,000 98,627 300,000 104,019
1995 825,000 2,000,000 92,000 300,000 77,628
Peter R. Haje................. 1997 $ 825,000 $1,200,000 $ 64,939 45,000 $ 120,816
Executive Vice President 1996 825,000 1,000,000 56,500 45,000 119,105
and General Counsel 1995 675,000 1,000,000 56,500 40,000 114,102
Richard J. Bressler........... 1997 $ 525,000 $1,200,000 $ 53,338 50,000 $ 53,175
Executive Vice President and 1996 525,000 900,000 50,500 100,000 44,421
Chief Financial Officer (3) 1995 450,000 750,000 50,500 100,000 42,755
</TABLE>
- ------------
(1) Mr. Turner became Vice Chairman on October 10, 1996, upon consummation of
the TBS Merger. Compensation paid by TBS to Mr. Turner for services rendered
to TBS prior to such date is not included in the table.
(2) Mr. Parsons became President on February 1, 1995. Prior to that, he served
as an Unaffiliated Director of the Company and was not an employee of the
Company. Mr. Parsons' 1995 stock options were awarded at the end of 1994 in
connection with his anticipated employment by the Company.
(3) Mr. Bressler became Executive Vice President and Chief Financial Officer on
January 15, 1998, having served as Senior Vice President and Chief Financial
Officer since March 16, 1995 and Senior Vice President, Finance from January
2, 1995.
(4) Amounts shown in the table include credits to each named executive officer's
deferred compensation account equal to one-third of the total shown under
the 'salary' column for each of 1997, 1996 and 1995.
(5) In accordance with SEC rules, amounts totalling less than $50,000 have been
omitted. The amounts of personal benefits shown in this column for 1997 that
represent more than 25% of the applicable executive's total Other Annual
Compensation include financial services of $85,000 to Mr. Levin, $75,000 to
Mr. Parsons and $35,000 to each of Messrs. Haje and Bressler,
transportation-related benefits (including an automobile allowance) of
$109,068 to Mr. Levin and $41,080 to Mr. Parsons and automobile allowances
of $24,000 to Mr. Haje and $18,000 to Mr. Bressler.
(6) None of the options indicated was awarded with tandem stock appreciation
rights. None of such executive officers was awarded restricted stock during
the relevant period and, as of December 31, 1997, only Mr. Parsons held any
such shares. These shares were awarded in or prior to 1994 under the
Directors' Restricted Stock Plan in his capacity then as an Unaffiliated
Director. The value of Mr. Parsons' 4,213 restricted shares based on the
closing price of the Common Stock on the New York Stock Exchange Composite
Listing on December 31, 1997 was $261,206. Mr. Parsons receives the
dividends paid in cash on such shares. See 'Corporate Governance -- Director
Compensation.'
(7) The amounts shown in this column for 1997 include the following:
(a) Pursuant to the Time Warner Savings Plan (the 'Savings Plan'), a
defined contribution plan available generally to employees of the Company,
for the 1997 plan year, each executive named above, deferred a portion of
his annual compensation and the Company contributed $2,000 for the first
$3,000 so deferred by the executive ('Matching Contribution'). These
Matching Contributions were invested under the Savings Plan in a Common
Stock fund. In addition, pursuant to a profit-sharing component of the
Savings Plan, the Company may make annual contributions for the benefit of
eligible employees of up to 12% of total eligible compensation; for 1997,
the Company contributed 11%, including $17,600 for the account of each
executive named above. Because the Internal Revenue Code of 1986, as amended
(the 'Code'), limits the amount of eligible compensation under the Savings
Plan ($160,000 for 1997) for any employee, the Company has adopted an
unfunded, non-qualified, excess profit-sharing plan covering otherwise
eligible compensation between $160,000 and $289,406 for 1997 (increased 5%
per year thereafter, to a maximum of $350,000). The Company's accrual for
this excess profit-sharing plan, $14,235 in 1997 for each named executive
officer, is deemed to earn interest at a long-term applicable federal rate
announced monthly by the Internal Revenue Service.
(footnotes continued on next page)
17
<PAGE>
<PAGE>
(footnotes continued from previous page)
(b) The Company maintains a program of life and disability insurance
generally available to all salaried employees on the same basis. Commencing
in June 1997, group term life insurance coverage was reduced to $50,000 for
each of the named executive officers, who are given an annual cash payment
equal to the cost of replacing such reduced coverage under a voluntary group
program available to employees generally. Such payments are included in the
'Other Annual Compensation' column. In addition, during 1997, the Company
maintained for certain members of senior management, including the named
executive officers, certain supplemental life insurance benefits and paid
premiums for this supplemental coverage of approximately $250 each. The
Company also maintained split-dollar life insurance policies on the lives of
the named executive officers other than Mr. Turner and paid the following
amounts allocated to the term portion of the split-dollar coverage for 1997:
Mr. Levin, $14,684; Mr. Parsons, $4,101; Mr. Haje, $7,957; and Mr. Bressler,
$1,057. The actuarial equivalent of the value of the premiums paid by the
Company for 1997 based on certain assumptions regarding interest rates and
periods of coverage are: Mr. Levin, $74,616; Mr. Parsons, $72,214; Mr. Haje,
$86,731; and Mr. Bressler, $19,090. It is anticipated that the Company will
recover the net after-tax cost of the premiums on these policies or the cash
surrender value thereof. During 1997, the Company imputed income of $54,000
to Mr. Turner in connection with the provision of term life insurance
coverage under its group policy. For a description of life insurance
coverage for certain executive officers provided pursuant to the terms of
their employment agreements, see 'Employment Arrangements.'
STOCK OPTION GRANTS DURING 1997
The following table sets forth certain information with respect to employee
options to purchase shares of Common Stock ('options') awarded during 1997 to
the named executive officers. All such options were nonqualified options. No
stock appreciation rights ('SARs'), alone or in tandem with stock options, were
awarded in 1997.
STOCK OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------------
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME GRANTED IN 1997 ($/SH) DATE PRESENT VALUE(2)
- ------------------------------------- ---------- ---------- --------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Gerald M. Levin...................... 175,000 2.1% $ 47.19 5/14/07 $ 3,209,500
87,500 1.1 58.99 5/14/07 1,241,625
87,500 1.1 70.79 5/14/07 959,000
R. E. Turner......................... 150,000 1.8% $ 47.19 5/14/07 $ 2,751,000
75,000 .9 58.99 5/14/07 1,064,250
75,000 .9 70.79 5/14/07 822,000
Richard D. Parsons................... 75,000 .9% $ 47.19 5/14/07 $ 1,375,500
37,500 .5 58.99 5/14/07 532,125
37,500 .5 70.79 5/14/07 411,000
Peter R. Haje........................ 45,000 .5% $ 47.19 5/14/07 $ 825,300
Richard J. Bressler.................. 50,000 .6% $ 47.19 5/14/07 $ 917,000
</TABLE>
- ------------
(1) Options for executive officers are generally awarded pursuant to plans
approved by the Company's stockholders and the terms are governed by the
plans and the recipient's option agreement. The option exercise price is the
fair market value of the Common Stock on the date of grant except for the
awards to Messrs. Levin, Turner and Parsons of which one quarter of the
total award has an exercise price 25% above the fair market value of the
Common Stock on the date of grant and one quarter of which has an exercise
price 50% above such fair market value. The options shown in the table
become exercisable in installments of one-third on the first three
anniversaries of the date of grant, subject to acceleration upon the
occurrence of certain events. Payment of the exercise price of an option may
be made in cash or, in whole or in part, in full shares of Common Stock
already owned by the holder of the option. The payment of withholding taxes
due upon exercise of an option may generally be made with shares of Common
Stock.
(2) These amounts represent the estimated present value of stock options at the
date of grant calculated using the Black-Scholes option pricing model, based
upon the following assumptions used in developing the grant valuations: an
expected volatility of 21.4% based on a three-year period ending May 30,
1997; an expected term to exercise of eight years; a risk-free rate of
return based on the interest rate of a U.S. Government zero-coupon bond in
effect on the date of the award with an eight-year maturity (May 15,
1997 -- 6.74%); and a dividend yield of 1%. The actual value of the options,
if any, realized by an officer will depend on the extent to which the market
value of the Common Stock exceeds the exercise price of the option on the
date the option is exercised. Consequently, there is no assurance that the
value realized by an officer will be at or near the value estimated above.
These amounts should not be used to predict stock performance.
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<PAGE>
OPTION EXERCISES AND VALUES IN 1997
The following table sets forth as to each of the named executive officers
information on option exercises during 1997 and the status of his options on
December 31, 1997: (i) the number of shares of Common Stock underlying options
exercised during 1997; (ii) the aggregate dollar value realized upon exercise of
such options; (iii) the total number of shares of Common Stock underlying
exercisable and nonexercisable stock options held on December 31, 1997; and (iv)
the aggregate dollar value of in-the-money exercisable and nonexercisable stock
options on December 31, 1997.
AGGREGATE OPTION EXERCISES DURING 1997
AND
OPTION VALUES ON DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES DOLLAR VALUE OF
SHARES DOLLAR UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
UNDERLYING VALUE OPTIONS ON 12/31/97 OPTIONS ON 12/31/97*
OPTIONS REALIZED ----------------------------- -----------------------------
NAME EXERCISED ON EXERCISE EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
- -------------------------- ---------- ----------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Gerald M. Levin (1)....... 48,000 $1,688,640 2,554,268 583,332 $80,776,635 $ 5,623,025
R.E. Turner............... -- -- 433,335 1,166,665 $ 5,639,847 $ 13,726,903
Richard D. Parsons........ -- -- 400,000 350,000 $ 9,097,250 $ 3,596,125
Peter R. Haje............. 28,620 $1,011,308 691,667 88,333 $28,308,658 $ 1,558,342
Richard J. Bressler (1)... -- -- 214,137 149,999 $ 5,982,648 $ 2,808,812
</TABLE>
- ------------
* Calculated using the closing price of $62.00 per share on December 31, 1997
minus the option exercise price.
(1) The options exercised by Mr. Levin were awarded in 1987. Messrs. Levin and
Bressler are the only executive officers listed above who have been awarded
SARs in tandem with any of their stock options. 217,600 of Mr. Levin's
options and 9,644 of Mr. Bressler's options held on December 31, 1997 were
awarded with tandem SARs; they all were awarded on or prior to September 22,
1989 and are currently exercisable; and at December 31, 1997, they had a
value of $6,795,760 and $304,380, respectively, but no separate value has
been attributed to these SARs. These SARs are exercisable for Common Stock
or cash, subject to a $250,000 limit on the amount of cash that may be
received upon their exercise.
The option exercise price of all the options held by the named executive
officers is the fair market value of the Common Stock on the date of grant
except for half of the options awarded to Messrs. Levin, Turner and Parsons in
1996 and 1997 (see 'Stock Option Grants in 1997') and 500,000 of Mr. Levin's
options awarded in 1993, half of which have an exercise price 25% above the fair
market value of the Common Stock on the date of grant and the other half of
which have an exercise price 50% above such fair market value. All options held
by the named executive officers become immediately exercisable in full upon the
occurrence of certain events, including the death or total disability of the
option holder, certain change-of-control transactions and, in most cases, a
termination of employment as a result of the Company's breach of the holder's
employment agreement. All such nonqualified options permit a portion of each
award to be transferred by gift directly or indirectly to members of the
holder's immediate family.
The options held by executive officers remain exercisable for the full term
of their employment agreements in the event their employment terminates as a
result of the Company's breach. For some executive officers, some or all of
their options remain exercisable for the full term of the options if their
employment is terminated for any reason other than for cause, including death.
Otherwise, options may generally be exercised for one year after death or total
disability and five years after retirement. All options terminate immediately if
the holder's employment is terminated for cause. The terms of the options shown
in the chart are generally ten years, although 320,000 options held by Mr. Levin
have a term of 15 years from the date of their award in 1989.
19
<PAGE>
<PAGE>
EMPLOYMENT ARRANGEMENTS
The Company is, and during 1997 was, a party to employment agreements with
the executive officers of the Company. These agreements have been filed with the
SEC as exhibits to the Company's periodic filings.
Among other things, the agreements with the Company's executive officers
typically provide for: a fixed term of employment in a specified executive post;
annual salary; deferred compensation, generally equal to 50% of annual salary,
which is invested and paid out as described below under 'Deferred Compensation';
an annual bonus in the discretion of the Compensation Committee, all or a
portion of which may be deferred at the election of the executive officer (Mr.
Levin may also defer a portion of his salary); and life insurance benefits to be
provided by split dollar policies, generally for the life of the executive and
pursuant to which the Company recovers an amount equal to the net after-tax cost
to the Company of the premiums on such policy or the cash surrender value
thereof, as well as $50,000 of group term life insurance under an insurance
program generally provided by the Company to its employees and a cash payment
equal to the premium for the coverage that would have otherwise been provided
under the general terms of such program.
Generally, such agreements include a narrow definition of the 'cause' for
which an executive's employment may be terminated and in that event, the
executive will only receive earned and unpaid base salary and deferred
compensation accrued through such date of termination.
These agreements typically provide that in the event of the Company's
material breach or termination of the executive's employment during the term of
employment without cause, the executive will be entitled to elect either (a) to
receive a lump-sum payment equal to the present value of the base salary,
average bonus and deferred compensation otherwise payable during the remaining
portion of the executive's term of employment or (b) to remain an employee of
the Company through the end of the term of employment and, without performing
any services, receive the base salary, bonuses and deferred compensation payable
as if there had been no breach or wrongful termination. Executives are not
generally required to mitigate damages after such a termination, other than as
necessary to prevent the Company from losing any tax deductions to which it
otherwise would have been entitled for any payments deemed to be 'contingent on
a change' under the Code. In addition, except for Mr. Turner's agreement, these
agreements typically provide that if an executive thereafter obtains other
employment, the total cash salary and bonus received therefrom for services
prior to the expiration of the executive's employment term (up to the amount of
compensation paid to the executive by the Company for such period) must be paid
over to the Company as received except that the executive officer may retain and
not pay over to the Company an amount equal to the severance he would have
received in accordance with the Company's personnel policies if he had been job
eliminated.
In addition, if his employment terminates as a result of the Company's
material breach or termination without cause by the Company during or after the
term of his employment agreement, Mr. Bressler is entitled to a severance
payment equal to the greater of the amount described in the preceding paragraph
or the present value of three times the sum of his annual base salary, average
bonus and deferred compensation. If his employment terminates under these
circumstances, Mr. Parsons is entitled to a severance payment equal to the
greater of the amount described in the preceding paragraph or the present value
of the sum of one year's annual base salary, average bonus and deferred
compensation.
If an executive becomes disabled during the term of his employment
agreement, the executive typically will receive full salary, bonus and deferred
compensation for six months and 75% thereof through the end of the employment
term or, in some cases, for three years, if longer. Deferred compensation will
be maintained and paid after giving effect to the executive's base salary after
disability. Any such payments will be reduced by amounts received from Worker's
Compensation, Social Security and disability insurance policies maintained by
the Company.
20
<PAGE>
<PAGE>
If an executive dies during the term of an employment agreement, generally
the executive's beneficiaries will receive the executive's earned and unpaid
salary and deferred compensation to the last day of the month in which the death
occurs and a pro rata portion of the executive's bonus for the year of his
death.
The minimum annual salaries and deferred compensation under these
agreements for the named executive officers are as shown for 1997 in the Summary
Compensation Table, except that the current annual salary and deferred
compensation for Mr. Levin totals $1,500,000 and for Mr. Bressler totals
$675,000. The expiration dates of these agreements and the amounts of the
individual life insurance coverage for the lifetime of such persons are: Mr.
Levin -- December 31, 2003 and $6 million; Mr. Turner -- December 31, 2001 and
$6 million; Mr. Parsons -- December 31, 1999 and $4 million; Mr.
Haje -- December 31, 1999 (not including a two-year advisory period) and $4
million; and Mr. Bressler -- December 31, 1999 and $4 million. Mr. Levin's
agreement allows him, effective no earlier than June 30, 2002 and with not less
than six months' prior notice to the Company, to give up his executive positions
and become an advisor to the Company for the remainder of the agreement term. In
that case, his advisory compensation would be equal to his annual salary and
deferred compensation.
In addition, under his employment agreement, in 1997 Mr. Turner was awarded
stock options to purchase 300,000 shares of Common Stock half of which have
exercise prices above the fair market value on the date of grant. See 'Stock
Option Grants in 1997.' Mr. Turner is also entitled to three further annual
awards of stock options each covering an additional 300,000 shares of Common
Stock. Pursuant to the terms of their employment agreements, so long as each of
Messrs. Levin, Turner and Parsons, respectively, is employed by the Company, the
Company has agreed to include him in management's slate for election as a
director and to use its best efforts to cause his election.
DEFERRED COMPENSATION
Deferred compensation for executive officers is deposited into separate
accounts maintained by the Company for each of such officers in a grantor trust
established by the Company. The Company appoints an investment advisor for each
such account subject to approval by the relevant executive. Funds are invested
in securities as directed by the investment advisor, with the assumed after-tax
effect upon the Company of gains, losses and income, and distributions thereof,
and of interest expenses and brokerage commissions and other direct expenses
attributed thereto, being credited or charged to the account. Payments are
generally made to the officer from the account in installments to liquidate the
account over a period of five to ten years commencing on the date employment
terminates under the employment agreement, or at such other times as the officer
might have elected. Such payments include an amount equal to the assumed tax
benefit to the Company of the compensation deduction available for tax purposes
for the portion of the account represented by the net appreciation in such
account, even though the Company might not actually receive such tax benefit.
Amounts paid by the Company to the deferred compensation accounts of the
named executive officers for 1997 and the portion, if any, of the 1997 annual
bonus elected to be deferred by any such officer are included in the amounts
shown in the Summary Compensation Table above.
TIME WARNER EMPLOYEES' PENSION PLAN
The Time Warner Employees' Pension Plan, as amended (the 'Pension Plan'),
provides benefits to eligible employees, including officers, of the Company and
certain of its subsidiaries. Directors who are not also employees of the Company
are not eligible to participate in the Pension Plan.
21
<PAGE>
<PAGE>
A participant accrues benefits under the Pension Plan on the basis of 1
2/3% of the average annual compensation (defined as the highest average annual
compensation for any five consecutive full or partial calendar years of
employment, which includes regular salary, overtime and shift differential
payments, and non-deferred bonuses paid according to a regular program) for each
year of service up to 30 years and 1/2% for each year of service over 30.
Compensation for purposes of calculating average annual compensation under the
Pension Plan is limited to $200,000 per year for 1988 through 1993 and $150,000
per year for 1994 and thereafter (each subject to adjustments provided in the
Code). Eligible employees become vested in all benefits under the Pension Plan
on the earlier of five years of service or certain other events.
Annual pension benefits are reduced by a Social Security offset determined
by a formula that takes into account credited service up to 35 years, covered
compensation up to the average Social Security wage base and a disparity factor
based on the age at which Social Security benefits are payable (the 'Social
Security Offset'). The pension benefit of participants on December 31, 1977 in
the former Time Employees' Profit-Sharing Savings Plan (the 'Profit Sharing
Plan') is further reduced by a fixed amount attributable to a portion of the
employer contributions and investment earnings credited to such employees'
account balances in the Profit Sharing Plan as of such date (the 'Profit Sharing
Plan Offset').
Under the Pension Plan, employees who are at least 60 years old and have
completed at least ten years of service may elect early retirement and receive
the full amount of their annual pension ('early retirement'). An early
retirement supplement is payable to an employee terminating employment at age 55
and before age 60, after 20 years of service, equal to the actuarial equivalent
of such person's accrued benefit, or, if greater, an annual amount equal to 35%
of such person's average compensation determined under the Pension Plan. The
supplement ceases when the regular pension commences at age 60 or upon the death
of the retiree.
Federal law limits both the amount of compensation that is eligible for the
calculation of benefits and the amount of benefits derived from employer
contributions that may be paid to participants under the Pension Plan. However,
as permitted by the Employee Retirement Income Security Act of 1974, as amended
('ERISA'), the Company has adopted the Time Warner Excess Benefit Pension Plan
(the 'Excess Plan'), which provides for payments by the Company of certain
amounts which employees of the Company would have received under the Pension
Plan if eligible compensation were limited to $250,000 in 1994 (increased 5% per
year thereafter, to a maximum of $350,000) and there were no payment
restrictions. For purposes of the Excess Plan, the $200,000 limit (as indexed
for years after 1989) on eligible compensation will only apply to compensation
received in 1988 through 1993; the $250,000 limit (as adjusted) will apply to
compensation received in 1994 and thereafter.
The following table shows the estimated annual pension payable upon
retirement to employees in specified remuneration and years-of-service
classifications. The amounts shown in the table do not reflect the effect of the
previously-described (i) Social Security Offset, (ii) Profit Sharing Plan Offset
or (iii) early retirement supplements. The amount of the estimated annual
pension is based upon a pension formula which applies to all participants in
both the Pension Plan and the Excess Plan. The estimated amounts are based on
the assumption that payments under the Pension Plan will commence upon normal
retirement (generally age 65) or early retirement, that the Pension Plan will
continue in force in its present form and that no joint and survivor annuity
will be payable (which would on an actuarial basis reduce benefits to the
employee but provide benefits to a surviving beneficiary). Amounts calculated
under the pension formula which
22
<PAGE>
<PAGE>
exceed ERISA limits will be paid under the Excess Plan from the Company's assets
and are included in the amounts shown in the following table.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION FOR
HIGHEST CONSECUTIVE YEARS OF CREDITED SERVICE
FIVE YEAR AVERAGE --------------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- ---------------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000.......................... $ 16,667 $ 25,000 $ 33,334 $ 41,668 $ 50,000 $ 52,500
200,000.......................... 33,334 50,000 66,668 83,335 100,000 105,000
400,000.......................... 66,668 100,000 133,336 166,670 200,000 210,000
600,000.......................... 100,000 150,000 200,000 250,000 300,000 315,000
800,000.......................... 133,336 200,000 266,672 333,340 400,000 420,000
</TABLE>
The amount of covered compensation that would be considered in the
determination of the highest five consecutive full or partial years of
compensation under the Pension Plan and the Excess Plan for each of Messrs.
Levin, Turner, Parsons, Haje, and Bressler is limited as a result of the
imposition of the limitations on eligible compensation. However, because
combined payments under the Pension Plan and the Excess Plan are based on the
highest average annual compensation for any five consecutive full or partial
calendar years of employment (taking into account the compensation limits only
for 1988 and thereafter), the compensation used for determining benefits under
such Plans for Mr. Levin (and employees who participated in the Pension Plan
prior to 1988) will include eligible compensation in years prior to 1988 which
exceeded these limits. The estimated annual benefits payable under the Pension
Plan and the Excess Plan, as of February 1, 1998, would be based on average
compensation of $729,248 for Mr. Levin; $262,674 for Mr. Turner; $275,840 for
Mr. Parsons; $262,674 for Mr. Haje; and $262,674 for Mr. Bressler, with 25.8,
1.4, 3.0, 7.4, and 9.2 years of credited service, respectively. In addition,
pursuant to his employment agreement, Mr. Parsons will be entitled to receive
supplemental payments from the Company that will achieve a total retirement
benefit equal to what he would have received if he had five additional years of
credited service under the Pension Plan.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
The chart below compares the Company's Common Stock performance with the
performance of the Standard & Poor's 500 Composite Stock Price Index ('S&P 500
Index') and a Peer Group Index by measuring the changes in common stock prices
from December 31, 1992 plus reinvested dividends and distributions. Pursuant to
the SEC's rules, the Company has created a peer group index with which to
compare its own stock performance since a published industry or line-of-business
index does not exist. The Company has attempted to select a grouping of
companies that includes companies in lines of business similar to its own.
Because of the Company's involvement in a broad mix of several major media and
entertainment businesses and the fact that no other public companies are engaged
in all of these businesses, no grouping could closely mirror the Company's
businesses or weight those businesses to match the relative contributions of
each of the Company's business units to the Company's performance. All of the
companies included in the Company's Peer Group Index are engaged in only some of
the businesses in which the Company is engaged and some are also engaged in
businesses in which the Company does not participate. The common stocks of the
following companies have been included in the Peer Group Index: Cablevision
Systems Corporation, Comcast Corporation, McGraw-Hill Inc., Meredith
Corporation, The News Corporation Limited, Tele-Communications, Inc., Viacom
Inc. and The Walt Disney Company. The chart assumes $100 was invested on
December 31, 1992 in each of the Company's Common Stock, the S&P 500 Index and
the Peer Group Index and reflects reinvestment of dividends and distributions on
a monthly basis and annual market capitalization weighting.
23
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<PAGE>
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
VALUE AT TIME WARNER PEER GROUP S&P 500
DECEMBER 31 COMMON STOCK INDEX INDEX
- ------------ ------------ ---------- ---------
<S> <C> <C> <C>
1992.... $100 $100 $ 100
1993.... 152 120 110
1994.... 122 109 112
1995.... 133 136 153
1996.... 133 132 189
1997.... 221 194 252
</TABLE>
ADDITIONAL INFORMATION
During 1997, the Company and its subsidiaries engaged in transactions in
the ordinary course of business, on normal commercial terms, with The Seagram
Company Ltd., a beneficial owner during 1997 of more than five percent of the
voting power of the Company's outstanding common stock, and ITOCHU Corporation
and Toshiba Corporation, the beneficial owners of more than five percent of the
voting power of separate series of the Voting Preferred Stock. In addition, the
Company maintains arrangements with subsidiaries of FMR Corp., a beneficial
owner of more than five percent of the voting power of the Company's outstanding
common stock, in connection with certain of the Company's employee benefit
plans. The amounts involved in such transactions were not material to the
Company or any of such companies.
In February 1998, the Company entered into separate agreements with Toshiba
and ITOCHU regarding their intent to convert 1,750,000 and 2,641,000 shares,
respectively, of their Voting Preferred Stock into Common Stock and to sell such
Common Stock. On March 19, 1998, the shares of Common Stock issued upon such
conversions, consisting of 3,644,620 shares of Common Stock from Toshiba and
5,500,252 shares of Common Stock from ITOCHU, were sold to an affiliate of
Citicorp at a price of $66.2903 per share for Toshiba and $68.9451 per share for
ITOCHU, which in each case was based on an average trading price of the
Company's Common Stock. Also on March 19, 1998, the Company entered into a
forward purchase agreement with the Citicorp affiliate covering these shares
that matures in two years and provides for settlement at that time (or earlier
at the Company's option) at $67.8870 per share (the average sales price) plus a
financing charge. The Company also has the right to issue shares to satisfy its
obligations under this agreement.
24
<PAGE>
<PAGE>
Mr. Haje, an executive officer of the Company, agreed to an order entered
on September 27, 1993 by the U.S. Office of Thrift Supervision that, for a
period of five years, suspends him from practicing before the OTS and requires
him not to engage in the legal representation of a federally insured depository
institution. Mr. Haje also agreed, for such period, not to participate in any
unsafe or unsound banking practices or the submission of any materially
misleading statements to any federal banking authority. Such order relates to
events that occurred while Mr. Haje was a partner in a law firm that represented
a federally insured depository institution, prior to his employment by the
Company, and places no limits on his services for the Company. A company wholly
owned by Mr. Turner is reimbursed by TBS for Mr. Turner's business use of a
plane owned and operated by such company. During 1997, TBS reimbursed such
company for an aggregate of $796,733 relating to Mr. Turner's business use of
such plane during 1996 and 1997. Mr. Danforth, a nominee for director, is a
partner at Bryan Cave LLP, a law firm that provided legal services to the
Company and its subsidiaries during 1997 and is expected to continue to render
such services in the future.
CERTAIN LITIGATION
TIME WARNER STOCKHOLDER LITIGATION
As the Company has disclosed and discussed more fully in its prior proxy
statements, three complaints were filed (two on October 30, 1995 and one on
March 12, 1996) in the Court of Chancery of the State of Delaware in and for New
Castle County against the Company, certain officers and directors of the
Company, and other defendants, by stockholders of the Company, purportedly
derivatively on behalf of the Company. These complaints allege, among other
things, that in connection with the then proposed TBS Merger, some or all of the
defendants have violated various fiduciary duties owed to the Company and its
stockholders. Among other relief demanded, these complaints sought an injunction
against consummation of the TBS Merger, an accounting to the Company for
individual defendants' alleged profits and plaintiffs' alleged damages. There
has been no activity in these actions since defendants made motions to dismiss
two of them in November 1995 and April 1996, respectively.
TBS SHAREHOLDER LITIGATION
As the Company has disclosed and discussed more fully in its prior proxy
statements, fifteen actions against TBS, the Company, certain officers and
directors of TBS or Time Warner Entertainment Company, L.P., and other
defendants, purportedly on behalf of a class of TBS shareholders, filed in
Superior Court, Fulton County, Georgia in connection with the TBS Merger have
been consolidated. On February 29, 1996, plaintiffs filed their third amended
consolidated supplemental and derivative class action complaint (the 'Third
Amended Complaint') alleging, among other things, that the terms of the TBS
Merger were unfair to TBS shareholders and that, in connection with the TBS
Merger, the defendants acted fraudulently, had breached or aided and abetted the
breach of fiduciary common law and statutory duties owed to TBS shareholders and
that the vote of the TBS Board approving the TBS Merger did not comply with
legal requirements. Among other relief demanded, the Third Amended Complaint
sought damages, an injunction against the consummation of the TBS Merger and
related transactions, and an auction of TBS. Plaintiffs' request for a
preliminary injunction was denied in October 1996 and in December 1996, the
Court granted defendants' motion for judgment on the pleadings with respect to
certain claims in the Third Amended Complaint and also granted plaintiffs'
motion for leave to file a fourth amended complaint. In January 1997, plaintiffs
filed a fourth amended class action complaint containing allegations and
requesting relief substantially similar in substance to the Third Amended
Complaint. On July 14, 1997, defendants' motion for summary judgment on
plaintiffs' fourth amended complaint and defendants' motion for final judgment
on the Third Amended
25
<PAGE>
<PAGE>
Complaint were both granted. On July 23, 1997, plaintiffs filed a notice of
appeal from these decisions; the appeal has now been fully briefed and is
awaiting decision.
The Company intends to continue to defend these actions vigorously.
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as independent
auditors of the Company to audit its consolidated financial statements for 1998
and has determined that it would be desirable to request that the stockholders
approve such appointment.
Ernst & Young LLP has served the Company and its subsidiaries as
independent auditors for many years. Representatives of Ernst & Young LLP will
be present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and to respond to appropriate questions from stockholders.
VOTE REQUIRED FOR APPROVAL
Stockholder approval is not required for the appointment of Ernst & Young
LLP, since the Board of Directors has the responsibility for selecting auditors.
However, the appointment is being submitted for approval at the Annual Meeting.
No determination has been made as to what action the Board of Directors would
take if stockholders do not approve the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
'Exchange Act') requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the SEC
and the New York Stock Exchange. Officers, directors and greater than
ten-percent stockholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on a review of
the copies of such forms furnished to the Company, or written representations
that no Forms 5 were required, the Company believes that during 1997, its
officers, directors and greater than ten-percent beneficial owners complied with
all applicable Section 16(a) filing requirements.
EXPENSES OF SOLICITATION
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be borne by the Company. In addition to
solicitation by use of the mails, proxies and voting instructions may be
solicited by directors, officers and employees of the Company in person or by
telephone, telegram or other means of communication. Such directors, officers
and employees will not be additionally compensated but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation. The
Company has retained D.F. King & Co., Inc. at an estimated cost of $15,000, plus
reimbursement of expenses, to assist in its solicitation of proxies from
brokers, nominees, institutions and individuals. Arrangements will also be made
with custodians, nominees and fiduciaries for forwarding proxy solicitation
materials to beneficial owners of shares held of record by such custodians,
nominees and fiduciaries, and the Company will reimburse such custodians,
nominees and fiduciaries for reasonable expenses incurred in connection
therewith.
26
<PAGE>
<PAGE>
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present
proper proposals for inclusion in the Company's proxy statement and for
consideration at the next annual meeting of its stockholders by submitting their
proposals to the Company in a timely manner. In order to be so included for the
1999 Annual Meeting, stockholder proposals must be received by the Company no
later than November 23, 1998, and must otherwise comply with the requirements of
Rule 14a-8. In addition, the Company's By-laws establish an advance notice
procedure with regard to certain matters, including stockholder proposals not
included in the Company's proxy statement, to be brought before an annual
meeting of stockholders. In general, notice must be received by the Secretary of
the Company not less than 70 days nor more than 120 days prior to the
anniversary date of the immediately preceding annual meeting and must contain
specified information concerning the matters to be brought before such meeting
and concerning the stockholder proposing such matters. If the date of the annual
meeting is more than 30 days earlier or more than 60 days later than such
anniversary date, notice must be received not earlier than the 120th day prior
to such annual meeting and not later than the close of business on the later of
the 70th day prior to such annual meeting or the 10th day following the day on
which public announcement of the date of such meeting is first made. If a
stockholder who has notified the Company of his intention to present a proposal
at an annual meeting does not appear or send a qualified representative to
present his proposal at such meeting, the Company need not present the proposal
for a vote at such meeting.
All notices of proposals by stockholders, whether or not to be included in
the Company's proxy materials, should be sent to the attention of the Secretary
of the Company at 75 Rockefeller Plaza, New York, New York 10019.
GENERAL
The Board of Directors does not know of any other matters to be presented
at the Annual Meeting. If any additional matters are properly presented, the
persons named in the proxy will have discretion to vote in accordance with their
own judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS,
GERALD M. LEVIN
Chairman of the Board and
Chief Executive Officer
March 23, 1998
27
<PAGE>
<PAGE>
DIRECTIONS TO
OMNI HOTEL BALLROOM
<TABLE>
<S> <C>
FROM THE NORTH:
---------------
Take I-75/85 South to Williams St. (Exit 99),
6 blocks to International Blvd. turn right on
International to Marietta St., turn right on
Marietta, Omni Ballroom entrance is on the left.
[AREA MAP]
FROM THE SOUTH & AIRPORT:
-------------------------
Take I-75/85 North to International Blvd. (Exit
96B), turn left on International to Marietta St.,
turn right on Marietta, Omni Ballroom entrance
is on the left.
FROM THE WEST:
--------------
Take I-20 East to Spring St. (Exit 22), turn left on
Spring St. Take Spring St. to Marietta St., turn
left on Marietta, 2 blocks, Omni Ballroom
entrance is on the left.
FROM THE EAST:
--------------
Take I-20 West to Spring St. (Exit 22), turn right
on Spring St. Take Spring St. to Marietta St., turn
left on Marietta, 2 blocks, Omni Ballroom
entrance is on the left.
The Omni Hotel Ballroom
100 CNN Center, Atlanta, Georgia 30335 404-659-0000 [LOGO] Local Parking Lots
(on Marietta St. between International Blvd. & Foundry St.) (estimated rate $6/day)
</TABLE>
<PAGE>
<PAGE>
PROXY
APPENDIX 1
PROXY CARD
TIME WARNER INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 14, 1998
The undersigned hereby constitutes and appoints Richard J. Bressler, Peter
R. Haje and Philip R. Lochner, Jr., and each of them, its true and lawful
agents and proxies, with full power of substitution in each, to attend the
Annual Meeting of Stockholders of TIME WARNER INC. on Thursday, May 14,
1998, and any adjournment thereof, and to vote on the matters indicated all
the shares of Common Stock which the undersigned would be entitled to vote
if personally present.
<TABLE>
<S> <C>
ELECTION OF DIRECTORS FOR TERMS EXPIRING IN 1999 -- Merv Adelson, J. PLEASE MARK, SIGN AND DATE THIS PROXY
Carter Bacot, Stephen F. Bollenbach, John C. Danforth, Beverly Sills CARD ON THE REVERSE SIDE AND RETURN IT
Greenough, Gerald Greenwald, Carla A. Hills, Gerald M. Levin, Reuben PROMPTLY USING THE ENCLOSED REPLY
Mark, Michael A. Miles, Richard D. Parsons, R.E. Turner and Francis ENVELOPE.
T. Vincent, Jr., nominees.
</TABLE>
(CONTINUED ON REVERSE SIDE)
<TABLE>
<S> <C>
FROM THE NORTH:
---------------
Take I-75/85 South to Williams St. (Exit 99),
6 blocks to International Blvd. turn right on
International to Marietta St., turn right on
Marietta, Omni Ballroom entrance is on the left.
[AREA MAP]
FROM THE SOUTH & AIRPORT:
-------------------------
Take I-75/85 North to International Blvd. (Exit
96B), turn left on International to Marietta St.,
turn right on Marietta, Omni Ballroom entrance
is on the left.
FROM THE WEST:
--------------
Take I-20 East to Spring St. (Exit 22), turn left on
Spring St. Take Spring St. to Marietta St., turn
left on Marietta, 2 blocks, Omni Ballroom
entrance is on the left.
FROM THE EAST:
--------------
Take I-20 West to Spring St. (Exit 22), turn right
on Spring St. Take Spring St. to Marietta St., turn
left on Marietta, 2 blocks, Omni Ballroom
entrance is on the left.
The Omni Hotel Ballroom
100 CNN Center, Atlanta, Georgia 30335 404-659-0000 [LOGO] Local Parking Lots
(on Marietta St. between International Blvd. & Foundry St.) (estimated rate $6/day)
</TABLE>
<PAGE>
<PAGE>
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR all nominees listed
and FOR proposal 2.
Please mark your
votes this way [X]
The Board of Directors recommends a vote FOR all nominees in Item 1 and
FOR proposal 2 .
FOR WITHHELD
1. Election of Directors [ ] [ ]
(see reverse).
For, except vote withheld from the following nominee(s):
FOR AGAINST ABSTAIN
2. Approval of Auditors. [ ] [ ] [ ]
3. In their discretion, upon such other matters as may properly come
before the Meeting.
MEETING ATTENDANCE
Please mark this box if you plan [ ]
to attend the Meeting.
ADDRESS CHANGE
Please mark this box if you have [ ]
indicated an address change.
Receipt is hereby acknowledged of the Time Warner Inc.
Notice of Meeting and Proxy Statement.
Signature(s)------------------------------------------- Date-------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
^ FOLD AND DETACH CARD HERE ^
RETURN CARD IN ENCLOSED ENVELOPE AFTER COMPLETING, SIGNING AND DATING
[LOGO]
ADMISSION TICKET
1998 ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 14, 1998
10:00 AM
INTERNATIONAL BALLROOM
OMNI HOTEL
CNN CENTER
190 MARIETTA STREET
ATLANTA, GA
THIS TICKET MUST BE PRESENTED TO ENTER THE MEETING
ADMITS TWO PERSONS
<PAGE>
<PAGE>
APPENDIX 2
LMCNV PROXY CARD
====================================================
Please mark, sign and date this Proxy and return it
promptly using the enclosed reply envelope.
====================================================
PROXY
TIME WARNER INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 14, 1998
The undersigned hereby constitutes and appoints Richard J. Bressler,
Peter R. Haje and Philip R. Lochner, Jr., and each of them, its true and lawful
agents and proxies, with full power of substitution in each, to attend the
Annual Meeting of Stockholders of TIME WARNER INC. on Thursday, May 14, 1998,
and any adjournment thereof, and to vote on the matters indicated all the shares
of SERIES LMCN-V COMMON STOCK which the undersigned would be entitled to vote if
personally present.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR all nominees
listed in item 1.
______________ ________________
Name of Holder Number of Shares
THE TIME WARNER INC. BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
IN ITEM 1.
1. Election of Directors for terms expiring in 1999 - Merv Adelson, J.
Carter Bacot, Stephen F. Bollenbach, John C. Danforth, Beverly Sills Greenough,
Gerald Greenwald, Carla A. Hills, Gerald M. Levin, Reuben Mark, Michael A.
Miles, Richard D. Parsons, R. E. Turner and Francis T. Vincent, Jr., nominees.
FOR [ ] WITHHELD [ ]
FOR, except vote withheld from the following nominee(s):_____________________
_______________________________________________________________________________
2. In their discretion, upon such other matters as may properly come before
the meeting.
Please check this box if you plan to attend the meeting. [ ]
Signature(s) ____________________________
_____________________________________________
Note: Please sign exactly as name Date
appears hereon. When signing
as attorney, officer, admini-
strator or trustee, please give
full title as such.
<PAGE>
<PAGE>
APPENDIX 3
PREFERRED STOCK PROXY CARD
====================================================
Please mark, sign and date this Proxy and return it
promptly using the enclosed reply envelope.
====================================================
PROXY
TIME WARNER INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 14, 1998
The undersigned hereby constitutes and appoints Richard J. Bressler,
Peter R. Haje and Philip R. Lochner, Jr., and each of them, its true and lawful
agents and proxies, with full power of substitution in each, to attend the
Annual Meeting of Stockholders of TIME WARNER INC. on Thursday, May 14, 1998,
and any adjournment thereof, and to vote on the matters indicated all the shares
of Preferred Stock which the undersigned would be entitled to vote if personally
present.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR all nominees
listed in item 1 and FOR proposal 2.
_________________ _________________________ ________________
Name of Holder Series of Preferred Stock Number of Shares
THE TIME WARNER INC. BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
IN ITEM 1 AND FOR PROPOSAL 2.
1. Election of Directors for terms expiring in 1999 -- Merv Adelson, J.
Carter Bacot, Stephen F. Bollenbach, John C. Danforth, Beverly Sills Greenough,
Gerald Greenwald, Carla A. Hills, Gerald M. Levin, Reuben Mark, Michael A.
Miles, Richard D. Parsons, R.E. Turner and Francis T. Vincent, Jr., nominees.
FOR [ ] WITHHELD [ ]
FOR, except vote withheld from the following nominee(s):_____________________
_______________________________________________________________________________
2. Approval of Auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, upon such other matters as may properly come before
the meeting.
Please check this box if you plan to attend the meeting. [ ]
Signature(s) ____________________________
_________________________________________
Note: Please sign exactly as name Date
appears hereon. When signing
as attorney, officer, administrator
or trustee, please give full title as
such.
<PAGE>
<PAGE>
APPENDIX 4
VOTING INSTRUCTIONS
TIME WARNER INC.
VOTING INSTRUCTIONS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 14, 1998
The Bank of New York, as Exchange Agent, is requesting your instructions as
to how the shares of Time Warner Common Stock which you are entitled to
receive as a result of the merger of Time Warner Inc. and Turner
Broadcasting System, Inc. are to be voted at the Time Warner Annual Meeting
of Stockholders scheduled to be held on May 14, 1998. If The Bank of New
York does not receive your instructions on or prior to May 12, 1998, these
shares will not be voted.
<TABLE>
<S> <C>
ELECTION OF DIRECTORS FOR TERMS EXPIRING IN 1999 -- Merv Adelson, J. PLEASE MARK, SIGN AND DATE THIS
Carter Bacot, Stephen F. Bollenbach, John C. Danforth, Beverly Sills INSTRUCTION CARD ON THE REVERSE SIDE AND
Greenough, Gerald Greenwald, Carla A. Hills, Gerald M. Levin, Reuben RETURN IT PROMPTLY USING THE ENCLOSED
Mark, Michael A. Miles, Richard D. Parsons, R. E. Turner and Francis REPLY ENVELOPE.
T. Vincent, Jr., nominees.
</TABLE>
(CONTINUED ON REVERSE SIDE)
<TABLE>
<S> <C>
FROM THE NORTH:
---------------
Take I-75/85 South to Williams St. (Exit 99),
6 blocks to International Blvd. turn right on
International to Marietta St., turn right on
Marietta, Omni Ballroom entrance is on the left.
[AREA MAP]
FROM THE SOUTH & AIRPORT:
-------------------------
Take I-75/85 North to International Blvd. (Exit
96B), turn left on International to Marietta St.,
turn right on Marietta, Omni Ballroom entrance
is on the left.
FROM THE WEST:
--------------
Take I-20 East to Spring St. (Exit 22), turn left on
Spring St. Take Spring St. to Marietta St., turn
left on Marietta, 2 blocks, Omni Ballroom
entrance is on the left.
FROM THE EAST:
--------------
Take I-20 West to Spring St. (Exit 22), turn right
on Spring St. Take Spring St. to Marietta St., turn
left on Marietta, 2 blocks, Omni Ballroom
entrance is on the left.
The Omni Hotel Ballroom
100 CNN Center, Atlanta, Georgia 30335 404-659-0000 [LOGO] Local Parking Lots
(on Marietta St. between International Blvd. & Foundry St.) (estimated rate $6/day)
</TABLE>
<PAGE>
<PAGE>
The undersigned hereby instructs The Bank of New York to direct the vote as
follows at the Time Warner Annual Meeting of Stockholders to be held on
May 14, 1998, and at any adjournment thereof, of all shares of Time Warner
Common Stock that the undersigned is entitled to receive.
Please mark your [X]
votes
The Board of Directors recommends a vote FOR all nominees in Item 1
and FOR proposal 2.
FOR WITHHELD
1. Election of Directors [ ] [ ]
(see reverse).
For, except vote withheld from the following nominee(s):
FOR AGAINST ABSTAIN
2. Approval of Auditors. [ ] [ ] [ ]
3. To grant discretionary voting authority to management
persons regarding such other matters as may properly
come before the Meeting.
MEETING ATTENDANCE
Please mark this box if you plan [ ]
to attend the Meeting.
ADDRESS CHANGE
Please mark this box if you have [ ]
indicated an address change.
Receipt is hereby acknowledged of the Time Warner Inc.
Notice of Meeting and Proxy Statement.
Signature(s)------------------------------------------ Date----------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
^ FOLD AND DETACH CARD HERE ^
RETURN CARD IN ENCLOSED ENVELOPE AFTER COMPLETING, SIGNING AND DATING
[LOGO]
ADMISSION TICKET
1998 ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 14, 1998
10:00 AM
INTERNATIONAL BALLROOM
OMNI HOTEL
CNN CENTER
190 MARIETTA STREET
ATLANTA, GA
THIS TICKET MUST BE PRESENTED TO ENTER THE MEETING
ADMITS TWO PERSONS
<PAGE>
<PAGE>
APPENDIX 5
CONFIDENTIAL VOTING INSTRUCTIONS
CONFIDENTIAL VOTING INSTRUCTIONS
TIME WARNER SAVINGS PLAN
TIME WARNER THRIFT PLAN
TWC SAVINGS PLAN
SOUTHERN PROGRESS EMPLOYEES' SAVINGS PLAN
INSTRUCTIONS SOLICITED BY FIDELITY MANAGEMENT TRUST COMPANY ON BEHALF OF THE
BOARD OF DIRECTORS FOR THE TIME WARNER INC. ANNUAL MEETING ON MAY 14, 1998.
Under the provisions of the Trusts relating to these Plans, Fidelity Management
Trust Company ("Fidelity"), as Trustee, is required to request your confidential
instructions as to how your proportionate interest in the shares of Time Warner
Common Stock held in the respective Time Warner Common Stock fund under each of
those Plans (an "interest") is to be voted at the Annual Meeting of Stockholders
scheduled to be held on May 14, 1998. Your instructions to Fidelity will not be
divulged or revealed to anyone at Time Warner Inc. If Fidelity does not receive
your instructions on or prior to May 11, 1998, your interest, if any,
attributable to (a) accounts transferred from the Time Incorporated
Payroll-Based Employee Stock Ownership Plan ("PAYSOP") and the WCI Employee
Stock Ownership Plan ("WCI ESOP") will not be voted and (b) the remainder of
your Plan accounts, if any, will be voted at the Annual Meeting in the same
proportion as other participants' interests in each such respective Plan for
which Fidelity has received voting instructions (excluding PAYSOP and WCI ESOP
accounts).
This instruction card must be signed
exactly as name appears hereon.
______________________________________
______________________________________
Signature(s) Date
(CONTINUED ON REVERSE SIDE)
<PAGE>
<PAGE>
The undersigned hereby instructs Fidelity, as Trustee, to vote as follows by
proxy at the Annual Meeting of Stockholders of Time Warner Inc. to be held on
May 14, 1998 and at any adjournment thereof, the undersigned's proportionate
interest in the shares of Time Warner Common Stock held in the Time Warner
Common Stock fund under each of the Plans.
1. Election of Directors for terms expiring in 1999 - Merv Adelson, J.
Carter Bacot, Stephen F. Bollenbach, John C. Danforth, Beverly Sills Greenough,
Gerald Greenwald, Carla A. Hills, Gerald M. Levin, Reuben Mark, Michael A.
Miles, Richard D. Parsons, R.E. Turner and Francis T. Vincent, Jr., nominees.
FOR [ ] WITHHELD [ ]
__ FOR, except vote withheld from the following nominee(s):_________________
________________________________
2. Approval of Auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To grant discretionary voting authority to management persons
regarding such other matters as may
properly come before the meeting.
Please check this box if you plan to attend the meeting. [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
<PAGE>
<PAGE>
APPENDIX 6
LETTER TO TBS HOLDERS
March 23, 1998
To: Holders of certificates formerly representing
securities of Turner Broadcasting System, Inc.
As you know, on October 10, 1996, Time Warner Inc. ("Time Warner")
completed its merger with Turner Broadcasting System, Inc. ("TBS"). As a result,
you have the right to receive shares of common stock of Time Warner ("Common
Stock") and the cash dividends paid thereon after October 10, 1996 upon exchange
of your certificates formerly representing capital stock of TBS.
Enclosed is a copy of the Notice of Annual Meeting and Proxy Statement
relating to Time Warner's 1998 Annual Meeting of Stockholders. Also enclosed is
a voting instruction card for you to use to direct the voting at this meeting of
the shares of Common Stock which you are entitled to receive. If you do not
provide instructions, these shares will not be voted at the meeting.
Please indicate your instructions, sign and date the enclosed
instruction card and return it using the enclosed envelope.
If you have any questions about how to exchange your certificates
formerly representing shares of TBS capital stock for the shares of Common Stock
to which you are entitled, please contact The Bank of New York, as Exchange
Agent, at 800-507-9357. We encourage you to take the necessary action to
exchange these certificates.
TIME WARNER INC.
<PAGE>
<PAGE>
APPENDIX 7
LETTER TO LMCN-V HOLDERS
March 23, 1998
Dear Holder of Series LMCN-V Common Stock:
You are cordially invited to attend the 1998 Annual Meeting of
Stockholders of Time Warner Inc. on Thursday, May 14, 1998, beginning at 10:00
A.M., local time, at the International Ballroom of the Omni Hotel at the CNN
Center, 190 Marietta Street, Atlanta, Georgia 30335.
As a holder of Series LMCN-V Common Stock, you are being asked to vote
only on the election of directors listed as item 1, in the enclosed Notice of
Annual Meeting of Stockholders. Your Board of Directors recommends a vote "FOR"
these proposed nominees.
Whether or not you plan to attend in person, it is important that your
shares be represented and voted at the Meeting. After reading the enclosed
Notice and Proxy Statement, please sign, date and mail the enclosed proxy in the
envelope provided.
If you plan to attend the Meeting in person, please bring the Admission
Ticket included with the enclosed Notice and Proxy Statement to facilitate your
admission. If you have not received an Admission Ticket, please contact the
Shareholder Relations Department at (212) 484-6971.
Sincerely,
GERALD M. LEVIN
Chairman of the Board
and Chief Executive Officer
<PAGE>
