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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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 29, 1996
Dear Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders
of Time Warner Inc. on Thursday, May 16, 1996, beginning at 10:30 A.M., local
time, at the Warner Bros. Studio, 4000 Warner Boulevard, Burbank, California
91522. Directions to the Warner Bros. Studio are on the back cover of the Proxy
Statement. I look forward to greeting as many of you as can attend the Meeting.
A post-meeting report of the proceedings will be sent to all stockholders.
Holders of Time Warner stock are being asked to 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, 2 and 3 in
the Notice, and 'AGAINST' the stockholder proposals described in the enclosed
Proxy Statement.
Whether or not you plan to attend the Meeting in person, it is important
that your shares of Time Warner stock be represented and voted at the Meeting.
Accordingly, after reading the enclosed Notice of Annual Meeting 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 Warner Bros.
Studio, if you plan to attend the Meeting in person, you must bring the
Admission Ticket included with the enclosed Notice of Annual Meeting of
Stockholders and Proxy Statement or a Time Warner employee identification card.
YOU WILL NOT BE PERMITTED INTO THE STUDIO WITHOUT IT. If you have not received
an Admission Ticket, please contact the Shareholder Relations Department at
(212) 484-6971.
Later this year, I expect that you will receive separate materials in
connection with a special meeting of stockholders to consider and vote on Time
Warner's merger with Turner Broadcasting System, Inc. and related matters. I am
very excited about this transaction and the opportunities it will provide for
our company.
Sincerely,
GERALD M. LEVIN
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 16, 1996
The Annual Meeting (the 'Annual Meeting') of Stockholders of Time Warner
Inc., a Delaware corporation (the 'Company'), will be held on Thursday, May 16,
1996 at the Warner Bros. Studio, 4000 Warner Boulevard, Burbank, California
91522 (see directions on back cover), commencing at 10:30 A.M., local time, for
the following purposes:
1. To elect four directors for a term of three years and until their
successors are duly elected and qualified;
2. To consider and take action upon a proposed Time Warner 1996 Stock
Option Plan for Non-Employee Directors;
3. To approve the appointment by the Board of Directors of the firm of
Ernst & Young LLP as independent auditors of the Company for 1996;
4. To consider and vote upon three stockholder proposals as described
in the attached Proxy Statement; and
5. 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 28, 1996, the record date, are entitled
to vote on the matters listed in this Notice of Annual Meeting.
TIME WARNER INC.
PETER R. HAJE
Secretary
March 29, 1996
THE ANNUAL MEETING WILL COMMENCE PROMPTLY AT 10:30 A.M. TO AVOID DISRUPTION OF
THE MEETING, ADMISSION MAY BE LIMITED AFTER THE MEETING COMMENCES. HOLDERS OF
COMMON STOCK AND CERTAIN SERIES OF PREFERRED STOCK ARE REQUESTED TO SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED PRE-ADDRESSED
REPLY ENVELOPE, WHETHER OR NOT THEY PLAN TO ATTEND THE ANNUAL MEETING, SO THAT
THEIR SHARES MAY BE REPRESENTED. ANY RECORD HOLDER OF SUCH STOCK WHO HAS
EXECUTED A PROXY AND IS PRESENT AT THE ANNUAL MEETING MAY VOTE IN PERSON INSTEAD
OF BY PROXY, THEREBY CANCELLING ANY PROXY PREVIOUSLY GIVEN. NO STOCKHOLDER OF
RECORD MAY APPOINT MORE THAN THREE PERSONS TO ACT AS HIS OR HER PROXY AT THE
ANNUAL MEETING.
FOR STUDIO SECURITY REASONS, 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 to holders of common stock, par
value $1.00 per share ('Common Stock'), Series C Convertible Preferred Stock,
par value $1.00 per share ('Series C Preferred'), Series D Convertible Preferred
Stock, par value $1.00 per share ('Series D Preferred'), Series E Convertible
Preferred Stock, par value $1.00 per share ('Series E Preferred'), Series F
Convertible Preferred Stock, par value $1.00 per share ('Series F Preferred'),
Series G Convertible Preferred Stock, par value $1.00 per share ('Series G
Preferred'), and Series I Convertible Preferred Stock, par value $1.00 per share
('Series I Preferred,' and collectively, the 'Voting Preferred Stock'), of Time
Warner Inc., a Delaware corporation (the 'Company'), in connection with the
solicitation of proxies by its Board of Directors for use at the Annual Meeting
of the Company's stockholders (the 'Annual Meeting') to be held on Thursday, May
16, 1996, at the Warner Bros. Studio, 4000 Warner Boulevard, Burbank, California
91522 (see directions on back cover), commencing at 10:30 A.M., local time, and
at any adjournment or postponement thereof, for the purpose of considering and
acting upon the matters set forth in the accompanying Notice of Annual Meeting
of Stockholders.
This Proxy Statement and accompanying forms of proxy and voting
instructions are first being mailed to holders of Common Stock and the Voting
Preferred Stock on or about March 29, 1996.
VOTING AT THE ANNUAL MEETING; RECORD DATE; CONFIDENTIAL VOTING
Only holders of record of Common Stock and Voting Preferred Stock at the
close of business on March 28, 1996, the record date, are entitled to notice of
and to vote at the Annual Meeting. As of March 28, 1996, there were 392,930,713
shares of Common Stock and 33,941,300 shares of Voting Preferred Stock
(3,264,508 shares of Series C Preferred, 11,000,000 shares of Series D
Preferred, 3,250,000 shares of Series E Preferred, 3,226,792 shares of Series F
Preferred, 6,200,000 shares of Series G Preferred and 7,000,000 shares of Series
I Preferred) outstanding and entitled to be voted at the Annual Meeting.
Each holder of record of shares of Common Stock who is entitled to vote may
cast one vote per share held on all matters properly submitted for the vote of
the stockholders at the Annual Meeting. Each holder of record of shares of
Voting Preferred Stock who is entitled to vote may cast two votes per share held
on all matters properly submitted for the vote of the stockholders at the Annual
Meeting.
The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast by the stockholders entitled to vote generally at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting.
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 the holders of a majority in voting power of
the shares of Common Stock and Voting Preferred Stock present either in person
or by proxy, and entitled to vote at the Annual Meeting, voting together as a
single class, is required to approve the Time Warner 1996 Stock Option Plan for
Non-Employee Directors (the 'Directors Option Plan'). 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 each
of the other matters to be acted upon at the Annual Meeting.
Under the General Corporation Law of the State of Delaware, the state in
which the Company is incorporated, an abstaining vote is deemed to be 'present'
but is not deemed to be 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 in such
tabulations, but abstentions will have such effect with respect to the
tabulation of votes on the approval of the Directors Option Plan. 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 with respect to 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 for purposes of determining whether a quorum
is present at a meeting.
PROXIES
All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting, and not revoked, will be voted at the
Annual Meeting in accordance with the instructions indicated on those proxies.
If no instructions are indicated on a properly executed proxy, the shares
represented by that proxy 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, including, among other things, consideration of a motion to
adjourn the Annual Meeting to another time or place, the persons named in the
enclosed form of proxy and acting thereunder will have discretion to vote on
those matters in accordance with their best judgment to the same extent as the
person signing the proxy would be entitled to vote. The Company does not
currently anticipate that any other matters will be raised at the Annual
Meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. A proxy may be revoked (i) by 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)
by 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, at or before the taking of the vote at the
Annual Meeting.
A copy of the Company's Annual Report to Stockholders for the year 1995,
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.
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RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the election of the nominees
for election as directors; FOR approval of the Time Warner 1996 Stock Option
Plan for Non-Employee Directors; FOR approval of the appointment of Ernst &
Young LLP as independent auditors of the Company for 1996; and AGAINST the
stockholder proposals described in this Proxy Statement.
CORPORATE GOVERNANCE
ELECTION OF DIRECTORS
The Company believes that it is in the best interest of Time Warner
stockholders that a majority of the members of the Company's Board of Directors
be directors who, 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'). In
furtherance of this belief, the Company's By-laws provide that at the time the
Board determines the slate of nominees for director at an annual meeting of
stockholders, taking into account the election of such slate and the directors
who will continue in office, a majority of the members of the Board must be
determined by the Board to be independent directors within the meaning of the
By-laws. 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.
The Board of Directors is divided into three classes, currently consisting
of five directors each. Edward S. Finkelstein and Henry Luce III, each of whom
is 70 years old, will not stand for reelection at the Annual Meeting and will
retire from the Board of Directors effective at the Annual Meeting, at which
time the number of directors constituting the Board of Directors will be reduced
to 13. Of such 13 directors, ten are Unaffiliated Directors and three are
Affiliated Directors. In connection with the retirements of Messrs. Finkelstein
and Luce, Mrs. Greenough, currently in the class of directors whose terms expire
in 1998, has been nominated for election at the Annual Meeting for a term
expiring at the annual meeting of stockholders in 1999. It is anticipated that
upon completion of the Company's merger with Turner Broadcasting System, Inc.,
the size of the Board of Directors will be increased to 15 and R.E. Turner and a
second person to be designated by Mr. Turner will become members.
The persons named in the enclosed proxy intend to vote such proxy for the
election of each of the four nominees named below, unless the stockholder
indicates on the proxy that the vote should be withheld from any or all of such
nominees. Each nominee elected as a director will continue in office until his
or her successor has been duly elected and qualified, or until his or her
earlier death, resignation or retirement.
The Board of Directors has proposed the following nominees for election as
directors at the Annual Meeting:
NOMINEES FOR TERMS EXPIRING IN 1999
Beverly Sills Greenough
Carla A. Hills
Reuben Mark
Francis T. Vincent, Jr.
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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. All of such nominees are
currently directors and were elected by the stockholders.
Set forth below is the principal occupation of, and certain other
information regarding, such nominees and other directors whose terms of office
will continue after 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>
NOMINEES FOR TERMS EXPIRING IN 1999
Beverly Sills Greenough ............ 66 CHAIRMAN OF LINCOLN CENTER FOR THE PERFORMING ARTS. Mrs. Greenough
1989 served as a director of Warner Communications Inc. ('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 has also
served as National Chairman of the March of Dimes Birth Defects
Foundation. She is also a director of American Express Company and
Human Genome Sciences Inc. Mrs. Greenough is an Unaffiliated
Director.
Carla A. Hills ..................... 62 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., AT&T Corp., Chevron Corporation and Trust Company of
the West. Ambassador Hills is an Unaffiliated Director.
Reuben Mark ........................ 57 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
Pearson plc, Toys 'R' Us, Inc. and The New York Stock Exchange,
Inc. Mr. Mark 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>
Francis T. Vincent, Jr. ............ 57 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 Culbro Corporation, Horizon Group and Oakwood Homes
Corporation. Mr. Vincent is an Unaffiliated Director.
DIRECTORS WHOSE TERMS EXPIRE IN 1997
Lawrence B. Buttenwieser ........... 64 PARTNER, ROSENMAN & COLIN. Mr. Buttenwieser served as a director of
1989 WCI from 1963 to 1990. Mr. Buttenwieser has been a partner at
Rosenman & Colin (attorneys) for more than the past five years. He
is also Chairman of the Board of Directors of General American
Investors Company, Inc. Mr. Buttenwieser is an Unaffiliated
Director.
David T. Kearns .................... 65 RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF XEROX CORPORATION.
1993 Mr. Kearns served as a Senior University Fellow at Harvard
University from August 1993 to March 1995 and served as Deputy
Secretary of the U.S. Department of Education from May 1991 until
January 1993. Prior to that, he served as Chairman of Xerox
Corporation from 1985 until May 1991, having served as its Chief
Executive Officer from 1982 to August 1990. He previously served as
a director of the Company from 1978 until May 1991 when he resigned
to accept his government appointment. He is also a director of The
Chase Manhattan Corporation and Ryder System, Inc. Mr. Kearns is an
Unaffiliated Director.
Gerald M. Levin .................... 56 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. Prior to that, Mr. Levin served as Vice Chairman of the
Board and Chief Operating Officer of the Company from May 1991,
having served as Vice Chairman of the Board of the Company from
July 1988. He previously served as a director of the Company from
1983 until January 1987. He is also a director of Turner
Broadcasting System, Inc. and a member of the Board of
Representatives of Time Warner Entertainment Company, L.P. Mr.
Levin 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>
J. Richard Munro ................... 65 CHAIRMAN OF THE EXECUTIVE/FINANCE COMMITTEE OF THE BOARD OF DIRECTORS
1978 OF, AND ADVISOR TO, THE COMPANY. Mr. Munro became an advisor to the
Company in July 1994. He has served as the Chairman of the
Executive Committee of the Board of Directors of the Company since
May 1990 and in January 1993, he became Chairman of the
Executive/Finance Committee following the combination of the
Executive Committee and the Finance Committee. He is also a
director of Genentech, Inc., Kellogg Company, Kmart Corporation and
Mobil Corporation. Mr. Munro is an Affiliated Director.
Richard D. Parsons ................. 47 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 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.
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Merv Adelson ....................... 66 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 WCI from January 1989 through August
1991. He is also a director of 7th Level, Inc. Mr. Adelson is an
Unaffiliated Director.
Michael A. Miles ................... 56 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, having served as
Vice Chairman and a member of the Board of Directors of Philip
Morris Companies Inc. and Chairman and Chief Executive Officer of
Kraft General Foods, Inc. from December 1989. He is also a director
of Allstate Corp., Dean Witter, Discover & Co., Dell Computer
Corporation and Sears, Roebuck and Co. and is also a Special
Limited Partner in Forstmann Little & Co. Mr. Miles 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>
Donald S. Perkins .................. 69 FORMER CHAIRMAN OF JEWEL COMPANIES, INC. Mr. Perkins became President
1979 of Jewel Companies, Inc. (retailing) in 1965, Chairman of its Board
in 1970, and served as Chairman of its Executive Committee from
1980 to June 1983. He is also a director of AON Corporation, AT&T
Corp., Cummins Engine Company, Inc., Illinova and Illinois Power
Company, Inland Steel Industries, Inc., LaSalle Street Fund, Inc.,
The Putnam Funds (including all 92 of its funds) and Springs
Industries, Inc. Mr. Perkins is an Unaffiliated Director.
Raymond S. Troubh .................. 69 FINANCIAL CONSULTANT AND DIRECTOR OF VARIOUS COMPANIES. Mr. Troubh
1989 served as a director of WCI from 1979 to 1990. Mr. Troubh has been
a financial consultant and a corporate director for more than the
past five years. He is also a director of ADT Limited, America West
Airlines, Inc., Applied Power Inc., ARIAD Pharmaceuticals, Inc.,
Becton, Dickinson and Company, Benson Eyecare Corporation, Diamond
Offshore Drilling, Inc., Foundation Health Corporation, General
American Investors Company, Inc., Manville Corporation, Olsten
Corporation, Petrie Stores Corporation, Riverwood International
Corporation, Triarc Companies, Inc. and WHX Corporation. Mr. Troubh
is an Unaffiliated Director.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors currently has designated five 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 such committees is composed entirely of
Unaffiliated Directors. The current members and functions of all the Board's
committees are as follows:
Audit Committee. The Audit Committee is composed entirely of Unaffiliated
Directors. Its members are Messrs. Buttenwieser (Chair), Kearns, Luce and Miles.
The functions of the Audit Committee, which met three times during 1995, include
(i) the review of the professional services and independence of the Company's
independent auditors and the scope of the annual external audit as recommended
by the independent auditors; (ii) the review, in consultation with the
independent auditors and the Company's chief internal auditor, of the plan and
results of the annual audit and the adequacy of the Company's internal
accounting controls; (iii) 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 (iv) 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,
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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. Finkelstein, Ambassador Hills and
Messrs. Mark (Chair), Troubh and Vincent. The Compensation Committee, which met
four times during 1995, 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 administer the Company's executive compensation plans.
The Compensation Committee, after receiving and considering the recommendations
of the Company's Chief Executive Officer, determines the salaries and incentive
compensation (including the grant of stock options) and employment 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 (Chair) and Vincent. The Nominating
and Governance Committee, which met three times during 1995, 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 qualification 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 60
nor more than 90 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.
Editorial Committee. The Editorial Committee is composed of all of the
directors except for Messrs. Levin and Parsons and Mr. Luce serves as its
chairman. The Editorial Committee, which met once in 1995, has authority to
review with the Company's editor-in-chief significant editorial developments and
plans affecting the Company's magazines, editorial personnel policies, major
editorial staffing matters and policies and procedures regarding journalistic
standards and accuracy. The Company's editor-in-chief, in consultation with the
Editorial Committee, makes recommendations to the Board of Directors regarding
the election of a successor editor-in-chief.
Executive/Finance Committee. The members of the Executive/Finance Committee
are Messrs. Adelson, Finkelstein, Mrs. Greenough and Messrs. Levin, Munro
(Chair), Parsons, Perkins and Troubh. The Executive/Finance Committee met three
times during 1995. The Executive/Finance Committee may exercise all the
authority of the Board of Directors in the management of the business and
affairs of the Company, except for matters related to the composition of the
Board of Directors and its committees, changes in the By-laws, changes in
matters specifically delegated to other committees and certain other significant
corporate matters.
During 1995, the Board of Directors met eleven times and no incumbent
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.
8
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<PAGE>
DIRECTOR COMPENSATION
As described in more detail below, the Company expects, subject to
stockholder approval of the proposed Directors Option Plan, to replace the
retirement plan for its eligible directors with the Directors Option Plan on a
going forward basis.
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' Stock Plan'). In addition, a fee of $2,500 is paid for
attendance at each special Board meeting and $1,000 is paid for attendance at
each committee meeting not held in conjunction with a Board meeting. The Board
has expressed its intention to eliminate these special meeting fees if the
stockholders approve the Directors Option Plan at the Annual Meeting. See
'Approval of the Time Warner 1996 Stock Option Plan for Non-Employee Directors.'
Committee chairmen do not receive additional compensation. Eligible Directors
are also reimbursed for expenses incurred in attending Board and committee
meetings, including those for travel, food and lodging.
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' 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' Stock Plan (the 'Restriction
Period'), the Eligible Director has the right to vote his or her Restricted
Shares, to receive and retain all regular cash dividends and to exercise 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) become vested, 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 reason other than as set forth
above, then all Restricted Shares issued to such Eligible Director are forfeited
to the Company. In 1995, each Eligible Director received 786 Restricted Shares
under the Directors' 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.
The Company has also maintained a retirement plan (the 'Directors
Retirement Plan') for its Eligible Directors who have served as such for at
least three years. Under this Plan, each such Eligible Director will receive an
annual retirement benefit commencing after the later of stepping down from the
Board of Directors or attaining age 60 (or earlier in the event such Eligible
Director becomes disabled), equal to one-half of the value of the annual
retainer (including cash and Restricted Shares) payable on the last day that the
Eligible Director served on the Board of Directors, which benefit will be paid
for the number of years of service as an Eligible Director.
9
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<PAGE>
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. If the stockholders approve the
Directors Option Plan at the Annual Meeting, see 'Approval of the Time Warner
1996 Stock Option Plan for Non-Employee Directors,' no further benefits will
accrue under the Directors Retirement Plan after the Annual Meeting. In that
case, each current Eligible Director, upon his or her retirement from the Board,
as described above, will be entitled to receive an annual benefit of $30,000
payable for the number of years of service through the Annual Meeting.
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth as of February 1, 1996 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, 1996, 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: 12 current Unaffiliated
Directors -- $264 million; and all current directors -- $294 million. In
addition, as of December 31, 1995, the trusts maintained pursuant to the
Company's qualified employee benefit plans, other than pension plans, held
Common Stock valued at approximately $720 million 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............................................................ 360,999 348,848 *
Richard J. Bressler (9)................................................. 5,196 122,804 *
Lawrence B. Buttenwieser (3)............................................ 86,577 -- *
Edward S. Finkelstein................................................... 8,927 -- *
Beverly Sills Greenough (4)............................................. 21,339 -- *
Peter R. Haje (9)....................................................... 9,525 691,954 *
Carla A. Hills.......................................................... 3,039 -- *
Tod R. Hullin (9)....................................................... 2,121 278,058 *
David T. Kearns......................................................... 2,739 -- *
Gerald M. Levin (5)(9).................................................. 364,508 2,533,600 *
Henry Luce III (6)...................................................... 5,850,517 -- 1.5%
Reuben Mark............................................................. 10,439 -- *
Michael A. Miles........................................................ 4,286 -- *
J. Richard Munro (7)(9)................................................. 332,492 442,556 *
Richard D. Parsons...................................................... 10,213 100,000 *
Donald S. Perkins....................................................... 14,116 -- *
Raymond S. Troubh (8)................................................... 9,499 -- *
Francis T. Vincent, Jr.................................................. 17,439 -- *
All current directors and executive officers (20 persons) as a group
(3)-(9)............................................................... 7,178,352 4,969,481 3.1%
</TABLE>
(footnotes on next page)
10
<PAGE>
<PAGE>
* Represents beneficial ownership of less than one percent of issued and
outstanding stock on February 1, 1996.
(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the 'Exchange Act'). Unless otherwise indicated, beneficial
ownership includes both sole 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. The shares of Common Stock held by certain
subsidiaries of the Company, which are not entitled to be voted at the
Annual Meeting, are excluded for purposes of calculating the Percent of
Class. As of February 1, 1996, none of the named persons or group
beneficially owns any of the Voting Preferred Stock, the Company's Series B
6.40% Preferred Stock, Series H Convertible Preferred Stock, par value $1.00
per share ('Series H Preferred'), or Liquid Yield OptionTM Notes due 2013
('LYONs').
(2) Reflects shares of Common Stock subject to options to purchase Common Stock
issued by the Company which, on February 1, 1996, were unexercised but were
exercisable within a period of 60 days from that date. These shares are
excluded from the column headed 'Number of Shares.'
(3) Includes 1,280 shares of Common Stock owned of record and beneficially by
Mr. Buttenwieser's wife and 22,656 shares of Common Stock held of record by
a trust of which Mr. Buttenwieser and others are trustees in which Mr.
Buttenwieser has no beneficial interest and as to all of which Mr.
Buttenwieser disclaims any beneficial ownership.
(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
power.
(5) Includes 15,000 shares of Common Stock held by Mr. Levin's wife, as to which
Mr. Levin disclaims any beneficial ownership.
(6) Includes 212,104 shares of Common Stock held by a trust of which Mr. Luce is
sole trustee, an aggregate of 710,308 shares of Common Stock held by various
trusts of which Mr. Luce is a co-trustee and 4,636,072 shares of Common
Stock beneficially owned by The Henry Luce Foundation, Inc., of which Mr.
Luce is one of twelve members and twelve directors.
(7) Includes 35,830 shares of Common Stock held of record and beneficially by
members of Mr. Munro's family, as to which Mr. Munro disclaims any
beneficial ownership.
(8) Includes 3,200 shares of Common Stock held beneficially by Mr. Troubh's
wife, as to which Mr. Troubh disclaims any beneficial ownership.
(9) Includes an aggregate of approximately 52,840 shares of Common Stock held by
two trusts under employee stock plans of the Company for the benefit of
current directors and executive officers of the Company (including 4,061
shares for Mr. Bressler, 3,037 shares for Mr. Haje, 2,121 shares for Mr.
Hullin, 10,488 shares for Mr. Levin and 18,472 shares for Mr. Munro) and an
aggregate of 51,230 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 or of any series of Voting
Preferred Stock.
<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
The Capital Group Companies, Inc. (3) ................................. 33,080,650 8.51% 7.00%
333 South Hope Street
Los Angeles, CA 90071
The Seagram Company Ltd. (4) .......................................... 56,763,349 14.51 12.36
1430 Peel Street
Montreal, Quebec
Canada H3A 1S9
SERIES C PREFERRED STOCK (5)
Trust for the benefit of Gordon Gray, Jr............................... 769,043 23.56 *
Trust for the benefit of C. Boyden Gray................................ 769,043 23.56 *
Trust for the benefit of Burton C. Gray................................ 769,043 23.56 *
Trust for the benefit of Bernard Gray ................................. 769,043 23.56 *
c/o Wachovia Bank, N.A.
P.O. Box 3099
Winston-Salem, NC 27150
</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>
Nancy Maguire Gray, Trustee of the
Nancy Maguire Gray Trust u/a dated 12/16/94 ......................... 188,336 5.76 *
P.O. Box 3199
Church Street Station
New York, NY 10008
SERIES D PREFERRED STOCK
Houston Industries Incorporated (6) ................................... 11,000,000 100 5.01
5 Post Oak Park
4400 Post Oak Parkway
Houston, TX 77027
SERIES E AND F PREFERRED STOCK
Alan Gerry (7) ........................................................ SERIES E
Loomis Road 3,107,956 95.60
Liberty, NY 12754 3.33
SERIES F
3,085,763 95.60
SERIES G PREFERRED STOCK
ITOCHU Corporation (8) ................................................ 6,200,000 100 2.70
5-1, Kita-Aoyama 2-chome
Minato-Ku, Tokyo 107-77
Japan
SERIES I PREFERRED STOCK
Toshiba Corporation (9) ............................................... 7,000,000 100 3.05
1-1, Shibaura 1-chome
Minato-Ku, Tokyo 105
Japan
</TABLE>
- ------------
* Less than 1%.
(1) The shares of Common Stock held by certain subsidiaries of the Company,
which are not entitled to be voted at the Annual Meeting, are excluded for
purposes of calculating the 'Percent of Class.' Each share of Voting
Preferred Stock and Series H Preferred is currently convertible into 2.08264
shares of Common Stock. Of the holders of Voting Preferred Stock identified
in this table only Houston Industries Incorporated could be deemed
beneficially to own more than 5% of the Common Stock pursuant to Rule 13d-3
under the Exchange Act by virtue of the convertibility of the Series D
Preferred.
(2) Each share of Voting Preferred Stock currently has two votes per share.
(3) Beneficial ownership is as of December 29, 1995. The Capital Group
Companies, Inc., a holding company, has filed with the Securities and
Exchange Commission Amendment No. 8, dated February 6, 1996, to its
statement on Schedule 13G to the effect that it (directly or indirectly) has
sole dispositive power over all these shares, that it has sole voting power
over 5,972,280 of these shares and that these shares are held principally by
Capital Research and Management Company, an investment adviser, and Capital
Guardian Trust Company, a bank. The Capital Group Companies, Inc. has
advised the Company that the shares of Common Stock reported as beneficially
owned includes 920,170 shares of Common Stock issuable upon conversion of
$118,595,000 principal amount of LYONs that it beneficially owns (these
shares have been excluded from the calculation of voting power), that all of
the reported shares are held for the benefit of its clients and that it and
each of its subsidiary investment management companies acts separately in
exercising investment discretion over its managed accounts.
(4) Beneficial ownership and 'Percent of Class' are as of February 1, 1996. The
Seagram Company Ltd. has filed with the Securities and Exchange Commission
Amendment No. 7, dated April 13, 1994, to its statement on Schedule 13D and
a statement of Changes in Beneficial Ownership on Form 4 dated May 9, 1994
to the effect that it indirectly through its indirect wholly owned
subsidiary, Seagram Inc., has sole voting and sole dispositive power over
all these shares.
(5) This information has been provided to the Company, as of February 1, 1996,
by the holders of the Series C Preferred. The trusts for the benefit of each
of Gordon Gray, Jr. and C. Boyden Gray each also holds 365,365 shares of
Common Stock and the trusts for the benefit of each of Burton C. Gray and
Bernard Gray each also holds 315,365 shares of
(footnotes continued on next page)
12
<PAGE>
<PAGE>
Common Stock (of which 146,870 shares are, in each case, held in an escrow
account subject to restrictions on disposition). The Nancy Maguire Gray
Trust also holds 89,476 shares of Common Stock.
(6) Beneficial ownership is as of July 17, 1995. Houston Industries Incorporated
has filed with the Securities and Exchange Commission a statement on
Schedule 13D dated July 17, 1995 to the effect that it also beneficially
owns 1,000,000 shares of Common Stock and has sole dispositive and voting
power over all these shares.
(7) Includes 41,337 shares of Series F Preferred held in an escrow account
subject to restrictions. Mr. Gerry also beneficially owns 2,922,907 shares
of Common Stock, of which 5,056 shares are held in an escrow account subject
to restrictions. This information has been provided to the Company, as of
February 1, 1996, by Mr. Gerry.
(8) Includes 1,200,000 shares of Series G Preferred held by ITOCHU International
Inc., 335 Madison Avenue, New York, NY 10017, a wholly owned subsidiary of
ITOCHU Corporation. ITOCHU Corporation and ITOCHU International Inc. each
also holds 1,440,000 and 360,000 shares, respectively, of Series H
Preferred; each share of Series H Preferred is convertible into 2.08264
shares of Common Stock but has no voting rights. This information has been
provided to the Company, as of February 1, 1996, by the holders of Series G
Preferred.
(9) Includes 177,500 shares of Series I Preferred held by Toshiba America, Inc.,
1251 Avenue of the Americas, New York, NY 10020, a wholly owned subsidiary
of Toshiba Corporation. This information has been provided to the Company,
as of February 1, 1996, by the holders of Series I Preferred.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON COMPENSATION OF EXECUTIVE OFFICERS OF THE
COMPANY
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Company's executive compensation programs are designed with a
particular emphasis on motivating the executives to continue to achieve the
Company's business objectives and to increase stockholder value. Each of the
Company's executive officers was in 1995, and is currently, employed pursuant to
a multi-year employment agreement, the purpose of which is to retain the
services of such officer for an extended period. The minimum salary to which
each executive officer is entitled is specified in the employment agreement, but
the annual bonus, which is a major part of an executive officer's cash
compensation, and awards of stock options for executive officers are generally
determined by the Compensation Committee of the Board of Directors of the
Company, which is comprised entirely of Unaffiliated Directors. The principal
terms of the employment agreements of certain executive officers are described
under 'Employment Arrangements.'
The Company believes that it is in the best interest of its stockholders
that its executive officers be compensated in a manner that provides such
officers with an incentive to advance both the short-term and long-term
interests of the Company's stockholders. The Company's current compensation
strategy is designed to maintain a high proportion of pay in the form of a
variable annual incentive bonus (which permits individual performance to be
appropriately recognized on an annual basis) and stock-based compensation (which
permits a meaningful portion of the executive's long-term rewards to coincide
with long-term stock price appreciation that accrues to the stockholders). To
this end, the Company's remuneration programs for its executive officers award
annual performance bonuses and, when appropriate, stock options. The
Compensation Committee takes into account the total compensation from all
sources provided to the individual by the Company, including deferred
compensation, savings and retirement plans and insurance and other benefits. In
addition, the Company has a stockholder-approved annual bonus plan (the 'Annual
Bonus Plan') applicable for 1995 to the Chief Executive Officer and each of the
four most highly compensated other executive officers of the Company who served
in such capacity on December 31, 1995 (collectively, the 'named executive
officers'). The Company expects that the compensation paid to such executive
officers under the Annual Bonus Plan will qualify for income tax deductibility
under section 162(m) of the Internal Revenue Code of 1986, as amended. The
starting point of the Compensation Committee's determination of the annual
incentive bonus for
13
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<PAGE>
Mr. Levin and the other named executive officers is the calculation of their
maximum bonus pool and the maximum individual bonus payable pursuant to the
Annual Bonus Plan. Such calculations were based on a percentage of the amount by
which the Company's EBITDA (as defined) for 1995 exceeded the Company's average
EBITDA for the preceding three years and resulted in a maximum individual
deductible annual bonus for each of the named executive officers equal to $5.35
million with a maximum bonus pool available for the payment of annual bonuses to
all of the named executive officers of $10.7 million.
In 1995, the Company did not, and for 1996 the Company does not expect to,
pay the named executive officers cash compensation in excess of the section
162(m) deductibility limit because of the applicability of the Annual Bonus
Plan, individual executive officers' compensation deferral arrangements or the
effect of 'grandfathering' provisions of the tax laws, although the Company's
Board of Directors, or the Compensation Committee, retains discretion to do so.
In addition, because of the restrictions on tax deductibility imposed by such
section 162(m), the Company has adopted a general policy of awarding stock
options to its executive officers only pursuant to plans that the Company
expects will satisfy the requirements of section 162(m).
During 1995, several of the Company's executive officers were awarded stock
options. These awards were made after a review of the exercise prices, numbers
and dates of the awards of those options already held by the executive officers
of the Company and a comparison to those held by other members of the Company's
senior management. Although there are no particular targets with respect to
executive officers' holdings of stock options, 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.
The Chief Executive Officer reviewed 1995 executive performance with and
recommended to the Compensation Committee the amount of each other executive
officer's annual incentive bonus (within the limits imposed by the Annual Bonus
Plan with respect to the named executive officers) and stock option award, if
any. These variable elements in the compensation of the Company's executive
officers recognize individual qualitative contributions and are determined based
upon the level of the executive's responsibilities, the efficiency and
effectiveness with which he oversees the matters under his supervision and the
degree to which he has contributed to the accomplishment of major tasks that
advance the Company's goals. In light of the nature of their responsibilities,
particularly the fact that these officers have overall corporate policy-making
and administrative responsibilities and do not directly oversee principal
operating units of the Company, the Compensation Committee's qualitative
assessment may not be based directly on corporate performance from a financial
standpoint but relate generally to the accomplishment of each of their personal
goals and the Company's goals as a whole. However, the Company's financial
performance is a key factor that affects the overall level of compensation for
all executive officers. This is especially the case for the named executive
officers, whose annual bonuses may not exceed the maximum amounts determined
under the Annual Bonus Plan, which are based on financial measures.
In 1995, the Company took strides toward its major strategic and financial
goals for the year both on a Company-wide basis and at its operating levels.
These strategic achievements included: making progress in creating an
organizational and ownership structure that better supports the Company's
overall strategy, especially in light of the Company's agreement to acquire
Turner Broadcasting System, Inc.; improving the Company's financial position and
flexibility by selling assets to reduce debt and refinancing approximately $4
billion of the Company's public debt, which lowered interest rates, extended
maturities and reduced potential Common Stock dilution; significantly advancing
the Company's cable clustering strategy through the completion of strategic
cable transactions giving the Company a total of approximately 11.7 million
subscribers under its management with more than three-quarters of its customers
located in 35 large groupings of more than 100,000 customers each; playing an
effective role with governments and
14
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<PAGE>
their agencies at both the federal and state level to attempt to ensure more
appropriate regulation of the cable industry and other parts of the Company's
operations, as illustrated by the approval by the Federal Communications
Commission of the Company's 'social contract,' permitting upper tier, monthly
cable rate increases over and above the limited inflation and programming cost
increases previously permitted, major progress at certain state levels on
liberalizing telephony regulation, the recent passage of the federal
Telecommunications Act of 1996, as well as the passage of legislation that
permits copyright owners and performers to license and receive royalties for the
public performance of sound recordings; putting quality management in place at
all of the Company's divisions; participating in major technological advances,
including securing a universal standard for digital versatile disc technology;
maintaining effective communications about the Company's business strategies
with its various constituencies; and making improvements in the Company's
corporate governance policies. These accomplishments and the Company's
performance as a whole had a significant impact on the assessment of the annual
incentive bonus compensation for all of the Company's executive officers. The
Compensation Committee considers a variety of factors in arriving at the
compensation paid to the Company's executive officers and no specific weighting
was assigned to any of the factors considered in determining the remuneration
paid to Mr. Levin or the other executive officers for 1995.
Mr. Levin's 1995 annual incentive bonus as Chairman of the Board and Chief
Executive Officer was determined by the Compensation Committee, starting with
the calculation of the maximum bonus payable pursuant to the Annual Bonus Plan.
In addition, for 1995, both strategic, non-financial and additional financial
goals were established for Mr. Levin and were reviewed as part of the process of
determining the amount of his bonus compensation within the Annual Bonus Plan's
parameters. Operational targets were established based on divisional and
Company-wide earnings before interest, taxes, depreciation and amortization
('EBITDA') and on cash flow. Mr. Levin's qualitative goals included expanding
and rationalizing the Company's cable investment, including a restructuring of
such ownership; debt reduction; continuing to strengthen and develop the skills
and depth of the senior management at the Company and its operating divisions;
continuing to enhance the Company's reputation among its major constituencies as
a solid, progressive and strategically oriented company and establishing a good
record on corporate governance issues. The Committee's evaluation also took into
account the performance of the Company's Common Stock during the year, giving
appropriate recognition, in its view, to the effects of general market
conditions, external influences thereon and efforts made by management to impact
market performance positively.
The total compensation opportunity for Mr. Levin was reviewed in the
context of the Annual Bonus Plan maximum and total compensation packages awarded
to chief executive officers at selected public companies with broad consumer
product, entertainment and media orientations. In light of Mr. Levin's
performance, as reflected in the Company's accomplishments discussed above, his
total cash compensation for the year was placed in the upper quartile of such
compensation paid to the comparison group. The Compensation Committee believes
that the Company's most direct competitors for executive talent are composed of
a broader class than the companies with which the Company would be compared for
stock performance purposes. Thus, the comparison group includes companies that
are not included in the peer group index in the graph showing the comparison of
five-year cumulative total stock returns that appears elsewhere in this Proxy
Statement. The Compensation Committee considered the performance of the
Company's Common Stock price during the year and that the performance of the
Common Stock has a significant impact on the long-term, stock-based components
of Mr. Levin's compensation. Mr. Levin's bonus level was based on the
Compensation Committee's review of Mr. Levin's accomplishment of his goals and
reflects the Committee's overall evaluation of his stewardship of the Company's
significant accomplishments during 1995 despite particularly difficult
regulatory and strategic
15
<PAGE>
<PAGE>
environments and his positioning of the Company, its management, product lines
and services for the future.
Members of the Compensation Committee
Reuben Mark (Chairman)
Edward S. Finkelstein
Carla A. Hills
Raymond S. Troubh
Francis T. Vincent, Jr.
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,
1995 (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 IN 1995 YEAR SALARY(4) BONUS COMPENSATION(5) OPTIONS AWARDED COMPENSATION(7)
- ------------------------------ ---- ---------- ---------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gerald M. Levin............... 1995 $1,050,000 $4,000,000 $ 153,930 -- $ 107,039
Chairman of the Board and 1994 1,050,000 4,000,000 130,390 -- 150,667
Chief Executive Officer (1) 1993 1,050,000 4,000,000 104,000 1,000,000 139,784
Richard D. Parsons............ 1995 $ 825,000 $2,000,000 $ 92,000 300,000 $ 77,628
President (2)
Peter R. Haje................. 1995 $ 675,000 $1,000,000 $ 56,500 40,000 $ 114,102
Executive Vice President 1994 675,000 975,000 51,500 -- 129,377
and General Counsel 1993 675,000 1,100,000 -- 50,000 119,391
Richard J. Bressler........... 1995 $ 450,000 $ 750,000 $ 50,500 100,000 $ 42,755
Senior Vice President and
Chief Financial Officer (3)
Tod R. Hullin................. 1995 $ 525,000 $ 550,000 -- 35,000 $ 56,279
Senior Vice President -- 1994 487,500 550,000 -- 40,000 75,344
Communications 1993 406,250 550,000 -- 30,000 20,867
and Public Affairs
</TABLE>
- ------------
(1) Mr. Levin became Chairman of the Board and Chief Executive Officer on
January 21, 1993, having served as President and Co-Chief Executive Officer
from February 20, 1992.
(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' stock options were awarded at the end of 1994 in
connection with his anticipated employment by the Company.
(3) Mr. Bressler became Senior Vice President and Chief Financial Officer on
March 16, 1995, having served as Senior Vice President, Finance from January
2, 1995, and as a Vice President (not an executive officer) prior to that.
(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 1995, 1994 and 1993, except that the credits
to Mr. Hullin's account for 1993 were $81,250.
(5) In accordance with rules of the Securities and Exchange Commission, amounts
totalling less than $50,000 have been omitted. The amounts of personal
benefits shown in this column for 1995 that represent more than 25% of the
applicable executive's total Other Annual Compensation include financial
services of $80,000 to Mr. Levin, $70,000 to Mr. Parsons and $32,500 to each
of Messrs. Haje and Bressler, transportation-related benefits (including an
automobile allowance) of $73,930 to Mr. Levin and automobile allowances of
$22,000 to Mr. Parsons, $24,000 to Mr. Haje and $18,000 to Mr. Bressler.
(6) None of the options indicated was awarded with tandem stock appreciation
rights. Of such executive officers, only Mr. Parsons was awarded restricted
stock during 1993, 1994 or 1995 and, as of December 31, 1995, held any such
shares. This restricted stock was awarded to Mr. Parsons in 1993 and 1994
pursuant to the Directors' 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
(footnotes continued on next page)
16
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<PAGE>
the Common Stock on the New York Stock Exchange Composite Listing on
December 29, 1995 was $159,567. Mr. Parsons receives the dividends paid in
cash on such shares. See 'Corporate Governance -- Director Compensation.'
(7) The amounts shown in this column for 1995 include the following:
(a) Pursuant to the Time Warner Employees' Savings Plan, a defined
contribution plan established under section 401(k) of the Internal Revenue
Code of 1986, as amended (the 'Code'), available generally to employees of
the Company, for the 1995 plan year, each executive named above, except for
Mr. Parsons (who was not yet eligible to participate), 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 in a fund maintained under the plan
trust primarily invested in Common Stock.
(b) Pursuant to the Time Warner Employees' Stock Ownership Plan
('TESOP'), a defined contribution plan available generally to employees of
the Company, the Company may make annual contributions to a trust for the
benefit of eligible employees of the Company in amounts not to exceed 12% of
total eligible compensation. For the 1995 plan year, the Company allocated
to each participant's account in such trust 8% of total eligible
compensation of each eligible employee of the Company, including $12,000 for
the account of each executive named above, except for Mr. Parsons (who was
not yet eligible to participate). The Company's contribution may be made in
shares of Common Stock and/or in cash which will be used to acquire shares
of Common Stock. Because the Code has limited the amount of eligible
compensation under TESOP to $150,000, the Company has adopted a
non-qualified 'supplemental TESOP' covering otherwise eligible compensation
between $150,000 and $262,500 for 1995 (increased 5% per year thereafter, to
a maximum of $350,000). The Company's accrual for this supplemental plan,
$9,000 in 1995 for each named executive officer, except for Mr. Parsons, is
maintained pursuant to an unfunded, non-qualified deferred compensation plan
and is deemed to earn interest at the long-term applicable federal rate as
announced monthly by the Internal Revenue Service, compounded daily.
(c) The Company maintains a program of life and disability insurance
which is generally available to all salaried employees on the same basis. In
addition, during 1995, 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 $150 each. The Company also maintained split-dollar life
insurance policies on the lives of the named executive officers and paid the
following amounts allocated to the term portion of the split-dollar coverage
for 1995: Mr. Levin, $12,263; Mr. Parsons, $3,662; Mr. Haje, $7,378; Mr.
Bressler, $941; and Mr. Hullin, $2,657. The actuarial equivalent of the
value of the premiums paid by the Company for 1995 based on certain
assumptions regarding interest rates and periods of coverage are: Mr. Levin,
$83,889; Mr. Parsons, $77,478; Mr. Haje, $90,952; Mr. Bressler, $19,605; and
Mr. Hullin, $33,129. It is anticipated that the Company will recover the net
after-tax cost of the premiums on these policies or the cash surrender value
thereof. For a description of life insurance coverage for certain executive
officers provided pursuant to the terms of their employment agreements, see
'Employment Arrangements.'
STOCK OPTION GRANTS DURING 1995
The following table sets forth certain information with respect to employee
options to purchase shares of Common Stock ('options') awarded during 1995 to
the named executive officers. All such options were nonqualified options and no
stock appreciation rights ('SARs'), alone or in tandem with stock options, were
awarded in 1995.
STOCK OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-------------------------------------------------
PERCENT
OF TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS VALUE AT ASSUMED ANNUAL
SECURITIES GRANTED EXERCISE RATES OF STOCK PRICE
UNDERLYING TO OR BASE APPRECIATION FOR OPTION TERM
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------------------------------
NAME GRANTED IN 1995 ($/SH) DATE 0%($) 5%($) 10%($)
- ------------------------------ ---------- --------- -------- ---------- ----- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald M. Levin............... -- -- -- -- -- -- --
Richard D. Parsons............ 300,000(2) 5.9% $35.63 11/16/04 0 $6,734,070 $16,995,510
Peter R. Haje................. 40,000 .8 38.69 3/15/05 0 974,988 2,460,684
Richard J. Bressler........... 100,000 2.0 38.69 3/15/05 0 2,437,470 6,151,710
Tod R. Hullin................. 35,000 .7 38.69 3/15/05 0 853,115 2,153,099
</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. The options
shown in the table become exercisable in installments of one-third on the
first three anniversaries of the date of grant. 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 options were awarded on November 17, 1994 in connection with Mr.
Parsons' anticipated employment by the Company.
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As required by rules of the Securities and Exchange Commission, the dollar
amounts in the last two columns represent the hypothetical gain or 'option
spread' that would exist for the options based on assumed 5% and 10% annual
compounded rates of stock price appreciation over the full ten-year option term
(resulting in 63% and 159% appreciation, respectively). These assumed rates of
appreciation applied to the price on the date of the awards in March 1995 would
result in a Common Stock price on March 15, 2005 of $63.06 and $100.21,
respectively. If these price appreciation assumptions are applied to all of the
Company's outstanding Common Stock, such Common Stock would appreciate in the
aggregate by approximately $9.5 billion and $24.1 billion, respectively, over
the ten-year period ending on March 15, 2005. These prescribed rates are not
intended to forecast possible future appreciation, if any, of the Common Stock.
OPTION EXERCISES AND VALUES IN 1995
The following table sets forth as to each of the named executive officers
information with respect to option exercises during 1995 and the status of their
options on December 31, 1995: (i) the number of shares of Common Stock
underlying options exercised during 1995; (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, 1995; and (iv) the aggregate dollar value of in-the-money
exercisable and nonexercisable stock options on December 31, 1995.
AGGREGATE OPTION EXERCISES DURING 1995
AND
OPTION VALUES ON DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES DOLLAR VALUE OF
SHARES DOLLAR UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
UNDERLYING VALUE OPTIONS ON 12/31/95 OPTIONS ON 12/31/95*
OPTIONS REALIZED ----------------------------- -----------------------------
NAME EXERCISED ON EXERCISE EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
- -------------------------- ---------- ----------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Gerald M. Levin (1)....... -- -- 2,200,268 333,332 $24,317,704 $947,496
Richard D. Parsons........ -- -- 100,000 200,000 $ 224,500 $449,000
Peter R. Haje............. -- -- 661,954 56,666 $12,214,533 $ 52,081
Richard J. Bressler (1)... -- -- 81,403 132,733 $ 971,309 $ 62,529
Tod R. Hullin............. -- -- 243,058 71,666 $ 3,664,949 $ 31,250
</TABLE>
- ------------
* Based on a closing price of $37.875 per share on December 29, 1995 as reported
on the New York Stock Exchange Composite Listing.
(1) Messrs. Levin and Bressler are the only executive officers listed above who
have been awarded SARs in tandem with any of their stock options. 313,600 of
Mr. Levin's options and 9,644 of Mr. Bressler's options held on December 31,
1995 were awarded with tandem SARs; they all were awarded on or prior to
September 22, 1989 and are currently exercisable; and at December 31, 1995,
they had a value of $3,030,800 and $71,718, 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 500,000 of Mr. Levin's options, awarded in 1993, half of which
options 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, the Company's breach of the
holder's employment agreement.
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,
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<PAGE>
including death. Otherwise, options may generally be exercised for one year
after death or total disability. 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.
EMPLOYMENT ARRANGEMENTS
The Company is, and during 1995 was, a party to employment agreements with
the executive officers of the Company. These agreements have been filed with the
Securities and Exchange Commission 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; 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 any group life insurance generally
provided by the Company to its employees.
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 wrongful termination of an executive's employment, the
executive will be entitled to elect either (a) to receive a lump-sum payment
equal to the present value of the base salary, projected bonuses 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, 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.
In addition, if Mr. Bressler's or Mr. Hullin's employment terminates as a
result of the Company's material breach or wrongful termination, or the Company
terminates such executive's employment after the term of his employment
agreement, such executive 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. Under such 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 salary and deferred
compensation and an average bonus. In addition, except for Mr. Levin's
agreement, the provisions of the employment agreements relating to mitigation of
damages provide 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.
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
19
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<PAGE>
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.
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 executive officers listed in the Summary Compensation Table
are as shown for 1995 in that Table, except that the current annual salary and
deferred compensation for Mr. Parsons is $900,000, for Mr. Haje is $825,000 and
for Mr. Bressler is $525,000. The expiration dates of these agreements and the
amounts of the individual life insurance coverage for the lifetime of such
persons are: Mr. Levin -- January 10, 2000 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; Mr. Bressler -- December
31, 1999 and $2 million; and Mr. Hullin -- December 31, 1998 and $2 million.
DEFERRED COMPENSATION
Deferred compensation for executive officers is deposited into separate
accounts maintained by the Company for each of such officers. The Company
appoints an investment advisor for each such account subject to approval by the
relevant executive. Funds are invested or deemed to be 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 three to five years commencing on the date employment was to terminate 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 of the Company for 1995 are reflected 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.
A participant accrues benefits under the Pension Plan on the basis of
1 2/3% of the average annual compensation (defined as the average of the highest
five consecutive full or partial years of compensation, 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 (both
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.
20
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<PAGE>
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 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 $ 50,001 $ 52,501
200,000.......................... 33,334 50,001 66,668 83,335 100,002 105,002
400,000.......................... 66,668 100,002 133,336 166,670 200,004 210,004
600,000.......................... 100,002 150,003 200,004 250,005 300,006 315,006
800,000.......................... 133,336 200,004 266,672 333,340 400,008 420,008
</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, Parsons, Haje, Bressler and Hullin is limited as a result of the
imposition of the limitations on eligible compensation. However, because
combined payments
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<PAGE>
under the Pension Plan and the Excess Plan are based on the average of the
highest five consecutive full or partial years of compensation (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, 1996, would be based on average compensation of $729,248 for Mr.
Levin; $262,500 for Mr. Parsons; $239,884 for Mr. Haje; $239,884 for Mr.
Bressler; and $239,884 for Mr. Hullin with 23.8, 1.0, 5.4, 7.2, and 5.1 years of
credited service, respectively. In addition, pursuant to their employment
agreements, Messrs. Parsons and Hullin will be entitled to receive supplemental
payments from the Company that will achieve a total retirement benefit equal to
what each of them 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, 1990 plus reinvested dividends and distributions. Pursuant to
the rules of the Securities and Exchange Commission, 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 five 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, Capital Cities/ABC, Inc., CBS Inc.
(through November 30, 1995, the last completed month prior to its merger into
Westinghouse Electric 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, 1990 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. The stock price
performance during 1995 includes substantial appreciation in the stock prices of
Capital Cities/ABC, Inc. and CBS Inc. as a result of the acquisition premiums
offered therefor by The Walt Disney Company and Westinghouse Electric
Corporation, respectively.
22
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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>
1990.... $100 $100 $ 100
1991.... 111 129 130
1992.... 150 173 140
1993.... 228 210 155
1994.... 183 211 157
1995.... 199 269 215
</TABLE>
ADDITIONAL INFORMATION
During 1995, the Company and its subsidiaries engaged in transactions in
the ordinary course of business, on normal commercial terms, with The Seagram
Company Ltd., the beneficial owner of more than five percent of the outstanding
Common Stock and ITOCHU Corporation and Toshiba Corporation, which became
beneficial owners of more than five percent of separate series of the Company's
voting securities on September 5, 1995 and October 2, 1995, respectively. The
amounts involved in such transactions were not material to the Company or any of
such companies. 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. During
1995, the Company provided approximately $80,000 of personal benefits to Mr.
Munro, a director of the Company.
CERTAIN LITIGATION
On October 30, 1995, two complaints were filed in the Court of Chancery of
the State of Delaware in and for New Castle County ('Delaware Chancery Court')
against the Company, certain officers and directors of the Company, and other
defendants, by stockholders of the
23
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<PAGE>
Company, purportedly derivatively on behalf of the Company. The two complaints
allege, among other things, that in connection with the proposed merger of the
Company and Turner Broadcasting System, Inc. ('TBS'), some or all of the
defendants have violated fiduciary duties owed to the Company and its
stockholders by, among other things, (i) seeking to entrench themselves in board
and management positions and to eliminate the threat of a hostile takeover, (ii)
securing economic benefits for themselves or conferring special benefits on
Tele-Communications, Inc. ('TCI') and others at the expense of the Company's
public stockholders, and (iii) structuring the transaction with TBS so as to
place the Company's chief executive officer in a position which allegedly will
involve a conflict between the interests of TCI and the Company. Among other
relief demanded, both complaints seek an injunction against consummation of the
transaction with TBS and an order directing the individual defendants to account
to the Company for their alleged profits and plaintiffs' alleged damages. On
November 22, 1995, the Company and the other defendants moved to dismiss the
complaint in one of these actions.
On March 12, 1996, a complaint was filed in the Delaware Chancery Court
against the directors and certain officers of the Company by a stockholder of
the Company, purportedly derivatively on behalf of the Company. The complaint
alleges, among other things, that some or all of the defendants have breached
fiduciary duties owed to the Company and its stockholders by, among other
things, (i) seeking to entrench themselves in board and management positions,
(ii) conferring special benefits upon TCI at the expense of the Company's public
stockholders and (iii) wasting and misappropriating corporate assets by causing
the Company to enter into certain agreements, including those with TCI, R.E.
Turner and Michael Milken in connection with the transaction with TBS. The
complaint seeks, among other things, (i) to enjoin, preliminarily and
permanently , consummation of the transaction with TBS and certain related
arrangements, (ii) to enjoin, preliminarily and permanently, any settlement of a
litigation between the Company and U S WEST, Inc. (in which U S WEST, Inc. seeks
to enjoin the transaction with TBS and other relief), unless and until such
settlement is approved by the Delaware Chancery Court, (iii) a declaratory
judgment that defendants breached their fiduciary duties to the Company and its
stockholders, and (iv) unspecified damages.
APPROVAL OF THE TIME WARNER
1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
GENERAL
The Time Warner 1996 Stock Option Plan for Non-Employee Directors (the
'Directors Option Plan') providing for the granting of stock options to purchase
shares of Common Stock and the granting of limited stock appreciation rights
with respect thereto to directors who are not employees of the Company ('Outside
Directors'), is proposed to be approved by stockholders. The Directors Option
Plan is intended to replace the Directors Retirement Plan. If the Directors
Option Plan is approved by stockholders, no further benefits will accrue under
the Directors Retirement Plan after the date of the Annual Meeting, however,
Outside Directors will remain entitled to receive benefits accrued prior to that
date. In addition, the Board of Directors has also expressed its intention to
eliminate the payment to directors of fees for attendance at special meetings of
the Board of Directors and committee meetings not held in conjunction with a
Board meeting if the Directors Option Plan is approved by stockholders. See
'Corporate Governance -- Director Compensation.'
The Company believes that a stock-based plan that provides long-term
rewards to Outside Directors that coincide with long-term stock price
appreciation recognizable by the stockholders is a more appropriate incentive
for its Outside Directors than the cash benefits paid under the Directors
Retirement Plan, which are paid based upon length of service regardless of the
Company's performance. The Board of Directors approved the Directors Option Plan
and the proposed amendments to the Directors Retirement Plan at its meeting on
March 21, 1996. The
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following summary of the Directors Option Plan does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the text of
the Directors Option Plan set forth in Annex A to this Proxy Statement.
STOCK SUBJECT TO THE PLAN
The Directors Option Plan provides for the granting of nonqualified options
('Options') to purchase a maximum of 250,000 shares of Common Stock (subject to
certain adjustments described below) and the granting of limited stock
appreciation rights in connection therewith ('Limited SARs') (collectively,
'Awards'). Shares in respect of which Awards are made may be either authorized
and unissued shares of Common Stock or issued shares held in treasury, or both.
The Company will reserve the number of shares necessary to satisfy the maximum
number of shares that may be or become subject to Awards under the Directors
Option Plan. If, and to the extent that, any Option should expire, terminate or
be cancelled for any reason without having been exercised (or without having
been deemed exercised, by virtue of the exercise of a related Limited SAR), the
Common Stock underlying such Options will again become available for Awards
under the Directors Option Plan. Cash payments received by the Company upon the
exercise of Options will be used for general corporate purposes.
ADMINISTRATION AND ELIGIBILITY
The Board of Directors has initially delegated authority to administer the
Directors Option Plan to its Compensation Committee (the 'Committee'). The
Directors Option Plan is intended to meet the requirements of Rule 16b-3 under
the Exchange Act so that Outside Directors who receive Options under the
Directors Option Plan will not thereby lose their status as 'disinterested
persons' for purposes of administering the Company's employee stock plans.
The only persons eligible to receive Awards under the Directors Option Plan
are members of the Board of Directors who are not at the time of grant employees
of the Company or any of its subsidiaries. If the Directors Option Plan is
approved by stockholders at the Annual Meeting, the ten Unaffiliated Directors
then serving will receive their first grant of Options thereunder shortly after
the Annual Meeting.
GRANT OF OPTIONS
Each Outside Director will automatically be granted Options with respect to
1,500 shares of Common Stock and related Limited SARs under the Directors Option
Plan on the tenth New York Stock Exchange trading day after each annual meeting
of the Company's stockholders, commencing with the Annual Meeting. The purchase
price of the shares of Common Stock covered by each Option will be equal to the
fair market value of the Common Stock on the date of grant. Each Option (and the
related Limited SAR) will become 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 will expire ten years after the date of grant.
EXERCISABILITY
Options may be exercised in whole or in part, to the extent then
exercisable, by delivering written notice to the Company in accordance with
procedures to be established by the Committee. Payment of the exercise price may
be made in cash or, unless otherwise determined by the Committee, in whole
shares of Common Stock already owned by the holder, or partly in cash and partly
in shares of Common Stock.
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Each Award will become immediately exercisable in full upon the occurrence
of any of the following change-of-control transactions: (a) the Board (or
stockholders if required) approves a consolidation or merger in which the
Company is not the surviving corporation, the sale of all or substantially all
of the assets of the Company or the liquidation or dissolution of the Company,
(b) any person or other entity (other than the Company or any Company-sponsored
employee benefit plan) purchases any shares of Common Stock (or securities
convertible into Common Stock) pursuant to a tender or exchange offer without
the prior consent of the Board of Directors, or becomes the beneficial owner of
securities of the Company representing 20% or more of the voting power of
Company's outstanding securities, or (c) during any two-year period, individuals
who at the beginning of such period constitute the entire Board of Directors
cease to constitute a majority of the Board, unless the election, or the
nomination for election, of each new director is approved by at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
In addition, the Directors Option Plan provides that Awards become
immediately exercisable in full at the time the director leaves the Board of
Directors for any reason, except in the event the director is removed from the
Board for cause, in which case all unexercised Options would immediately
terminate and cease to exist.
The Directors Option Plan provides that Options will 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).
LIMITED SARS
Limited SARs are automatically granted under the Directors Option Plan in
tandem with each grant of Options. Limited SARs may be exercised only during a
prescribed period following the occurrence of one or more 'change-of-control'
transactions described above. Upon the exercise of Limited SARs, the holder will
receive in cash an amount equal to the number of shares of Common Stock with
respect to which such Limited SARs are exercised multiplied by the excess of (a)
the highest per share price paid or to be paid in connection with certain
change-of-control transactions which occur at any time during the 60-day period
preceding the exercise of such Limited SARs, or, if higher, the highest reported
closing sales price of a share of Common Stock on the New York Stock Exchange
Composite Tape at any time during such 60-day period, over (b) the exercise
price of the Option.
The exercise of any Options will cause a corresponding reduction in the
number of shares of Common Stock remaining subject to the related Limited SARs,
and the exercise of any Limited SARs will cause a corresponding reduction in the
number of shares remaining subject to the related Options, in either case,
maintaining a balance between outstanding Options and Limited SARs. Any such
reduction will reduce the number of shares available for future Awards under the
Directors Option Plan.
ADDITIONAL PROVISIONS
Options and Limited SARs are not transferable other than by will or the
laws of descent and distribution and may be exercised during the optionee's
lifetime only by the optionee.
In the event of a stock split, stock dividend, recapitalization, merger,
consolidation or other similar transaction which affects the character or amount
of the outstanding Common Stock, the Committee will equitably adjust the
purchase price of each Award and the number of shares subject to each such
Award, and the number of shares for which Awards may be granted under the
Directors Option Plan will be appropriately adjusted.
The obligations of the Company with respect to Awards granted under the
Directors Option Plan are subject to all applicable laws. Unless otherwise
provided by the Committee, the payment
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of withholding taxes due in respect of an Award under the Directors Option Plan
may be made with shares of Common Stock.
The Board of Directors may terminate or amend the Directors Option Plan at
any time, provided, however, that the Board of Directors will comply with all
applicable laws, applicable stock exchange listing requirements, and any
requirements for exemption (to the extent necessary) under Rule 16b-3 under the
Exchange Act. Termination or amendment of the Directors Option Plan or any
outstanding Award may not adversely affect the rights of any holder without his
or her consent.
OTHER INFORMATION
On March 25, 1996, the closing sale price of the Common Stock, as reported
on the New York Stock Exchange Composite Listing, was $41.75 per share.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS AND LIMITED SARS
The following summary generally describes the principal Federal (and not
state and local) income tax consequences of Awards granted under the Directors
Option Plan. It is general in nature and is not intended to cover all tax
consequences that may apply to a particular holder or to the Company. The
provisions of the Code and the regulations thereunder relating to these matters
are complicated and their impact in any one case may depend upon the particular
circumstances.
If an Option is granted in accordance with the terms of the Directors
Option Plan, no income will be recognized by the recipient thereof at the time
the Option is granted.
On exercise of an Option, the amount by which the fair market value of the
shares of Common Stock on the date of exercise exceeds the purchase price of
such shares will generally be taxable to the holder as ordinary income, and will
be deductible for tax purposes by the Company in the year in which the holder
recognized the ordinary income. The disposition of shares acquired upon exercise
of an Option will ordinarily result in long-term or short-term capital gain or
loss (depending on the applicable holding period) in an amount equal to the
difference between the amount realized on such disposition and the sum of the
purchase price and the amount of ordinary income recognized in connection with
the exercise of the Option. If an Option is exercised through the use of Common
Stock previously owned by the holder, such exercise generally will not be
considered a taxable disposition of the previously owned shares and thus no gain
or loss will be recognized with respect to such shares upon such exercise.
The amount of any cash received upon the exercise of Limited SARs under the
Directors Option Plan will be includible in the holder's ordinary income and the
Company will be entitled to a deduction for such amount.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority in voting power of the
shares of Common Stock and Voting Preferred Stock present, either in person or
by proxy, and entitled to vote is required to approve the Directors Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE TIME WARNER
1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS.
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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 1996
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.
STOCKHOLDER PROPOSALS
PROPOSAL REGARDING THE USE OF CHLORINE-BLEACHED PAPER
The Ancilla Domini Sisters, Donaldson, Indiana 46513, beneficial owners of
1,000 shares of Common Stock, joined by Sisters of Charity of the Incarnate
Word, 2600 North Loop West, Houston, Texas 77092, the beneficial owners of
16,100 shares of Common Stock, Progressive Asset Management, 1814 Franklin
Street, Oakland, California 94612, representing a client who beneficially owns
100 shares of Common Stock, and Green Century Balanced Fund, 29 Temple Place,
Boston, Massachusetts 02111, the beneficial owner of 700 shares of Common Stock,
have advised the Company that they intend to propose a resolution at the Annual
Meeting. The proposed resolution and statement in support thereof are set forth
below:
WHEREAS the Environmental Protection Agency, in the finding of its
three-year study on dioxins, declared that dioxins probably cause cancer and are
linked to numerous other health disorders, including hormone disorders and
disfunctions in immune systems. This threat to human health and the environment
has been recognized by a number of international conventions;
WHEREAS exposure to dioxin poses a risk of getting cancer between 1 in
1,000 and 1 in 10,000, which is at least 100 times greater than the usual
acceptable risk level of 1 in 1,000,000 EPA uses for regulating exposure to
toxic substances;
WHEREAS dioxin is bio-accumulative which means it remains in the tissue of
living organisms that consume it. Contamination levels increase at every step of
the food chain;
WHEREAS in October 1993, the American Public Health Association (APHA), the
nations' premier public health organization, stated in a public resolution that
'virtually all chlorinated organic compounds that have been studied exhibit at
least one of a wide range of serious toxic effects such as endocrine
dysfunction, developmental impairment, birth defects, reproductive dysfunction
and infertility, immunosuppression and cancer, often at extremely low doses;'
WHEREAS production of chlorine-bleached paper is a major source of dioxin;
WHEREAS the use of chlorine dioxide instead of chlorine bleach, the process
used to produce most of the paper TIME now purchases, does not eliminate the
production of dioxins; incineration merely turns a water pollution problem into
an air pollution problem. A report released in May
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1995 by the Center for the Biology of Natural Systems at the City University of
New York found that dioxins from waste incineration travel distances as far as
1,250 miles;
WHEREAS TIME, the largest magazine publisher, is such a large
private-sector user of paper (800 tons a week), that the paper industry will
adjust bleaching processes to fill TIME's demands;
WHEREAS TIME pledged in January 1992 to use alternative paper as soon as it
is practical to do so;
WHEREAS clean alternatives, such as oxygen, ozone and hydrogen peroxide are
currently being used around the world to produce high quality paper products
without adding dangerous poisons to the environments in which those products are
made;
RESOLVED: The shareholders request the Board of Directors to report on its
plans to convert to the use of alternative, totally chlorine-free paper. The
report should be available to all shareholders within six months of the 1996
annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
The Company takes its concern about the environment seriously. In December
1995, the Company's Time Inc. publishing subsidiary, along with three other
major corporations, Duke University and the Environmental Defense Fund (the
'Paper Task Force') released their Paper Task Force Recommendations for
Purchasing and Using Environmentally Preferable Paper (the 'Task Force Report').
This 246-page Report, based on almost three years of extensive research,
contains 22 recommendations and is intended to provide a road map on how
companies, including the Company, can minimize the environmental impact of the
paper they buy and use. Rather than considering only a single or a few
attributes of paper, for example, how it is bleached, the Paper Task Force chose
to examine the entire lifecycle of paper, literally from the forest to the
landfill. In so doing, the Task Force Report provides guidelines for integrating
environmental criteria into paper purchasing. These guidelines point the way to
improved forest management, cleaner manufacturing and less waste in landfills. A
copy of the Task Force Report is available from the Company upon request.
The Company, through its Time Inc. unit, has announced its commitment to
promote in its paper purchases the Paper Task Force's concept of the 'minimum
impact mill,' a holistic manufacturing concept that encompasses environmental
management systems, compliance with environmental laws and regulations and
process technologies. In so doing, the Company has already reported on its plans
with respect to the use of chlorine-free paper. The preparation of the report
requested by the proposal would be redundant and wasteful since the Company, as
a participant in the Paper Task Force, has already committed substantial time
and resources and has done extensive research on the subject matter of the
proposal and has reported on its conclusions and plans.
As the Task Force Report recommends, the Company integrates environmental
criteria into its paper purchasing decisions along with other criteria such as
cost, availability and functionality. As the Task Force Report indicates, there
are several ways to achieve the minimum impact mill in terms of low-effluent
bleaching processes; a totally chlorine-free process is just one. Because of the
possibility of developing technologies and changing economics and environmental
regulations, the Board of Directors believes that the Company should remain
flexible in its approach to its paper purchases and is not well served by
setting rigid deadlines and technological goals as the proponents seem to
request. The Board of Directors believes that the Company, and the environment,
would be better served by using the Company's resources to implement the Task
Force Report's recommendations than in the creation of the requested report.
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PROPOSAL REGARDING THE CHAIRMAN OF THE BOARD
The Teamsters Affiliates Pension Plan, 25 Louisiana Avenue, N.W.,
Washington, D.C. 20001, beneficial owner of 51,900 shares of Common Stock, has
advised the Company that it intends to propose a resolution at the Annual
Meeting. The proposed resolution and statement in support thereof are set forth
below:
RESOLVED: That shareholders urge the Board of Directors of Time Warner Inc.
or its successor to amend the bylaws to require that an independent director who
was not formerly the chief executive of the company serve as chair of the board.
SUPPORTING STATEMENT: Deal-making in the media business has raised the
issue of whether a functional system of checks and balances is operating to
remove personal egos from compromising sound business decisions.
Personal will is not unknown at Time Warner which has 'several crowned
heads and princelings whose egos and territorial rights must be either respected
or dealt with before they can cause trouble,' in the words of Time magazine, a
Time Warner property.
One simple method for improving such checks and balances is through an
independent board chairman. The board's responsibility in scrutinizing
management plans may be reduced when the board chair is also the chief architect
of the management plan in his or her capacity as chief executive officer. By
requiring that the chair be an independent director, the board may be able to
bring to bear more critical review of basic management plans. Such a chair
should come from outside the corporation; permitting the recently retired CEO to
chair the company may serve to allow old, inefficient ideas to remain protected.
We believe there is certainly much that causes pause in recent actions by
management at our Company.
Disappointing stock performance. Time Warner's stock price declined 6% in
the period between the announcement of the Turner merger and early
October, 1995.
Fortune (another company publication), has described Time Warner's
performance as an extended 'stay in the land of no returns.'
Dilution in Time Warner stock. Fortune again: 'Some Wall Streeters oppose
the deal because Time Warner would increase its outstanding shares by
about 50% to acquire Turner. David Londoner, the influential analyst at
Schroder Wertheim & Co., has told clients the proposal is too dilutive.'
The $4 million bonus awarded to Chairman and CEO Gerald Levin, despite
disappointing stock appreciation.
The involvement of felon Michael Milken who reportedly was paid many
millions for relatively little work.
Independent scrutiny is a principle we believe that CEO Levin shares. Time
says Levin 'indicated he would have no patience for prima donnas.' Certainly,
the nature of personalities involved suggests that full and frank debate is
possible at Time Warner.
Again, Time: 'When Levin vetoed a Turner plan to acquire NBC last year,
Turner publicly complained that Time Warner's treatment of him was the
equivalent of female genital mutilation.' Leaving aside questions of taste both
of the speaker and the family publication printing it, if the Turner-Levin
relationship can survive such bruising conversations, then perhaps our company
can codify improved board autonomy by providing for an independent chair.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
The Board of Directors believes that the interests of the Company and its
stockholders are best served by the experience, consistent direction and ability
for decisive action afforded by a full-
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time Chairman and Chief Executive Officer who is subject to the oversight of the
Company's Board of Directors and directly accountable to the stockholders. In
fact, requiring the positions to be separated could potentially dilute the Chief
Executive Officer's accountability to the stockholders. The Board believes no
conflict of interest is created by having one person hold the offices of the
Chairman and Chief Executive Officer, and that no meaningful additional measure
of independence and stockholder access would be provided by a non-executive
Chairman.
Under the Company's current organization, the Company and its stockholders
have benefitted from the full-time attention of a Chairman who is also the Chief
Executive Officer. In such capacities, he is confronted on a daily basis with
the operational, administrative and strategic issues that face the Company. As a
result, the Chairman is able to prioritize properly the issues that need the
attention of the Board and its committees and the directors are able to interact
directly and consistently with the person with detailed knowledge about the
Company and about management's goals for the Company.
In addition, the independence of Board oversight, the subject of the
proposal, is already in place at the Company. Twelve of the fifteen current
members of the Board are Unaffiliated Directors, and three of the five
committees of the Board, Compensation, Nominating and Governance and Audit, are
composed entirely of Unaffiliated Directors. A more detailed discussion about
the authority of these committees is presented earlier in this Proxy Statement.
Each of the Unaffiliated Directors is a full participant in the Company's major
strategic and policy decisions and, when they deem it appropriate, the
Unaffiliated Directors may meet without the Affiliated Directors. The insight,
advice and counsel that each Unaffiliated Director contributes to the Company
would not be enhanced by an Unaffiliated Director serving as Chairman. The Board
believes the existing structure has served the Company well and need not be
altered.
PROPOSAL REGARDING STAGGERED BOARD
John J. Gilbert and Margaret R. Gilbert, 29 East 64th Street, New York, New
York 10021, representing at least 1,000 shares of Common Stock, have advised the
Company that they intend to propose a resolution at the Annual Meeting. The
proposed resolution and statement in support thereof are set forth below:
RESOLVED: That the stockholders of Time Warner Inc., assembled in annual
meeting in person and by proxy, hereby request that the Board of Directors take
the needed steps to provide that at future elections of directors new directors
be elected annually and not by classes as is now provided and that on expiration
of present terms of directors their subsequent election shall also be on an
annual basis.
REASONS
Continued very strong support along the lines we suggest were shown at the
last annual meeting when 42%, 2,399 owners of 89,948,660 shares, were cast in
favor of this proposal. The vote against included 1,141 unmarked proxies.
ARCO to its credit voluntarily ended theirs stating that when a very high
percentage (34.6%) desired it to be changed to an annual election it was reason
enough for them to change it. Several other companies have also followed suit
such as: Pacific Enterprises, Katy Industry, Hanover Direct and others. A few
years ago my resolution on the subject was withdrawn when the Westinghouse
directors agreed to end their stagger system. At the recent Lockheed-Martin
merger the stagger system was ended and also at a special merger meeting of
First Commerce Corporation in 1995. Further, Allegheny Power System tried to put
in a stagger system, as well as take away cumulative voting, and the
stockholders defeated it, showing stockholders are interested in their rights.
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Because of normal need to find new directors and because of environmental
problems and the avalanche of derivative losses and many groups desiring to have
directors who are qualified on the subjects, we think that ending the stagger
system of electing directors is the answer. Some recommendations have been made
to carry out the CERES 10 points. The 11th, in our opinion, should be to end the
staggered boards and to have cumulative voting.
Equitable Life Insurance Company, which is now called Equitable Companies,
converted from a policy owned company to a public stockholder meeting. Thanks to
AXA, the comptrolling French insurance company not wanting it they now do not
have a staggered board.
Orange and Rockland Utility Company has a terrible time with the stagger
system and its 80% clause to recall a director. The chairman was involved in a
scandal affecting the company. Not having enough votes at the meeting to get rid
of the chairman had to be adjourned. Finally, at the adjourned meeting enough
votes were counted to recall him.
Also, ending the staggered board might help get directors who see we get an
improved report on the stockholders meeting, which includes the identity of
shareholders asking questions; answers to questions raised at the meeting and
the votes for and against all resolutions; as well as to see about getting a
better chairman to run the annual meeting and not one who waste an hour with
pictures before getting to the business of the meeting.
If you agree, please mark your proxy for this resolution; otherwise it is
automatically cast against it, unless you have marked to abstain.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
The Board believes that the Company relies, even more than most other
companies, on the quality, commitment and creativity of people who work for it.
Its people are of vital importance to the success of its unique mix of products
and services and to the expansion of its businesses. The Board believes that the
staggered Board system gives the people of the Company, especially its division
heads and journalistic and creative communities, an enhanced sense of
continuity, purpose and direction that is essential to the growth of its
businesses. The Board, therefore, believes that the present system of
classification is in the best interest of the stockholders and should be
continued. In fact, in 1993 more than half of the domestic, public companies in
the FORTUNE 500 had staggered boards. The provision of the Company's Restated
Certificate of Incorporation that the Board of Directors be divided into three
classes was approved at the special meeting of the Company's stockholders held
on December 7, 1983. The provision reduces the possibility of a sudden and
surprise change in majority control of the Board of Directors without the
support of the incumbent Board. This provision and others approved by the
stockholders in December 1983 are designed to impede disruptive and inequitable
tactics that have become relatively common corporate takeover practices.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the votes cast on each stockholder
proposal, either in person or by proxy, by holders of Common Stock and Voting
Preferred Stock entitled to vote and voting as a single class is required to
adopt each such stockholder proposal.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of 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 Securities and Exchange Commission ('SEC') and the New York
Stock Exchange. Officers, directors and greater than ten-percent
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stockholders are required by SEC regulation 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 1995, its officers, directors
and greater than ten-percent beneficial owners complied with all applicable
Section 16(a) filing requirements, except that Mr. Bressler filed one late
report relating to the Company's redemption of convertible debt securities held
by him.
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 $20,000,
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.
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
1997 Annual Meeting, stockholder proposals must be received by the Company no
later than December 2, 1996, 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 60 days nor more than 90 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 90th day prior to
such annual meeting and not later than the close of business on the later of the
60th 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.
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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 29, 1996
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ANNEX A
TIME WARNER 1996 STOCK OPTION
PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE OF THE PLAN
The purpose of the Time Warner 1996 Stock Option Plan for Non-Employee
Directors (hereinafter the 'Plan') is to provide for the granting of
nonqualified stock options and limited stock appreciation rights to Outside
Directors and to increase their proprietary interest in Time Warner and their
identification with the interests of Time Warner's stockholders through annual
grants of stock options.
2. CERTAIN DEFINITIONS
The following terms (whether used in the singular or plural) have the
meanings indicated when used in the Plan:
(a) 'Agreement' means the stock option and Limited SARs agreement
specified in Section 10.
(b) 'Approved Transaction' means any transaction in which the Board
(or, if approval of the Board is not required as a matter of law, the
stockholders of Time Warner) shall approve (i) any consolidation or merger
of Time Warner in which Time Warner is not the continuing or surviving
corporation or pursuant to which shares of Common Stock would be converted
into cash, securities or other property, other than a merger of Time Warner
(x) as contemplated in the Amended and Restated Agreement and Plan of
Merger dated as of September 22, 1995 among Time Warner Inc., TW Inc., Time
Warner Acquisition Corp., TW Acquisition Corp. and Turner Broadcasting
System, Inc., as the same may be amended from time to time, or (y) in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (ii) any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of Time Warner, or (iii) the adoption
of any plan or proposal for the liquidation or dissolution of Time Warner.
(c) 'Award' means grants of Options and Limited SARs under this Plan.
(d) 'Board' means the Board of Directors of Time Warner.
(e) 'Board Change' means, during any period of two consecutive years,
individuals who at the beginning of such period constituted the entire
Board ceased for any reason to constitute a majority thereof unless the
election, or the nomination for election by Time Warner's stockholders, of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period.
(f) 'Code' means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute or statutes thereto. Reference to
any specific Code section shall include any successor section.
(g) 'Common Stock' means, subject to Section 11 hereof, the common
stock, par value $1.00 per share, of Time Warner.
(h) 'Composite Tape' means the New York Stock Exchange Composite Tape.
(i) 'Control Purchase' means any transaction in which any person (as
such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act), corporation or other entity (other than Time Warner or any employee
benefit plan sponsored by Time Warner or any of its Subsidiaries) (i) shall
purchase any Common Stock (or securities convertible into Common
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<PAGE>
Stock) for cash, securities or any other consideration pursuant to a tender
offer or exchange offer, without the prior consent of the Board, or (ii)
shall become the 'beneficial owner' (as such term is defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of Time
Warner representing 20% or more of the combined voting power of the then
outstanding securities of Time Warner ordinarily (and apart from the rights
accruing under special circumstances) having the right to vote in the
election of directors (calculated as provided in Rule 13d-3(d) in the case
of rights to acquire Time Warner's securities).
(j) 'Effective Date' means the date the Plan becomes effective
pursuant to Section 13.
(k) 'Exchange Act' means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute or statutes thereto.
Reference to any specific Exchange Act section shall include any successor
section.
(l) 'Fair Market Value' of a share of Common Stock means the average
of the high and low sales prices of a share of Common Stock on the
Composite Tape on the date in question.
(m) 'Holder' means an Outside Director who has received an Award under
this Plan.
(n) 'Limited SARs' means limited stock appreciation rights subject to
the terms of Section 7.6.
(o) 'Minimum Price Per Share' means the highest gross price (before
brokerage commissions, soliciting dealers' fees and similar charges) paid
or to be paid for any share of Common Stock (whether by way of exchange,
conversion, distribution, liquidation or otherwise) in, or in connection
with, any Approved Transaction or Control Purchase which occurs at any time
during the period beginning on the sixtieth day prior to the date on which
Limited SARs are exercised and ending on the date on which Limited SARs are
exercised. If the consideration paid or to be paid in any such Approved
Transaction or Control Purchase shall consist, in whole or in part, of
consideration other than cash, the cash value of such consideration shall
be the same as established by the Board under the provisions of Time
Warner's 1994 Stock Option Plan or any successor thereto.
(p) 'Option' means any nonqualified stock option granted pursuant to
this Plan.
(q) 'Outside Directors' shall mean a member of the Board who, as of
the close of business on the date of the grant of any Option hereunder, is
not an employee of Time Warner or any Subsidiary.
(r) 'Plan' has the meaning ascribed thereto in Section 1.
(s) 'Subsidiary' of a person means any present or future subsidiary
corporation (as such term is defined in section 424 of the Code) of such
person and any present or future trade or business, whether or not
incorporated, controlled by or under common control with such person. An
entity shall be deemed a Subsidiary of a person only for such periods as
the requisite ownership or control relationship is maintained.
(t) 'Time Warner' means Time Warner Inc., a Delaware corporation, and
any successor thereto.
(u) 'Trading Day' means any day on which the New York Stock Exchange
is open for business.
(v) 'Total Disability' means a permanent and total disability as
defined in section 22(e)(3) of the Code.
3. STOCK SUBJECT TO THE PLAN
3.1. Number of Shares. Subject to the provisions of Section 11 and this
Section 3, the maximum number of shares of Common Stock in respect of which
Awards may be granted is 250,000. If and to the extent that an Option shall
expire, terminate or be cancelled for any reason
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without having been exercised (or without having been considered to have been
exercised as provided in Section 7.6), the shares of Common Stock subject to
such expired, terminated or cancelled portion of the Option shall again become
available for purposes of the Plan.
3.2. Character of Shares. Shares of Common Stock deliverable under the
terms of the Plan may be, in whole or in part, authorized and unissued shares of
Common Stock or issued shares of Common Stock held in Time Warner's treasury, or
both.
3.3. Reservation of Shares. Time Warner shall at all times reserve a number
of shares of Common Stock (authorized and unissued Common Stock, issued Common
Stock held in Time Warner's treasury, or both) equal to the maximum number of
shares that may be subject to outstanding Awards and future Awards under the
Plan.
4. ADMINISTRATION
4.1. Interpretation. Subject to the express provisions of the Plan, the
Board shall have plenary authority to interpret the Plan, to prescribe, amend
and rescind the rules and regulations relating to it and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The determinations of the Board on the matters referred to in this Section 4
shall be conclusive.
4.2. Delegation to Committee. Notwithstanding anything to the contrary
contained herein, the Board may at any time, or from time to time, appoint a
Committee and delegate to such Committee the authority of the Board to
administer the Plan. Upon such appointment and delegation, any such Committee
shall have all the powers, privileges and duties of the Board, and shall be
substituted for the Board, in the administration of the Plan to the extent
provided in such delegation, except for the power to appoint members of the
Committee and to terminate, modify or amend the Plan. The Board may from time to
time appoint members of any such Committee in substitution for or in addition to
members previously appointed, may fill vacancies in such Committee and may
discharge such Committee.
Any such Committee shall select one of its members as its chairman and
shall hold its meetings at such times and places as it shall deem advisable. A
majority of members shall constitute a quorum and all determinations shall be
made by a majority of such quorum. Any determination reduced to writing and
signed by all of the members shall be fully as effective as if it had been made
by a majority vote at a meeting duly called and held.
5. ELIGIBILITY
The only persons eligible to participate in the Plan shall be Outside
Directors.
6. ANNUAL GRANTS
Each Outside Director shall automatically be granted 1,500 Options and
related Limited SARs under the Plan on the day that is 10 Trading Days after
each annual meeting of stockholders of Time Warner, commencing with the annual
meeting to be held in 1996, and, except as hereinafter provided, the Company
shall promptly thereafter execute and deliver to each Outside Director, an
Agreement evidencing the grant of such Options and Limited SARs, in each case
without any further action required to be taken by the Board or any committee
thereof. An individual who shall become an Outside Director subsequent to the
date of the annual meeting of stockholders of Time Warner for any year shall
first become eligible to participate in the Plan commencing on the date of the
next annual meeting of stockholders of Time Warner.
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<PAGE>
7. OPTIONS AND LIMITED SARS
7.1. Option Prices. The purchase price of the Common Stock under each
Option shall be equal to 100% of the Fair Market Value of the Common Stock on
the date of grant.
7.2. Terms of Options. The term of each Option shall be ten years from the
date of grant.
7.3. Exercisability of Options. Subject to adjustment as provided in
Section 11, each Option granted under the Plan shall be exercisable (a) on and
after the first anniversary of the date of grant, to the extent of 500 shares,
(b) on and after the second anniversary of the date of grant, to the extent of
1,000 shares and (c) on and after the third anniversary of the date of grant, to
the extent of 1,500 shares. Notwithstanding the foregoing, each Option granted
under the Plan shall become exercisable in full (a) on the date the Holder
ceases to be a director of Time Warner for any reason other than as described in
Section 7.5(d) and (b) in the event of any Approved Transaction, Board Change or
Control Purchase.
7.4. Manner of Exercise. Payment of the Option purchase price shall be made
in cash or in whole shares of Common Stock already owned by the Holder or partly
in cash and partly in such Common Stock in accordance with the provisions of the
Agreement. An Option shall be exercised by written notice to Time Warner upon
such terms and conditions as provided in the Agreement. Time Warner shall effect
the transfer of the shares of Common Stock purchased under the Option as soon as
practicable, and within a reasonable time thereafter such transfer shall be
evidenced on the books of Time Warner. No Holder or other person exercising an
Option shall have any of the rights of a stockholder of Time Warner with respect
to shares of Common Stock subject to an Option granted under the Plan until due
exercise and full payment has been made. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to the date of such
due exercise and full payment.
7.5. Termination of Options. The unexercised portion of each Option shall
automatically and without notice irrevocably terminate and become null and void
at the time of the earliest to occur of (a) ten years from the date of grant of
such Option, (b) five years from the date the Holder ceases to be a director of
Time Warner by reason of retirement, Total Disability or any reason other than
as described in the succeeding clauses (c) and (d), (c) one year from the date
the Holder dies or (d) the date the Holder is removed from the Board for cause.
7.6. Limited SARs. Limited SARs shall be granted pursuant to the provisions
of this Section 7.6 with respect to each grant of Options under the Plan
(hereinafter called a 'related Option'). Subject to the terms and provisions of
this Section 7.6, each Limited SAR shall be exercisable to the extent the
related Option is then exercisable and in no event after the complete
termination or full exercise of the related Option. Limited SARs shall be
exercisable in whole or in part upon notice to Time Warner upon such terms and
conditions as provided in the Agreement.
Upon the exercise of Limited SARs, the related Option shall be considered
to have been exercised to the extent of the number of shares of Common Stock
with respect to which such Limited SARs are exercised and shall be considered to
have been exercised to that extent for purposes of determining the number of
shares of Common Stock in respect of which other Awards may be granted. Upon the
exercise or termination of the related Option, the Limited SARs with respect
thereto shall be considered to have been exercised or terminated to the extent
of the number of shares of Common Stock with respect to which the related Option
was so exercised or terminated.
The provisions of Sections 7 through 19 (to the extent that such provisions
are applicable to Options) shall also be applicable to Limited SARs unless the
context otherwise requires.
Limited SARs may be exercised only during the period (a) beginning on the
first day following either (i) the date of an Approved Transaction, (ii) the
date of a Control Purchase, or (iii) the date of a Board Change, and (b) ending
on the ninetieth day following such date. The effective date of
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exercise of a Limited SAR shall be deemed to be the date on which Time Warner
shall have received notice from the Holder of the exercise thereof.
Upon the exercise of Limited SARs granted in connection with an Option,
except as otherwise provided in the Agreement and the immediately succeeding
sentence, the Holder thereof shall receive in cash an amount equal to the
product computed by multiplying (a) the excess of (i) the higher of (A) the
Minimum Price Per Share, or (B) the highest reported closing sales price of a
share of Common Stock as reported on the Composite Tape at any time during the
period beginning on the sixtieth day prior to the date on which such Limited
SARs are exercised and ending on the date on which such Limited SARs are
exercised over (ii) the per share Option price of the related Option, by (b) the
number of shares of Common Stock with respect to which such Limited SARs are
being exercised. The Board shall have the discretion to settle Limited SARs by
the delivery of Common Stock rather than cash if in the judgment of the Board
such action is necessary or advisable to preserve pooling of interests
accounting treatment for any proposed transaction involving Time Warner.
7.7. Nontransferability of Options and Limited SARs. Options and Limited
SARs shall not be transferable other than by will or the laws of descent and
distribution, and Options and Limited SARs may be exercised during the lifetime
of the Holder thereof only by such Holder (or his or her court appointed legal
representative).
8. NO RIGHT TO NOMINATION
Nothing contained in the Plan or in any Award shall confer on any Outside
Director the right to be nominated for reelection to the Board.
9. NONALIENATION OF BENEFITS
No right or benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, hypothecation, pledge, exchange, transfer,
encumbrance or charge, and any attempt to anticipate, alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or charge the same shall be
void. No right or benefit hereunder shall in any manner be liable for or subject
to the debts, contracts, liabilities or torts of the person entitled to such
benefits.
10. WRITTEN AGREEMENT
Each grant of an Option and Limited SARs shall be evidenced by an Agreement
consistent with the terms of the Plan.
11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
In the event of any stock split, dividend, distribution, combination,
reclassification or recapitalization that changes the character or amount of the
Common Stock while any portion of any Award theretofore granted under the Plan
is outstanding but unexercised, the character and number of shares subject to
such Award and the option price shall be appropriately adjusted by the Board,
whose determination shall be conclusive. If any such change or transaction shall
occur, the number and kind of shares for which Awards may thereafter be granted
under the Plan shall be adjusted to give effect thereto.
Notwithstanding anything to the contrary contained in this Plan, upon
consummation of the mergers contemplated by the Amended and Restated Agreement
and Plan of Merger dated as of September 22, 1995 among Time Warner, Turner
Broadcasting System, Inc., TW Inc. ('New Time Warner'), Time Warner Acquisition
Corp. and TW Acquisition Corp. and the assumption of this Plan by New Time
Warner: (i) New Time Warner shall be substituted for Time Warner for all
purposes of this Plan, (ii) Common Stock as used in this Plan shall mean the
common stock, par
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value $.01 per share, of New Time Warner ('New Time Warner Common Stock'), (iii)
the Board shall mean the Board of New Time Warner, and (iv) each outstanding
Option and Limited SAR shall automatically become an Option to purchase and a
Limited SAR with respect to New Time Warner Common Stock on a one-for-one basis
at the same exercise price.
12. TERMINATION AND AMENDMENT
The Board may at any time terminate the Plan or make such amendments to the
Plan as it shall deem advisable; provided, however, that the Plan may not be
amended more than once every six months (other than to comply with changes to
the Code or the Employee Retirement Income Security Act of 1974, as amended),
and any amendment to the Plan shall comply with all applicable laws and stock
exchange listing requirements, including without limitation, Rule 16b-3 under
the Exchange Act. No termination, modification or amendment of the Plan may,
without the consent of the person to whom any Award shall theretofore have been
granted, adversely affect the rights of such person with respect to such Award.
No modification, extension, renewal or other change in any Award granted under
the Plan shall be made after the grant of such Award, unless the same is
consistent with the provisions of the Plan.
13. EFFECTIVENESS OF THE PLAN
The Plan shall become effective upon approval by the stockholders of Time
Warner entitled to vote at the annual meeting of such stockholders to be held in
1996, or any adjournment thereof.
14. GOVERNMENT AND OTHER REGULATIONS
The obligation of Time Warner with respect to Awards shall be subject to
all applicable laws, rules and regulations and such approvals by any
governmental agencies as may be required, including, without limitation, the
effectiveness of any registration statement required under the Securities Act of
1933, and the rules and regulations of any securities exchange on which the
Common Stock may be listed. For so long as the Common Stock is registered under
the Exchange Act, Time Warner shall use its reasonable efforts to comply with
any legal requirements (a) to maintain a registration statement in effect under
the Securities Act of 1933 with respect to all shares of Common Stock that may
be issued to Holders under the Plan, and (b) to file in a timely manner all
reports required to be filed by it under the Exchange Act.
15. WITHHOLDING
Time Warner's obligation to deliver shares of Common Stock or pay cash in
respect of any Award under the Plan shall be subject to applicable federal,
state and local tax withholding requirements. Federal, state and local
withholding taxes paid by a Holder upon the exercise of any Option may be paid
in shares of Common Stock upon such terms and conditions as the Board shall
determine; provided, however, that the Board in its sole discretion may
disapprove such payment and require that such taxes be paid in cash.
16. SEPARABILITY
If any of the terms or provisions of this Plan conflict with the
requirements of applicable law or Rule 16b-3 under the Exchange Act, then such
terms or provisions shall be deemed inoperative to the extent necessary to avoid
the conflict with applicable law or such Rule without invalidating the remaining
provisions hereof.
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17. NON-EXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the
Plan to the stockholders of Time Warner for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements for Outside Directors as it may deem desirable.
18. GOVERNING LAW
The Plan shall be governed by, and construed in accordance with, the laws
of the State of New York.
19. BENEFICIARIES
Each Outside Director may designate any person(s) or legal entity(ies),
including his or her estate, as his or her beneficiary under the Plan. Such
designation shall be made in writing on a form filed with the Secretary of Time
Warner or his or her designee and may be revoked or changed by an Outside
Director at any time by filing written notice of such revocation or change with
the Secretary of Time Warner or his or her designee. If no person shall be
designated by an Outside Director as his or her beneficiary or if no person
designated by such Outside Director as his or her beneficiary survives such
Outside Director, the Outside Director's beneficiary shall be his or her estate.
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<PAGE>
[MAP PROVIDING DIRECTIONS TO WARNER BROS. STUDIO]
<PAGE>
<PAGE>
APPENDIX 1
- --------------------------------------------------------------------------------
TIME WARNER INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 16, 1996
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 16,
1996, 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 -- PLEASE MARK, SIGN AND DATE THIS PROXY
Beverly Sills Greenough, Carla A. Hills, Reuben Mark and Francis T. CARD ON THE REVERSE SIDE AND RETURN IT
Vincent, Jr., nominees. PROMPTLY USING THE ENCLOSED REPLY
ENVELOPE.
</TABLE>
(CONTINUED ON REVERSE SIDE)
P
R
O
X
Y
<PAGE>
<PAGE>
This proxy when properly executed will be voted in the [X] Please mark
manner directed herein. If no direction is made, this your votes
proxy will be voted FOR all nominees listed, FOR this way
proposals 2 and 3 and AGAINST proposals 4 through 6.
The Board of Directors recommends a vote FOR all nominees
in Item 1 and FOR proposals 2 and 3.
FOR WITHHELD
1. Election of Directors [ ] [ ]
(see reverse).
For, except vote withheld from the following nominee(s):
________________________________________________
FOR AGAINST ABSTAIN
2. Approval of the 1996 [ ] [ ] [ ]
Stock Option Plan for
Non-Employee Directors.
3. Approval of Auditors. [ ] [ ] [ ]
The Board of Directors recommends a vote AGAINST proposals 4 through 6.
FOR AGAINST ABSTAIN
4. Stockholder proposal [ ] [ ] [ ]
regarding chlorine-
bleached paper.
5. Stockholder proposal [ ] [ ] [ ]
regarding the Chair-
man of the Board.
FOR AGAINST ABSTAIN
6. Stockholder proposal [ ] [ ] [ ]
regarding staggered board.
7. 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.
<PAGE>
<PAGE>
APPENDIX 2
==================================
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 16, 1996
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 16, 1996, 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, FOR proposals 2 and 3 and AGAINST proposals 4
through 6.
______________ ___________________ ________________
Name of Holder Series of Preferred Number of Shares
Stock
The Time Warner Inc. Board of Directors recommends a vote FOR all nominees in
item 1 and FOR proposals 2 and 3.
1. Election of Directors for terms expiring in 1999 - Beverly Sills
Greenough, Carla A. Hills, Reuben Mark and Francis T. Vincent, Jr.,
nominees.
FOR [ ] WITHHELD [ ]
[ ] FOR, except vote withheld from the following nominee(s):____________
__________________________________________________________________
2. Approval of the 1996 Stock Option Plan for Non-Employee Directors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of Auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The Board of Directors recommends a vote AGAINST proposals 4 through 6.
4. Stockholder proposal regarding chlorine-bleached paper.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Stockholder proposal regarding the Chairman of the Board.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. Stockholder proposal regarding staggered board.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. 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 Date
as name appears hereon.
When signing as attorney,
officer, administrator or
trustee, please give full
title as such.
<PAGE>
<PAGE>
APPENDIX 3
- --------------------------------------------------------------------------------
TIME WARNER EMPLOYEES' STOCK OWNERSHIP PLAN
CONFIDENTIAL VOTING INSTRUCTIONS
INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 16, 1996
Under the provisions of the Trust relating to the Time Warner Employees' Stock
Ownership Plan ('TESOP'), which includes accounts transferred from the Time
Incorporated Payroll-Based Employee Stock Ownership Plan ('PAYSOP') and the WCI
Employee Stock Ownership Plan ('WCI ESOP'), Chemical Bank, or any successor
organization ('Chemical'), as Trustee, is required to request your confidential
instructions as to how the shares of Time Warner Common Stock attributable to
your accounts under TESOP are to be voted at the Time Warner Annual Meeting of
Stockholders scheduled to be held on May 16, 1996. Your instructions to Chemical
will not be divulged or revealed to anyone at Time Warner Inc. If Chemical does
not receive your instructions on or prior to May 13, 1996, (a) the shares
allocated to your PAYSOP and WCI ESOP accounts, if any, will not be voted and
(b) all other shares allocated to your TESOP accounts will be voted at the
Annual Meeting in the same proportion as shares for which Chemical has received
voting instructions with respect to other participants' TESOP accounts
(excluding PAYSOP and WCI ESOP accounts).
<TABLE>
<S> <C>
ELECTION OF DIRECTORS FOR TERMS EXPIRING IN 1999 -- Please mark, sign and date this
Beverly Sills Greenough, Carla A. Hills, Reuben Mark and Francis T. Instruction Card on the reverse side and
Vincent, Jr., nominees. return it promptly using the enclosed
envelope.
</TABLE>
(CONTINUED ON REVERSE SIDE)
<PAGE>
<PAGE>
The undersigned hereby instructs Chemical, as Trustee, [X] Please mark
to direct the vote as follows as the Time Warner Annual your votes
Meeting of Stockholders to be held on May 16, 1996 and this way
at any adjournment thereof, of all shares of Time Warner
Common Stock attributable to the undersigned's accounts
under TESOP (including PAYSOP and WCI ESOP accounts).
The Board of Directors recommends a vote FOR all nominees
in Item 1 and FOR proposals 2 and 3.
FOR WITHHELD
1. Election of Directors [ ] [ ]
(see reverse).
For, except vote withheld from the following nominee(s):
________________________________________________
FOR AGAINST ABSTAIN
2. Approval of the 1996 [ ] [ ] [ ]
Stock Option Plan for
Non-Employee Directors.
3. Approval of Auditors. [ ] [ ] [ ]
The Board of Directors recommends a vote AGAINST proposals 4 through 6.
FOR AGAINST ABSTAIN
4. Stockholder proposal [ ] [ ] [ ]
regarding chlorine-
bleached paper.
5. Stockholder proposal [ ] [ ] [ ]
regarding the Chair-
man of the Board.
FOR AGAINST ABSTAIN
6. Stockholder proposal [ ] [ ] [ ]
regarding staggered board.
7. To grant discretionary voting authority to
management persons regarding such
matters as may properly come before
the Meeting.
MEETING ATTENDANCE
Please check this box if you plan [ ]
to attend the Meeting.
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.
<PAGE>
<PAGE>
APPENDIX 4
CONFIDENTIAL VOTING INSTRUCTIONS
TIME WARNER EMPLOYEES' SAVINGS PLAN ("Savings Plan")
TIME WARNER THRIFT PLAN ("Thrift Plan")
CABLE EMPLOYEES SAVINGS PLAN ("Cable Plan")
Instructions solicited on behalf of the Board of Directors for
the Time Warner Inc. Annual Meeting on May 16, 1996.
Under the provisions of the Trusts relating to these three 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
(an "interest") held in the Time Warner Common Stock Fund under
any of those Plans is to be voted at the Annual Meeting of
Stockholders scheduled to be held on May 16, 1996. 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 13, 1996, your interest, if any,
in the Time Warner Common Stock Fund (a) attributable to accounts
transferred from the Time Incorporated Payroll-Based Employee
Stock Ownership Plan ("PAYSOP") to the Cable Plan will not be
voted and (b) attributable to the remainder of your Cable Plan
account,if any, and any other Plan accounts will be voted at the
Annual Meeting in the same proportion as interests for which
Fidelity has received voting instructions with respect to other
participants' Time Warner Common Stock Fund accounts maintained
in such respective Plan (excluding PAYSOP accounts in the Cable
Plan).
This instruction 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 16, 1996 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 (including
PAYSOP accounts in the Cable Plan), if any.
The Time Warner Inc. Board of Directors recommends a vote FOR all nominees in
item 1 and FOR proposals 2 and 3.
1. Election of Directors for terms expiring in 1999 - Beverly Sills
Greenough, Carla A. Hills, Reuben Mark and Francis T. Vincent, Jr.,
nominees.
FOR [ ] WITHHELD [ ]
|_| FOR, except vote withheld from the following nominee(s):
__________________________________________________________________
2. Approval of the 1996 Stock Option Plan for Non-Employee Directors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of Auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The Board of Directors recommends a vote AGAINST proposals 4 through 6.
4. Stockholder proposal regarding chlorine-bleached paper.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Stockholder proposal regarding the Chairman of the Board.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. Stockholder proposal regarding staggered board.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. To grant discretionary voting authority to management persons
regarding such 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
