Warner Media (TWX) DEFA14A Additional proxy soliciting materials

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

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))

¨ Definitive Proxy Statement

x Definitive Additional Materials

¨ Soliciting Material Pursuant to §240.14a-12

Time Warner Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x No fee required.

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3)                Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

¨ Fee paid previously with preliminary materials:

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

Explanatory Note: As part of Time Warner Inc.’s regular, ongoing engagement with shareholders, Time Warner is planning to have a number of in-person meetings with shareholders. The attached Proxy Statement Summary is intended to facilitate discussions at those meetings and presents information regarding the Company’s businesses, performance, executive compensation programs, and governance practices taken from the Company’s 2014 Proxy Statement.

2014 Proxy Statement Summary

May 2014

Table of Contents

2

Section

Page

Executive Summary

3

Company Overview

4

Executive Compensation Practices

8

Governance Practices

12

Executive Summary

Clear Operating Strategy

Sound Corporate &

Compensation Governance

Practices

Use leading scale and brands to create the best content

Lead digital transition of our industry

Expand internationally in faster-growing territories

Focus on operating and capital efficiency

Compensation Program

Closely Aligned With

Performance

Significant emphasis on variable performance-based compensation (93% of total target pay for CEO)

Mix of performance measures across varying time horizons

Challenging financial and strategic goals set at the beginning of each performance period

Informed by shareholder perspectives; following long-standing practice of ongoing shareholder

engagement, held conversations with shareholders representing > 40% of common stock in late 2013

93%

of

votes

cast

by

shareholders

in

2013

were

in

favor

of

named

executive

officer

compensation

Focused Business Model

Sustained Strong Financial

Performance

Global leader in media and entertainment with a focus on video content

Three ongoing operating divisions: Turner, HBO, and Warner Bros.

Time Inc. will be spun-off on June 6, 2014

Adjusted

Operating

Income

5-year

compound

annual

growth

rate

of

9.5%;

2013

growth

of

7.7%

to

a

record $6.6B

Free Cash Flow grew 20% in 2013, to $3.5B

Adjusted EPS 5-year compound annual growth rate of 21.6%; 2013 growth of 16.4% to $3.77

3

Board’s leadership structure and composition provide effective independent oversight

Committee follows strong governance practices to determine executive compensation

Overview of Our Businesses

4

Owns and operates leading cable television networks and related digital

properties in the U.S. and internationally, including TBS, TNT, CNN, Cartoon

Network, Adult Swim, truTV and Turner Sports

Turner accounted for 33% of the Company’s total revenues in 2013

Operates leading premium pay television services HBO and Cinemax, in the

U.S. and internationally

Home Box Office accounted for 17% of the Company’s total revenues in 2013

Global leader in entertainment with businesses that produce and distribute

feature films, television programming, home entertainment, comic

books, and

videogames, and license characters and brands for consumer products

Warner Bros. accounted for 39% of the Company’s total revenues in 2013

One of the largest magazine publishers based on readership and print

advertising revenues; also operates related websites and operations

Time Inc. accounted for 11% of the Company’s total revenues in 2013

The Company will spin off Time Inc. to its shareholders on June 6, 2014

Our Operating Strategy –

2013 Highlights

Lead digital transition of

our industry

Use leading scale and

brands to create the

best content

Expand internationally

in faster-growing

territories

Turner

o

TBS #1 ad-supported cable network in primetime among adults 18-34 and adults 18-49

o

Adult Swim #2 among adults 18-34

o

TNT aired four of the top 15 original series on ad-supported cable

Home Box Office

o

More Primetime Emmy awards than any other network for the 12th year in a row

Warner Bros.

o

#1 at the worldwide box office, with films grossing over $5 billion in 2013

o

#1 producer of primetime broadcast series with > 60 series airing for the 2013-2014 season

Continued to lead the development of new digital services and business models, such as TV

Everywhere (including HBO GO), UltraViolet, Disc-to-Digital and digital magazines

HBO

GO

active

users

grew

over

30%

and

average

monthly

usage

grew

at

a

double

digit

rate

Increased monetization of content through platforms such as subscription video on demand

Turner

launched

networks

in

Asia

and

Latin

America,

expanding

to

more

than

150

channels

in

over 200 countries

Home

Box

Office

launched

premium

services

in

Denmark,

Norway

and

India

and

purchased

its

partners’

interests in HBO Asia, HBO South Asia and HBO Nordic

5

Sustained Strong Financial Performance*

Free Cash Flow ($B)

Return on Invested Capital

1-YR Growth: 7.7%

3-YR CAGR: 6.9%

Adjusted Operating Income ($B)

Adjusted EPS

1-YR Growth: 16.4%

3-YR CAGR: 15.8%

6

* See Annex A for definitions of non-GAAP financial measures and reconciliations to the most

directly comparable GAAP financial measures.

$4.2

$4.6

$5.4

$5.9

$6.1

$6.6

2008

2009

2010

2011

2012

2013

2008

2009

2010

2011

2012

2013

$1.42

$1.82

$2.43

$2.86

$3.24

$3.77

2009

2010

2011

2012

2013

$2.9

$2.7

$2.7

$2.9

$3.5

20%

19%

19%

2011

2012

2013

Commitment to Driving Shareholder Value

Direct Returns of Capital ($B)

Total Shareholder Return

7

~$19.7B in returns

since 2009

$2.1

$3.0

$5.6

$4.3

$4.8

2009

2010

2011

2012

2013

Share Repurchases

Dividends

48.6%

133.1%

282.3%

32.4%

56.8%

128.2%

1-YR

3-YR

5-YR

Time Warner

S&P 500

Compensation Mix Focused on Components that

Drive Performance

Chairman / CEO Pay

Pay for Other NEOs

93% Variable

81% Variable

8

7%

36%

57%

13%

19%

43%

25%

Base Salary

Target Annual Cash Bonus

Target Value of Performance Long-Term

Incentive Awards (PSUs & Stock Options)

Base Salary

Target Annual Cash Bonus

Target Value of Performance Long-Term

Incentive Awards (PSUs & Stock Options)

Target Value of Long-Term Incentive

Awards (RSUs)

Performance Measures and 2013 Results

Incentive

Component

Time

Horizon

Performance

Measure

How TWX & NEOs Performed

on the Performance Measures

2013 Outcome Linked to

Performance

Annual Cash

Bonus

1-year

Adj. Divisional Pre-Tax Income

70%

8% growth in 2013

145% financial

performance rating

(maximum –

150%)

Free Cash Flow

20% growth in 2013

Annual progress on key long-term

strategic objectives

30%

Individual performance

achievements described on

pages 45-46 of the proxy

statement

Individual performance

ratings ranged from

130% to 140%

(maximum –

150%)

PSUs with a

Performance

Period Ending

in 2013

3-year

TSR relative to the S&P 500

130.7% TSR (2011-2013)

91

percentile

of

the

S&P

500

182.2% payout for

2011-2013 PSUs

Stock Options

4-year

vesting

period

TWX common stock price

1-year increase –

45.8%

3-year increase –

116.7%

5-year increase –

235.7%

Value realized

determined by long-

term stock price

performance

9

1

For PSUs, (1) TSR is calculated using the average closing price for the 30 trading days ending on the first and last days of the performance period and (2) the S&P 500 percentile rank calculation excludes companies that were removed

from

the

S&P

500

Index

during

the

performance

period

due

to

the

decline

of

such

companies’

stock

price

below

the

minimum

market

capitalization

standard

only

if

their

stock

is

no

longer

traded

on

a

national

exchange

Multiple performance measures that are important to investors

Varying time horizons

1

1

st

More

Challenging

Financial

Goals

for

2013

*

2013 Adjusted Divisional Pre-Tax Income and Free Cash Flow goals for annual cash bonuses were

significantly more challenging than for 2012

Higher growth required to achieve the same rating across entire range of outcomes

Adjusted Divisional Pre-Tax Income Growth 

Required for 150% Rating

Free Cash Flow

Required for 150% Rating

10

*

See

Annex

A

for

definitions

of

non-GAAP

financial

measures

and

reconciliations

to

the

most

directly

comparable

GAAP

financial

measures.

6%

9%

2012

2013

$2,565

$3,195

2012

2013

CEO Pay

The Company entered into a new five-year employment agreement with Mr. Bewkes in 2012, effective January 1,

2013.  Terms disclosed in the proxy statement filed last year

Structure of the agreement reflects input from shareholders

Increase in target compensation consisted only of long-term performance-based incentive opportunity

No increase in base salary or target bonus

No upfront grant of equity awards, and no further grants of time-vested RSUs

Removed exercise tax gross-up

Stock ownership requirement increased to 8x base salary (up from

5x)

2013 CEO compensation reflects the terms of the agreement

Mr. Bewkes’

2013 Compensation

Base Salary

No change

Annual Cash Bonus

No change in target bonus

Financial criteria:

o

Committee approved a 145% financial performance rating

Individual performance:

o

Committee approved a 140% individual performance rating

Long-Term Incentive

Awards

Target annual value of long-term incentive awards increased

Awards entirely performance-based, with 50% of target value in PSUs and 50% in stock options

11

Best Practices in Compensation Governance

Regular engagement with shareholders, with input reflected in compensation plan design

Emphasis on variable compensation with multiple performance metrics

Substantial share ownership and retention requirements

Limited personal benefits

Limit on annual equity dilution

No gross-ups, including for change-in-control

Clawback policy

Use of independent compensation consultant

Annual compensation-related risk review and disclosure

12

Sound Corporate Governance

Lead Independent Director

has robust authority, including authority over meeting agendas

Board Leadership Policy requires consideration of Board leadership at least annually, with disclosure to

shareholders on factors reviewed (see 2014 report posted at www.timewarner.com/leadership)

Stephen Bollenbach has served as Lead Independent Director since

May 2012

Director

Qualifications:

The

Board

believes

that

the

Company

is

best

served

by

a

board

of

directors

consisting

of

individuals who have a variety of complementary skills, professional experience, and backgrounds, and who bring

diverse viewpoints and perspectives to the Board

Board Independence:

All directors, other than the CEO, are independent and each Board committee consists solely

of independent directors

Board Refreshment:

The Board believes it is well-served by having non-employee directors with a mix of tenures

and expects that average tenure will generally not exceed 10 years

Director Accountability:

Board is elected annually (no classified board) under a majority-vote standard

Special

Meeting

Rights:

Shareholders

have

the

right

to

request

special

meetings

(15%

threshold)

ESG Disclosure:

The Company keeps the investment community informed on activities relating to environmental,

social and governance matters, including through updates on corporate social responsibility (additional details

at

www.timewarner.com/citizenship)

13

Non-GAAP Financial Measures -

Definitions

A-1

Annex A

“Adjusted Operating Income (Loss)” is defined as Operating Income (Loss) excluding the impact of noncash impairments of

goodwill, intangible and fixed assets; gains and losses on operating assets (other than deferred gains on sale-leasebacks); gains

and losses recognized in connection with pension and other postretirement benefit plan curtailments or settlements; external costs

related to mergers, acquisitions or dispositions, as well as contingent consideration related to such transactions, to the extent such

costs are expensed; and amounts related to securities litigation and government investigations.

“Adjusted Divisional Pre-Tax Income” is defined as Adjusted Operating Income plus Income (loss) from equity method

investments.

“Adjusted EPS” is defined as Diluted Income per Common Share from Continuing Operations attributable to Time Warner Inc.

common shareholders excluding noncash impairments of goodwill, intangible and fixed assets and investments; gains and losses on

operating assets (other than deferred gains on sale-leasebacks), liabilities and investments; gains and losses recognized in

connection with pension and other postretirement benefit plan curtailments or settlements; external costs related to mergers,

acquisitions, investments or dispositions, as well as contingent consideration related to such transactions, to the extent such costs

are expensed; amounts related to securities litigation and government investigations; and amounts attributable to businesses

classified as discontinued operations, as well as the impact of taxes and noncontrolling interests on the above items.

For periods ending on or after July 1, 2012, “Free Cash Flow” is defined as Cash Provided by Operations from Continuing

Operations plus payments related to securities litigation and government investigations (net of any insurance recoveries), external

costs related to mergers, acquisitions, investments or dispositions, to the extent such costs are expensed, contingent consideration

payments made in connection with acquisitions, and excess tax benefits from equity instruments, less capital expenditures, principal

payments on capital leases and partnership distributions, if any.  For periods ending prior to that date, “Free Cash Flow” is defined as

Cash Provided by Operations from Continuing Operations plus payments related to securities litigation and government

investigations (net of any insurance recoveries), external costs related to mergers, acquisitions, investments or dispositions, to the

extent such costs are expensed, and excess tax benefits from equity instruments, less capital expenditures, principal payments on

capital leases and partnership distributions, if any. A change to the definition of Free Cash Flow for periods prior to July 1, 2012 to

adjust for contingent consideration payments made in connection with acquisitions would have had no impact on the reported Free

Cash Flow for such periods.

Year Ended December

31,

2013

2012

2011

2010

2009

2008

Adjusted Operating Income

$

6,599

$

6,126

$

5,864

$

5,400

$

4,618

$

4,193

Asset impairments

(140)

(186)

(44)

(20)

(85)

(7,213)

Gain (loss) on operating assets, net

142

9

7

70

(33)

(3)

Other

(1)

4

(31)

(22)

(22)

(30)

(21)

Operating Income

$

6,605

$

5,918

$

5,805

$

5,428

$

4,470

$

(3,044)

Non-GAAP Financial Measures -

Reconciliations

A-2

Reconciliation of Adjusted Operating Income to Operating Income

(In millions; Unaudited)

(1)

For 2013 and 2012, the definition of Other includes gains and losses recognized in connection with pension and other postretirement benefit plan curtailments or settlements; external costs related to

mergers,

acquisitions

or

dispositions;

and

amounts

related

to

securities

litigation

and

government

investigations.

For

2011,

the

definition

of

Other

includes

external

costs

related

to

mergers,

acquisitions or dispositions; and amounts related to securities litigation and government investigations. There were no pension and other postretirement benefit plan curtailments or settlements in

2011. For

2010, 2009 and 2008,

the

definition

of

Other

includes

only

amounts

related

to

securities

litigation

and

government

investigations.

Reconciliation of Adjusted EPS to Diluted Income Per Common Share from Continuing Operations

(Unaudited)

Year Ended December

31,

2013

2012

2011

2010

2009

2008

Diluted income per common share from continuing operations

$

3.77

$

3.00

$

2.71

$

2.27

$

1.74

$

(4.27)

Less Impact of items affecting comparability on diluted income

per common share from continuing operations

—

(0.24)

(0.15)

(0.16)

(0.08)

(5.69)

Adjusted diluted income per common share from continuing

operations

$

3.77

$

3.24

$

2.86

$

2.43

$

1.82

$

1.42

A-3

Reconciliation of Cash Provided by Operations from Continuing Operations to Free Cash Flow

(In millions; Unaudited)

Year Ended December

31,

2013

2012

2011

2010

2009

Cash provided by operations from continuing operations

$

3,716

$

3,476

$

3,448

$

3,314

$

3,386

Add payments related to securities litigation and government

investigations

—

3

8

22

30

Add

external

costs

related

to

mergers,

acquisitions,

investments

or

dispositions and contingent consideration payments

232

33

14

—

21

Add excess tax benefits from equity instruments

179

83

22

7

1

Less capital expenditures

(602)

(643)

(772)

(631)

(547)

Less principal payments on capital leases

(9)

(11)

(12)

(14)

(18)

Free Cash Flow

$

3,516

$

2,941

$

2,708

$

2,698

$

2,873

Non-GAAP Financial Measures -

Reconciliations

A-4

Non-GAAP Financial Measures -

Reconciliations

Reconciliation of Return on Invested Capital (ROIC)

(In millions; Unaudited)

Reconciliation of Operating Income to NOPAT

Year Ended December 31,

2013

2012

2011

Operating Income

$

6,605

$

5,918

$

5,805

Asset impairments

140

186

44

Loss on Operating Assets

(142)

(9)

(7)

Other operating income items

(4)

31

22

Adjusted Operating Income

6,599

6,126

5,864

Add Amortization expense

251

248

269

Adjusted Operating Income before amortization expense

6,850

6,374

6,133

Less

Income

taxes

(1)

(2,261)

(2,167)

(2,024)

Add equity loss, net of taxes

(152)

(183

)

(79)

Adjust for items affecting comparability relating to equity

method investments

30

94

1

NOPAT

(2)

$

4,467

$

4,118

$

4,031

A-5

Reconciliation of Total Assets to Capital Employed

Non-GAAP Financial Measures -

Reconciliations

(1)

Calculated

using

the

Company’s

adjusted

effective

tax

rate

—

33%

for

2013,

34%

for

2012

and

33%

for

2011.

The

Company’s

adjusted

effective

tax

rate

reflects

the

impact

of

the

items

affecting

comparability on the Company’s Income from continuing operations as set forth as set forth below.

2013

2012

2011

Actual

Adjustments

As Adjusted

Actual

Adjustments

As Adjusted

Actual

Adjustments

As Adjusted

Income from continuing

operations before

income taxes

5,303

            39

      5,264  

4,448

       (335)

4,783

4,359

       (201)

4,560

Income tax provision

(1,749)

           (34)     (1,715)

(1,526)

        100

  (1,626)

(1,477)

          43

  (1,520)

Effective Tax rate

          33%

           87%

        33%

       34%

         30%

34%

       34%

         21%

33%

Year Ended December

31,

2013

2012

2011

2010

Total Assets

$

67,994

$

68,089

$

67,801

$

66,732

Less:

Deferred tax assets

(447)

(474

)

(663

)

(581)

Total current liabilities of continuing

operations less debt due within one year

(8,317)

(9,050)

(8,899

)

(8,800

)

Excess cash

(3)

(362)

(1,341)

(1,976

)

(2,163)

Capital employed

58,868

57,224

56,263

55,188

Less Purchase Price Adjustments

(34,888)

(35,060)

(35,292)

(35,528)

Capital employed excluding PPA

$

23,980

$

22,164

$

20,971

$

19,660

Average Capital Employed

(5)

$

58,046

$

56,744

$

55,726

Average Capital Employed excluding PPA

(5)

$

23,072

$

21,568

$

20,316

ROIC

(6)

8%

7%

7%

ROIC excluding PPA

(6)

19%

19%

20%

(4)

A-6

Non-GAAP Financial Measures -

Reconciliations

Year

Ended

December

31,

2013

2012

2011

Items Affecting Comparability

Asset impairments

$

(140)

$

(186)

$

(44)

Gains on operating assets, net

142

9

7

Other

operating

income

items

(a)

4

(31)

(22)

Gains (losses) on investments

61

(30)

(136)

Other

Amounts related to separation of Time Warner Cable Inc.

3

4

(5)

Amounts related to separation of Warner Music Group

(1)

(7)

—

Items affecting comparability relating to equity method investments

(30)

(94)

(1)

Total other

(28)

(97)

(6)

Total of above items affecting comparability

39

(335)

(201)

Income

tax

impact

of

above

items

(b)

(34)

100

43

Impact of items affecting comparability on income attributable to Time Warner Inc.

shareholders

$

5

$

(235)

$

(158)

(a)

For 2013 and 2012, the definition of Other operating income items includes gains and losses recognized in connection with pension and other postretirement benefit plan curtailments or

settlements; external costs related to mergers, acquisitions or dispositions; and amounts related to securities litigation and government investigations.  For 2011, the definition of Other

operating income items includes external costs related to mergers, acquisitions or dispositions; and amounts related to securities litigation and government investigations.

(b)

For the year ended December 31, 2012, includes $42 million that reflects the reversal of a valuation allowance related to the usage of capital loss carryforwards in connection with the

2013 sale of the Company’s investment in a joint venture in Japan.  The sale of such investment closed in the first quarter of 2013.

(2)

Net operating profit after taxes (“NOPAT”) represents the Adjusted Operating Income before amortization expense, net of tax at the Company’s adjusted effective tax rate plus the equity income

(loss), net of taxes

from

investments

accounted

for

under

the

equity

method

adjusted

for

the

Company’s

share

of

items

affecting

comparability

relating

to

such

equity

method

investments.

(3)

Excess cash represents the amount of cash in excess of $1.5 billion.

(4)

Purchase Price Adjustments (“PPA”) reflect the net outstanding goodwill and intangible assets recognized in connection with the merger of Time Warner Inc. (now known as Historic TW Inc.) with

America Online,

Inc.

(now

known

as

Historic

AOL

LLC)

in

2001

and

the

restructuring

of

Time

Warner

Entertainment

Company,

L.P.

in

2003.

(5)

Average Capital Employed and Average Capital Employed excluding PPA are calculated using the respective amounts at December 31, 2013, 2012, 2011 and 2010 divided by two.

(6)

Return

on

Invested

Capital

(“ROIC”)

is

calculated

as

NOPAT

divided

by

Average

Capital

Employed

and

ROIC

excluding

PPA

is

calculated

as

NOPAT

divided

by

Average

Capital

Employed

excluding

PPA.