1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Under Rule 14a-12
TIME WARNER INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
[Time Warner Logo]
March 30, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of Time Warner Inc. on Thursday, May 18, 2000, beginning at 10:00 A.M., local
time, at the Apollo Theatre, 253 West 125th Street, New York, New York 10027. I
look forward to greeting those of you who are able to attend the Meeting.
Please vote on all the matters listed in the enclosed Notice of Annual
Meeting of Stockholders. Your Board of Directors recommends a vote "FOR" the
proposals listed in the Notice and described in the enclosed Proxy Statement.
Whether or not you plan to attend in person, it is important that your
shares be represented and voted at the Meeting. After reading the enclosed
Notice and Proxy Statement, please sign, date and mail the proxy card or voting
instructions in the envelope provided. This year, many stockholders will have a
choice of voting by telephone, over the Internet or by using a traditional proxy
or instruction card. Check your proxy materials to see which options are
available to you.
Because of security procedures required for access to the Apollo Theatre,
if you plan to attend the Meeting, you must bring the Admission Ticket (which
admits two people) included with the Notice and Proxy Statement or a Time Warner
employee identification card. YOU WILL NOT BE PERMITTED INTO THE MEETING WITHOUT
ONE OF THESE. If you have not received an Admission Ticket, please contact the
Shareholder Relations Department at (212) 484-6971.
In the near future, we expect to send separate materials in connection with
a special meeting of stockholders to consider and vote on Time Warner's merger
with America Online, Inc. I am very excited about this transaction and the
opportunities it will provide for our company. At the Annual Meeting, I plan to
provide an update on our progress toward finalizing this momentous combination.
Sincerely,
/s/ Gerald M. Levin
GERALD M. LEVIN
Chairman of the Board
and Chief Executive Officer
3
TIME WARNER INC.
75 Rockefeller Plaza
New York, NY 10019
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2000
The Annual Meeting (the "Annual Meeting") of Stockholders of Time Warner
Inc. (the "Company") will be held on Thursday, May 18, 2000 at the Apollo
Theatre, 253 West 125th Street, New York, New York 10027, commencing at 10:00
A.M., local time, for the following purposes:
1. To elect 11 directors for a term of one year and until their
successors are duly elected and qualified;
2. To approve the appointment by the Board of Directors of the firm of
Ernst & Young LLP as independent auditors of the Company for 2000; and
3. To transact such other business as may properly come before the
Annual Meeting.
Only holders of the Company's common stock and preferred stock at the close
of business on March 23, 2000, the record date, are entitled to vote on some or
all of the matters listed in this Notice of Annual Meeting.
TIME WARNER INC.
CHRISTOPHER P. BOGART
Secretary
March 30, 2000
THE ANNUAL MEETING WILL START PROMPTLY AT 10:00 A.M. TO AVOID DISRUPTION,
ADMISSION MAY BE LIMITED ONCE THE MEETING STARTS. PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED PRE-ADDRESSED REPLY
ENVELOPE OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET, WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING. ANY RECORD HOLDER WHO IS PRESENT AT THE
MEETING MAY VOTE IN PERSON INSTEAD OF BY PROXY, THEREBY CANCELLING ANY PREVIOUS
PROXY. YOU MAY NOT APPOINT MORE THAN THREE PERSONS TO ACT AS YOUR PROXY AT THE
MEETING.
YOU WILL BE REQUIRED TO SHOW THE ENCLOSED ADMISSION TICKET OR
AN EMPLOYEE ID CARD TO ATTEND THE ANNUAL MEETING.
4
TIME WARNER INC.
75 Rockefeller Plaza
New York, NY 10019
PROXY STATEMENT
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Time Warner Inc., a Delaware corporation
(the "Company"), for use at the Annual Meeting of the Company's stockholders
(the "Annual Meeting") to be held on Thursday, May 18, 2000 at the Apollo
Theatre, 253 West 125th Street, New York, New York 10027, commencing at 10:00
A.M., local time, and at any adjournment or postponement, for the purpose of
considering and acting upon the matters set forth in the accompanying Notice of
Annual Meeting of Stockholders.
This Proxy Statement and accompanying forms of proxy and voting
instructions are first being mailed on or about April 3, 2000 to stockholders
entitled to vote at the Annual Meeting.
VOTING AT THE ANNUAL MEETING; RECORD DATE; CONFIDENTIAL VOTING
Only holders of record of the Company's voting stock at the close of
business on March 23, 2000, the record date, are entitled to notice of and to
vote at the Annual Meeting. At that time, the number of shares entitled to vote
and their voting rights were:
- 1,197,827,285 shares of Common Stock, par value $.01 per share ("Common
Stock"), each of which is entitled to one vote on all matters properly
submitted at the Annual Meeting;
- 114,123,884 shares of Series LMCN-V Common Stock, par value $.01 per
share ("Series LMCN-V Stock"), each of which is entitled to 1/100 of a
vote on the election of directors; and
- 5,438,033 shares of four series of Convertible Preferred Stock, par value
$.10 per share, consisting of 3,124,829 shares of Series E Preferred,
4,496 shares of Series F Preferred, 700,000 shares of Series I Preferred
and 1,608,708 shares of Series J Preferred (collectively, the "Voting
Preferred Stock"), each of which is entitled to four votes on all matters
properly submitted at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast at the Annual Meeting is necessary to constitute a
quorum.
In accordance with the Company's confidential voting policy, all
stockholder proxies, ballots and voting materials will be confidentially
inspected and tabulated by independent inspectors of election and will not be
disclosed to the Company except under certain limited circumstances.
REQUIRED VOTE
- A plurality of the votes duly cast is required for the election of
directors.
- The affirmative vote of a majority of the votes duly cast by the holders
of Common Stock and Voting Preferred Stock, voting together as a single
class, is required to approve the other matters to be acted upon at the
Annual Meeting.
An abstention is deemed "present" but is not deemed a "vote cast." As a
result, abstentions and broker "non-votes" are not included in the tabulation of
the voting results on the election of directors or issues requiring approval of
a majority of the votes cast and, therefore, do not have the effect of
5
votes in opposition. A broker "non-vote" occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power on that item and has not
received instructions from the beneficial owner. Broker "non-votes" and the
shares as to which a stockholder abstains are included in determining whether a
quorum is present.
PROXIES
All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting, and not revoked, will be voted as
instructed on those proxies. If no instructions are indicated, the shares will
be voted as recommended by the Board of Directors. No stockholder of record may
appoint more than three persons to act as his or her proxy at the Annual
Meeting.
If any other matters are properly presented at the Annual Meeting for
consideration, the persons named in the enclosed form of proxy will have
discretion to vote on those matters in accordance with their own judgment to the
same extent as the person signing the proxy would be entitled to vote. In
accordance with the Company's By-laws, the Annual Meeting may be adjourned,
including by the Chairman, in order to permit the solicitation of additional
proxies. The Company does not anticipate that any other matters will be raised
at the Annual Meeting.
Any stockholder of record may revoke a proxy at any time before it is voted
by (i) filing with the Secretary of the Company, at or before the taking of the
vote at the Annual Meeting, a written notice of revocation or a duly executed
proxy, in either case later dated than the prior proxy relating to the same
shares or (ii) attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not of itself revoke a proxy). Any written
notice of revocation or subsequent proxy should be delivered to Time Warner
Inc., 75 Rockefeller Plaza, New York, NY 10019, Attention: Secretary, or hand
delivered to the Secretary, before the taking of the vote at the Annual Meeting.
To revoke a proxy previously submitted electronically through the Internet or by
telephone, a stockholder may simply submit a proxy at a later date, in which
case, the later submitted proxy will be recorded and the earlier proxy will be
revoked.
A copy of the Company's Annual Report to Stockholders for the year 1999,
including financial statements, has been sent simultaneously with this Proxy
Statement or has been previously provided to all stockholders entitled to vote
at the Annual Meeting.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the election of the nominees
for election as directors and FOR approval of the appointment of Ernst & Young
LLP as independent auditors of the Company for 2000.
CORPORATE GOVERNANCE
ELECTION OF DIRECTORS
The Company believes that, in the best interest of its stockholders, a
majority of the members of its Board of Directors should, in the Board's
judgment, have no direct or indirect material economic relationship with the
Company other than as a result of customary directors' compensation or stock
ownership ("Unaffiliated Directors"). Under the Company's By-laws, when the
Board sets the slate of director nominees for election at an annual meeting of
stockholders, it must determine that a majority of its members will be
independent directors within the meaning of the By-laws, assuming the election
of such slate. The Company also has a policy limiting the eligibility for
nomination by the Board of Directors as a non-employee director to persons who
would be less than 70 years old at the time of election. As a result of this
policy, Merv Adelson and Beverly Sills Greenough are retiring as members of the
Board of Directors at the Annual Meeting.
2
6
The nominees for director at the Annual Meeting will be elected to serve
for a one-year term until the next annual meeting of stockholders and until
their successors have been duly elected and qualified or until their earlier
death, resignation or retirement. Each of the nominees is currently a director
of the Company, and was elected by the stockholders. Assuming the election of
these nominees, there will be 11 directors, of whom eight will be Unaffiliated
Directors and three will be Affiliated Directors. On January 10, 2000, the
Company and America Online, Inc. ("America Online") agreed to a merger (the "AOL
Merger Transaction") pursuant to which the Company and America Online will each
become a wholly owned subsidiary of a new holding company named AOL Time Warner
Inc. Upon completion of the AOL Merger Transaction, the two companies have
agreed that the Board of Directors of the new combined company will initially
consist of 16 members, with the Company and America Online each selecting eight
members. As a result, if the AOL Merger Transaction is completed before the
Company's next annual meeting of stockholders, the nominees listed below, if
elected, would not serve for a full year and only eight of them would be
selected to serve on the Board of Directors of the combined company.
The persons named in the enclosed proxy intend to vote such proxy for the
election of each of the 11 nominees named below, unless the stockholder
indicates on the proxy that the vote should be withheld from any or all of the
nominees.
The Company expects each nominee for election as a director at the Annual
Meeting to be able to accept such nomination. If any nominee is unable to accept
such nomination, proxies will be voted in favor of the remainder of those
nominated and may be voted for substitute nominees.
Set forth below is the principal occupation of, and certain other
information regarding, the 11 nominees.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
- ---------------------------------- --- --------------------------
J. Carter Bacot................... 67 RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE BANK
1996 OF NEW YORK. Mr. Bacot served as Chairman and Chief
Executive Officer of The Bank of New York Company, Inc.
and Chairman of The Bank of New York from 1982 until
February 8, 1998 and currently serves as a director and
consultant. He is also a director of Associates First
Capital Corporation and Venator Group, Inc. Mr. Bacot
is an Unaffiliated Director.
Stephen F. Bollenbach............. 57 PRESIDENT AND CHIEF EXECUTIVE OFFICER OF HILTON HOTELS
1997 CORPORATION. Mr. Bollenbach has served as President and
Chief Executive Officer of Hilton Hotels Corporation
since February 1996. Prior to that, Mr. Bollenbach was
Senior Executive Vice President and Chief Financial
Officer of The Walt Disney Company (entertainment) from
April 1995 until February 1996 and President and Chief
Executive Officer of Host Marriott Corporation
(lodging) from October 1993 to April 1995. He is also a
director of Catellus Development Corporation, Hilton
Hotels Corporation, Kmart Corporation and Park Place
Entertainment Corporation (Chairman). Mr. Bollenbach is
an Unaffiliated Director.
3
7
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
- ---------------------------------- --- --------------------------
John C. Danforth.................. 63 PARTNER, BRYAN CAVE LLP AND FORMER UNITED STATES SENATOR.
1998 Mr. Danforth has been a partner at Bryan Cave LLP
(attorneys) since January 1995. Prior to that, Mr.
Danforth served as a United States Senator representing
the state of Missouri from 1976 until January 1995. He
is also a director of Cerner Corporation and The Dow
Chemical Company. Mr. Danforth is an Unaffiliated
Director.
Gerald Greenwald.................. 64 CHAIRMAN EMERITUS OF UAL CORPORATION AND UNITED AIRLINES,
1997 INC. Mr. Greenwald served as Chairman and Chief
Executive Officer of UAL Corporation (airline holding
company) and United Airlines, Inc. from July 1994 until
July 1999. He is also a director of Aetna Inc. Mr.
Greenwald is an Unaffiliated Director.
Carla A. Hills.................... 66 CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF HILLS & COMPANY
1993 AND FORMER UNITED STATES TRADE REPRESENTATIVE.
Ambassador Hills became Chairman and Chief Executive
Officer of Hills & Company (international trade and
investment consultants) in March 1993, having served in
President Bush's Cabinet as the United States Trade
Representative from February 1989 to January 20, 1993.
Ambassador Hills is also a director of American
International Group, Inc., Chevron Corporation and
Lucent Technologies Inc. Ambassador Hills is an
Unaffiliated Director.
Gerald M. Levin................... 60 CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF THE
1988 COMPANY. Mr. Levin became Chairman of the Board and
Chief Executive Officer of the Company on January 21,
1993 having served in other executive positions at the
Company prior to that. He previously served as a
director of the Company from 1983 until January 1987.
He is also a member of the Board of Representatives of
Time Warner Entertainment Company, L.P. and a director
of The New York Stock Exchange, Inc. Mr. Levin is an
Affiliated Director.
Reuben Mark....................... 61 CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF COLGATE-
1993 PALMOLIVE COMPANY. 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
Citigroup Inc. and Pearson plc. Mr. Mark is an
Unaffiliated Director.
4
8
NAME AND YEAR FIRST
BECAME A DIRECTOR OF PRINCIPAL OCCUPATION
THE COMPANY AGE DURING THE PAST FIVE YEARS
- ---------------------------------- --- --------------------------
Michael A. Miles.................. 60 FORMER CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
1995 OF PHILIP MORRIS COMPANIES INC. Mr. Miles served as
Chairman of the Board and Chief Executive Officer of
Philip Morris Companies Inc. (consumer products) from
September 1991 until July 1994. He is also a director
of The Allstate Corporation, Dell Computer Corporation,
The Interpublic Group of Companies, Inc., Morgan
Stanley, Dean Witter, Discover & Co. and Sears, Roebuck
and Co. and is a Special Limited Partner in Forstmann
Little & Co. Mr. Miles is an Unaffiliated Director.
Richard D. Parsons................ 51 PRESIDENT OF THE COMPANY. Mr. Parsons became President of
1991 the Company 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 Citigroup
Inc., Estee Lauder Companies, Inc. and Philip Morris
Companies Inc. and a member of the Board of
Representatives of Time Warner Entertainment Company,
L.P. Mr. Parsons is an Affiliated Director.
R.E. Turner....................... 61 VICE CHAIRMAN OF THE COMPANY. Mr. Turner became Vice
1996 Chairman of the Company upon consummation of the
Company's merger with Turner Broadcasting System, Inc.
("TBS") on October 10, 1996. Prior to that, Mr. Turner
served as Chairman of the Board and President of TBS
from 1970. Mr. Turner is an Affiliated Director.
Francis T. Vincent, Jr............ 61 CHAIRMAN OF VINCENT ENTERPRISES. Mr. Vincent has been a
1993 private 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
Arkansas General Industries, Inc., General Cigar
Holdings, Inc., Oakwood Homes Corporation and Westfield
America Corporation. Mr. Vincent is an Unaffiliated
Director.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors 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 the five standing Board committees, except the Values and
Human Development Committee, is composed entirely of Unaffiliated Directors. The
current members and functions of the Board's committees are as follows:
Audit Committee. The Audit Committee is composed entirely of Unaffiliated
Directors. Its members are Messrs. Bacot, Danforth and Miles (Chair). The
functions of the Audit Committee, which met three times during 1999, include the
review of (i) the professional services and independence of the Company's
independent auditors; (ii) material changes in accounting policies and
5
9
financial reporting practices and material developments in financial reporting
standards in consultation with the independent auditors and management; (iii)
the plan and scope of the annual external audit as recommended by the
independent auditors; (iv) the adequacy of the Company's internal accounting
controls and the results of material internal audits in consultation with the
independent auditors and the Company's chief internal auditor; (v) the Company's
annual financial statements and the results of each external audit in
consultation with management and the independent auditors; and (vi) the auditing
and accounting principles and practices to be used in the preparation of the
Company's financial statements in consultation with the Company's independent
auditors and the Company's principal financial officer and principal accounting
officer. The Audit Committee also oversees the Company's compliance program.
The Audit Committee has authority to consider the qualification of the
Company's independent auditors and make recommendations to the Board of
Directors as to their selection, approve any material non-audit services to be
rendered to the Company by such independent auditors and review and resolve any
differences of opinion between such independent auditors and management relating
to the preparation of the financial statements.
Compensation Committee. The Compensation Committee is composed entirely of
Unaffiliated Directors. Its members are Mr. Bollenbach, Ambassador Hills and
Messrs. Mark (Chair) and Vincent. The Compensation Committee, which met five
times during 1999, has authority to engage independent compensation consultants
to assist the Committee in its review of the Company's executive compensation.
The Compensation Committee also has authority, as delegated by the Board of
Directors, to review and approve the Company's employee benefit plans and
administer its executive compensation plans. The Compensation Committee, after
receiving and considering the recommendations of the Company's Chief Executive
Officer, approves the salaries and incentive compensation (including the grant
of stock options) and employment arrangements 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. Miles and Vincent (Chair). The Nominating
and Governance Committee, which met twice during 1999, has authority to review
the size, composition, functioning and level of compensation of the Board of
Directors and recommends nominees to serve on the Board of Directors and
considers the qualifications of candidates for election as directors. Nominees
to the Board of Directors are selected on the basis of recognized achievements
and their ability to bring various skills, experience and diverse perspectives
to the deliberations of the Board of Directors. In carrying out its
responsibilities, the Nominating and Governance Committee will consider
candidates recommended by other directors, employees and stockholders. Written
suggestions for nominees should be sent to the Secretary of the Company.
The Company's By-laws provide that any stockholder of record who is
entitled to vote for the election of directors may nominate persons for election
as directors only if timely written notice in proper form of the intent to make
a nomination at a meeting of stockholders is received by the Secretary of Time
Warner at 75 Rockefeller Plaza, New York, NY 10019. To be timely and in proper
form under the By-laws, the notice generally must be delivered not less than 70
nor more than 120 days prior to the date of the meeting at which directors are
to be elected and must contain prescribed information about the proponent and
each nominee, including such information about each nominee as would have been
required to be included in a proxy statement filed pursuant to the rules of the
Securities and Exchange Commission had such nominee been nominated by the Board
of Directors.
Finance Committee. The Finance Committee is composed entirely of
Unaffiliated Directors. Its members are Messrs. Adelson (Chair), Bacot,
Bollenbach and Greenwald. The Finance Committee, which met twice during 1999,
has authority to review and make recommendations to the Board of
6
10
Directors concerning the financial structure and financial condition of the
Company and its subsidiaries, including annual budgets, long-term financial
plans, corporate borrowings, investments, capital expenditures, long-term
commitments and the issuance of stock. The Finance Committee also has the
authority to approve such matters that are consistent with the general financial
policies and direction from time to time determined by the Board of Directors.
Values and Human Development Committee. The members of the Values and
Human Development Committee are Mr. Danforth, Mrs. Greenough (Chair) and Messrs.
Greenwald, Mark and Parsons. The Committee, which met once during 1999, has the
mandate to provide guidance and oversight to the Company's management in its (i)
development and articulation of the Company's core values, commitments and
social responsibilities; (ii) development of strategies for ensuring the
Company's involvement in the communities in which it does business; (iii)
establishment of a strategy for developing its human resources and leadership
for the future; and (iv) efforts to find practical ways to increase workforce
diversity at all levels and to evaluate the Company's performance in advancing
the goal of greater workforce diversity.
During 1999, the Board of Directors met eight times and no director
attended fewer than 75% of the total number of meetings of the Board of
Directors and the committees of which he or she was a member.
DIRECTOR COMPENSATION
During 1999, each Unaffiliated Director received $80,000 as an annual
retainer, half of which was paid in cash (unless deferred by the director) and
the remaining half in shares of Common Stock under the 1988 Restricted Stock
Plan for Non-Employee Directors (the "Directors' Restricted Stock Plan"), and an
award of options covering 3,000 shares of Common Stock under the Time Warner
1996 Stock Option Plan for Non-Employee Directors (the "Directors' Option
Plan"). No additional compensation is paid for service as a committee chair or
member or for attendance at special meetings of the Board or a Board committee.
Unaffiliated Directors are 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' Restricted Stock Plan, which was approved by
stockholders of the Company, each Unaffiliated Director has generally been
issued an annual grant of shares of Common Stock ("Restricted Shares") having a
market value in 1999 of $40,000. During the restriction period provided under
the Directors' Restricted Stock Plan, the Unaffiliated Director votes the
Restricted Shares, receives and retains all regular cash dividends and exercises
all other rights as a holder of Common Stock, but may not dispose of the
Restricted Shares, and the Company retains custody of the stock certificates and
all distributions other than regular cash dividends.
The restriction period ends, and all Restricted Shares (including any
distributions retained by the Company) vest, upon the termination of the
Unaffiliated 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 Unaffiliated
Director leaves the Board of Directors for any other reason, then all his or her
Restricted Shares are forfeited to the Company. In 1999, each Unaffiliated
Director received 545 Restricted Shares under the Directors' Restricted Stock
Plan.
The Company also has a deferred compensation plan for Unaffiliated
Directors. Under this plan, Unaffiliated 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
7
11
deferred are payable in a lump-sum or in installments, generally upon attainment
of age 70 or cessation of service as a director of the Company for certain
enumerated reasons.
Each Unaffiliated Director currently receives an annual award of
nonqualified stock options ("Options") to purchase 3,000 shares of Common Stock
(and related limited stock appreciation rights ("Limited SARs") that may be
exercised only during a prescribed period following the occurrence of certain
transactions involving a change in control of the Company) pursuant to the
Directors' Option Plan. Under the Directors' Option Plan, which was approved by
the Company's stockholders, the Options and related Limited SARs are
automatically awarded on the tenth New York Stock Exchange trading day after
each annual meeting of the Company's stockholders. The purchase price of the
shares of Common Stock covered by each Option is equal to the fair market value
of the Common Stock on the date of grant. Each Option (and the related Limited
SAR) becomes exercisable (cumulatively to the extent not previously exercised)
at the rate of one-third of the aggregate number of shares covered thereby at
the end of each successive one-year period following the date of grant and
expires ten years after the date of grant.
The Directors' Option Plan also provides that awards become immediately
exercisable in full (i) when the director leaves the Board of Directors for any
reason, except that upon removal for cause all unexercised Options immediately
terminate, or (ii) if certain "change-in-control" transactions occur. Options
remain exercisable for one year after the director dies and for five years after
the director leaves the Board of Directors for any reason other than death or
removal for cause (but not beyond the ten-year term of the Option).
Upon approval by the Company's Board of Directors on January 9, 2000 of the
AOL Merger Transaction, all of the Restricted Shares then owned by the
directors, by their terms, vested and became free of restrictions and all of
their then outstanding Options, by their terms, vested and became exercisable.
Future awards of Restricted Shares and Options will be subject to the regular
vesting schedules pursuant to the Plans.
As discussed in the Company's proxy statements in prior years, the
Directors' Option Plan replaced the Company's retirement plan (the "Directors'
Retirement Plan") for its Unaffiliated Directors and no additional benefits have
accrued under the Directors' Retirement Plan since May 1996. Under the
Directors' Retirement Plan, each Unaffiliated Director will receive an annual
payment of $30,000 for the number of years of service as an Unaffiliated
Director through May 16, 1996. The annual payments commence after the later of
stepping down from the Board of Directors or attaining age 60 (or earlier in the
event such Unaffiliated Director becomes disabled). Service as an outside
director of Warner Communications Inc. prior to July 24, 1989 is considered
credited service under the Directors' Retirement Plan. The Chief Executive
Officer of the Company may accelerate payment of the annual retirement benefit
accrued to an Unaffiliated Director under the Plan.
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth as of February 1, 2000 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, 2000, the approximate aggregate market value of the
Common Stock held by certain persons as set forth in the table below (exclusive
of stock options) was as follows: ten current Unaffiliated Directors -- $124
million; and all current directors -- $8.8 billion. In addition, as of December
31, 1999, the trusts maintained pursuant to the Company's qualified employee
benefit
8
12
plans, other than pension plans, held Common Stock valued at approximately $2.5
billion in accounts for the benefit of employees of the Company and its
subsidiaries.
COMMON STOCK BENEFICIALLY OWNED(1)
-------------------------------------
NUMBER OF OPTION PERCENT OF
NAME SHARES SHARES(2) CLASS
---- --------- --------- ----------
Merv Adelson........................................... 1,402,921 12,000 *
J. Carter Bacot........................................ 9,635 9,000 *
Stephen F. Bollenbach.................................. 2,635 9,000 *
Richard J. Bressler (9)................................ 11,298 892,216 *
John C. Danforth (3)................................... 7,555 6,000 *
Beverly Sills Greenough (4)............................ 46,809 12,000 *
Gerald Greenwald (5)................................... 19,435 9,000 *
Peter R. Haje (9)...................................... 20,021 1,530,000 *
Carla A. Hills......................................... 10,209 12,000 *
Gerald M. Levin (6)(9)................................. 886,962 7,877,500 *
Reuben Mark............................................ 25,009 12,000 *
Michael A. Miles....................................... 22,703 12,000 *
Richard D. Parsons (9)................................. 22,650 2,050,000 *
R.E. Turner (7)(9)..................................... 110,823,084 4,175,000 9.6%
Francis T. Vincent, Jr. (8)............................ 40,109 12,000 *
All current directors and executive officers (21
persons) as a group (3)-(9).......................... 113,383,922 16,266,068 10.8%
- ---------------
* Represents beneficial ownership of less than one percent of issued and
outstanding stock on February 1, 2000.
(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 of the Securities and Exchange Commission
("SEC"). Unless otherwise indicated, beneficial ownership includes both sole
voting and sole investment power. This table does not include, unless
otherwise indicated, any shares of Common Stock or other equity securities
of the Company which may be held by pension and profit-sharing plans of
other corporations or endowment funds of educational and charitable
institutions for which various directors and officers serve as directors or
trustees. As of February 1, 2000, the only equity securities of the Company
beneficially owned by the named persons or group were shares of Common Stock
and options to purchase Common Stock.
(2) Reflects shares of Common Stock subject to options to purchase Common Stock
issued by the Company which, on February 1, 2000, were unexercised but were
exercisable within 60 days from that date. These shares are excluded from
the column headed "Number of Shares." 196,000 of the stock options shown for
Mr. Bressler and 60,000 of the stock options shown for Mr. Haje have each
been transferred to a limited partnership owned by their respective
families. As a result of the Board of Directors' approval of the AOL Merger
Transaction on January 9, 2000, all then outstanding options, by their
terms, vested and became exercisable.
(3) Includes 500 shares of Common Stock held by a trust of which Mr. Danforth's
wife is the trustee and sole beneficiary, as to which Mr. Danforth disclaims
any beneficial ownership, and 5,750 shares of Common Stock held by two
trusts of which Mr. Danforth is a beneficiary and as to which he shares
voting and investment control.
(4) Includes 20,480 shares of Common Stock held by a trust of which Mrs.
Greenough is the beneficiary but as to which she has no voting or investment
control.
(5) Includes 4,000 shares of Common Stock held by Mr. Greenwald's wife, as to
which Mr. Greenwald disclaims any beneficial ownership.
(6) Includes 30,000 shares of Common Stock held by Mr. Levin's wife, as to which
Mr. Levin disclaims any beneficial ownership.
(7) Includes (a) 579,884 shares of Common Stock owned by a corporation wholly
owned by Mr. Turner, (b) 2,600,998 shares of Common Stock held by a trust
over which Mr. Turner has sole voting and dispositive control, (c) 6,028,896
shares of Common Stock held by a limited partnership of which Mr. Turner is
the sole general partner, (d) 4,000,000 shares of Common Stock that, on May
12, 2000, Mr. Turner has the right to put to a broker at $19.815 per share
and the broker has a right to call from Mr. Turner at $30.05 per share
(which call Mr. Turner may settle in cash), (e) 770,000 shares of Common
Stock owned by Mr. Turner's wife and (f) 5,000,000 shares of Common Stock
held by the Turner Foundation, Inc., of which Mr. Turner is one of six
trustees. Mr. Turner disclaims beneficial ownership of shares held by his
wife and the Turner Foundation, Inc.
(8) Includes 1,100 shares of Common Stock held by Mr. Vincent's wife, as to
which Mr. Vincent disclaims any beneficial ownership.
(9) Includes (a) an aggregate of approximately 76,180 shares of Common Stock
held by a trust under the Time Warner Savings Plan for the benefit of
current directors and executive officers of the Company (including 9,028
shares for Mr. Bressler, 22,066 shares for Mr. Levin, 324 shares for Mr.
Parsons and 230 shares for Mr. Turner) and (b) an aggregate of 806,000
shares of Common Stock beneficially owned by certain relatives of such
persons. Approximately 7,045 shares of Common Stock were held by the trust
under the Time Warner Savings Plan for the benefit of Mr. Haje.
9
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is the name, address, stock ownership and voting power of
each person or group of persons known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock, Series LMCN-V Stock or any
series of Voting Preferred Stock, and, unless otherwise indicated, is based on
information provided to the Company as of February 1, 2000 by the beneficial
owner.
SHARES OF
STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY PERCENT OF VOTING
OF BENEFICIAL OWNER OWNED CLASS(1) POWER(2)
------------------- ------------ ---------- ----------
COMMON STOCK
Capital Research and Management Company (3).............. 59,438,350 5.0% 4.5%
333 South Hope Street
Los Angeles, CA 90071
FMR Corp. (4)............................................ 91,409,736 7.7 7.3
82 Devonshire Street
Boston, MA 02109
Janus Capital Corporation (5)............................ 92,187,046 7.7 7.3
100 Fillmore Street
Denver, CO 80206
R.E. Turner (6).......................................... 110,823,084 9.6 9.1
c/o Turner Broadcasting System, Inc.
One CNN Center
Atlanta, GA 30303
SERIES LMCN-V STOCK
Liberty Media Corporation (7)............................ 114,123,884 100.0 *
9197 South Peoria Street
Englewood, CO 80112
SERIES E PREFERRED STOCK
Alan Gerry (8)........................................... 3,025,331 96.7 2.2
Loomis Road
Liberty, NY 12754
SERIES I PREFERRED STOCK
Toshiba Corporation (9).................................. 700,000 100.0 *
1-1, Shibaura 1-chome
Minato-Ku, Tokyo 105
Japan
SERIES J PREFERRED STOCK (10)
Trust for the benefit of Gordon Gray, Jr................. 461,426 28.7 *
Trust for the benefit of C. Boyden Gray.................. 284,381 17.7 *
Trust for the benefit of Burton C. Gray.................. 220,019 13.7 *
Trust for the benefit of Bernard Gray.................... 205,221 12.8 *
c/o Wachovia Bank, N.A
P.O. Box 3099
Winston-Salem, NC 27150
Nancy Maguire Gray, Trustee of the Nancy Maguire Gray
Trust u/a dated 12/16/94................................. 113,002 7.0 *
P.O. Box 3199
Church Street Station
New York, NY 10008
(table continued on next page)
10
14
SHARES OF
STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY PERCENT OF VOTING
OF BENEFICIAL OWNER OWNED CLASS(1) POWER(2)
------------------- ------------ ---------- ----------
Eaton Vance Management (11).............................. 136,002 8.5 *
24 Federal Street
Boston, MA 02110
Goldman, Sachs & Co. (12)................................ 125,981 7.8 *
One New York Plaza
New York, NY 10004
- ---------------
* Less than 1%.
(1) Each share of Voting Preferred Stock is currently convertible into 4.16528
shares of Common Stock. Of the holders of Voting Preferred Stock identified
in this table, none could be deemed beneficially to own more than 5% of the
Common Stock pursuant to Rule 13d-3. Under certain circumstances, each
share of Series LMCN-V Stock is convertible into one share of Common Stock;
such circumstances are not currently present. Because an insignificant
number of shares of Series F Preferred Stock is outstanding, holders of 5%
or more of the Series F Preferred Stock have not been identified.
(2) Each share of Voting Preferred Stock has four votes. Each share of Series
LMCN-V Stock currently has 1/100 of a vote on certain limited matters.
(3) Beneficial ownership is as of December 31, 1999. Capital Research and
Management Company, an investment adviser, has filed with the SEC Amendment
No. 3, dated February 10, 2000, to its statement on Schedule 13G to the
effect that (a) it (directly or indirectly) has sole dispositive power over
all these shares, (b) it has voting power over none of these shares, (c)
the shares of Common Stock reported as beneficially owned include 4,760,064
shares of Common Stock reported as issuable upon the conversion of
2,380,000 shares of 7.00% automatic common exchange securities due 2000 of
Houston Industries Incorporated (the "Houston ACEs") (these shares have
been excluded from the calculation of voting power), (d) all of the
reported shares are held for the benefit of its clients and (e) it and each
of its subsidiary investment management companies acts separately in
exercising investment discretion over its managed accounts.
(4) Beneficial ownership is as of December 31, 1999. FMR Corp., a holding
company, has filed with the SEC Amendment No. 3, dated February 14, 2000,
to its statement on Schedule 13G to the effect that (a) it (directly or
indirectly) has sole dispositive power over all these shares, (b) it has
sole voting power over 4,857,887 of these shares and no shared voting
power, (c) these shares are held principally by Fidelity Management &
Research Company, a wholly-owned investment adviser, (d) the shares of
Common Stock reported as beneficially owned include 2,365,400 shares of
Common Stock reported as issuable upon the conversion of 1,182,700 shares
of Houston ACEs (these shares have been excluded from the calculation of
voting power), (e) these shares are, for the most part, held by investment
companies and institutional accounts managed by subsidiaries of FMR Corp.
and (f) the family of Edward C. Johnson 3d, including Mr. Johnson, the
Chairman of FMR Corp., and his daughter Abigail Johnson, a director, and
trusts for the family members' benefit may be deemed to form a controlling
group with respect to FMR Corp.
(5) Beneficial ownership is as of December 31, 1999. Janus Capital Corporation,
an investment adviser, has filed with the SEC Amendment No. 1, dated
February 14, 2000, to its statement on Schedule 13G to the effect that (a)
because it acts as an investment adviser to several investment companies
and individual and institutional clients, it may be deemed the beneficial
owner of these shares, which are held by its clients, (b) it may be deemed
to share dispositive and voting power over all these shares with Thomas H.
Bailey, Chairman of the Board, President and owner of approximately 12.2%
of Janus Capital Corporation, and (c) the shares of Common Stock reported
as beneficially owned include 4,057,718 shares of Common Stock reported as
issuable upon conversion of convertible securities (these shares have been
excluded from the calculation of voting power).
(6) Includes (a) 579,884 shares of Common Stock owned by a corporation wholly
owned by Mr. Turner, (b) 2,600,998 shares of Common Stock held by a trust
over which Mr. Turner has sole voting and dispositive control, (c)
6,028,896 shares of Common Stock held by a limited partnership of which Mr.
Turner is the sole general partner, (d) 4,000,000 shares of Common Stock
that, on May 12, 2000, Mr. Turner has the right to put to a broker at
$19.815 per share and the broker has a right to call from Mr. Turner at
$30.05 per share (which call Mr. Turner may settle in cash), (e) 770,000
shares of Common Stock owned by Mr. Turner's wife and (f) 5,000,000 shares
of Common Stock held by the Turner Foundation, Inc., of which Mr. Turner is
one of six trustees; and excludes 4,175,000 shares of Common Stock subject
to options to purchase Common Stock issued by the Company which, on
February 1, 2000, were unexercised but were exercisable within 60 days from
that date (but such shares are included in the percent-of-class calculation
but not voting power). Mr. Turner disclaims beneficial ownership of shares
held by his wife and the Turner Foundation, Inc.
(7) Consists of shares beneficially owned by Liberty Media Corporation, through
its direct and indirect subsidiaries; excludes 559,066 shares of Common
Stock held by an indirect wholly owned subsidiary of AT&T Corp. In March
1999, AT&T Corp. acquired Tele-Communications, Inc., and Liberty Media
Corporation (its subsidiary), but incumbent management of Liberty Media
Corporation has voting and investment control over the Series LMCN-V Stock.
(footnotes continued on next page)
11
15
(footnotes continued from previous page)
(8) Includes 491,000 shares of Series E Preferred Stock held by a limited
partnership of which Mr. Gerry is the general partner. Voting power
includes 14,812,892 shares of Common Stock beneficially owned by Mr. Gerry
(of which (a) 4,891,952 shares are held by four limited partnerships of
which Mr. Gerry is the general partner and (b) 2,205,723 shares are held by
the Gerry Foundation Inc., of which Mr. Gerry is the President and one of
five family members on the Board of Directors and (c) 50,000 shares are
held by the Beaverkill Foundation, of which Mr. Gerry's wife is the
President and one of four family members on the Board of Directors). Mr.
Gerry disclaims beneficial ownership of shares held by the Gerry Foundation
Inc. and the Beaverkill Foundation.
(9) Includes 17,000 shares of Series I Preferred Stock held by a wholly owned
subsidiary of Toshiba Corporation.
(10) The trusts for the benefit of each of Gordon Gray, Jr. and C. Boyden Gray
also hold 1,713,092 and 250,942 shares of Common Stock, respectively, and
those trusts and the trusts for the benefit of each of Burton C. Gray and
Bernard Gray each also holds 293,740 shares of Common Stock in an escrow
account subject to restrictions on disposition. Gordon Gray, Jr. also owns
57,864 shares of Common Stock directly. The Nancy Maguire Gray Trust also
holds 44,552 shares of Common Stock. These shares of Common Stock are
included in the calculation of voting power of the beneficial owners.
(11) Beneficial ownership is as of March 8, 2000. Eaton Vance Management
manages, directly and indirectly, investment companies, individual accounts
and trusts that also hold 929,344 shares of Common Stock, which are
included in the calculation of voting power.
(12) These shares are held by various exchange funds, and voting and dispositive
control is shared with Goldman Sachs Asset Management, a separate operating
division of Goldman, Sachs & Co. Voting power includes 82,625 shares of
Series E Preferred Stock and 1,027,514 shares of Common Stock held by such
funds.
In connection with the AOL Merger Transaction, the Company granted to
America Online an irrevocable option to purchase up to 233,263,204 shares of
Common Stock (representing 19.9% of the then outstanding Common Stock) at a
price of $110.63 per share. This option will only become exercisable in the
event the merger agreement for the AOL Merger Transaction is terminated and
America Online is entitled to receive certain termination fees. America Online
granted the Company a similar option. Neither of these options is currently
exercisable.
12
16
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON COMPENSATION OF EXECUTIVE OFFICERS OF THE
COMPANY
The Compensation Committee of the Board of Directors furnished the
following report on executive compensation.
In 1999, the Company once again achieved its main financial and strategic
goals and the Company's stockholders benefited from appreciation in the
Company's stock price. In the Committee's view, the Company's continuing
emphasis on financial discipline and cash flow generation and continuing
implementation of initiatives begun in prior years as well as new ones
contributed significantly to the Company's 1999 results. By the end of 1999, the
Company was well positioned to negotiate successfully the Company-transforming
merger with America Online, Inc. that was announced in January 2000. The 1999
compensation for the Company's senior management is primarily attributable to
these accomplishments, as discussed in greater detail below, and is consistent
with the Company's established executive compensation philosophy.
Compensation Philosophy
The Company's executive compensation programs are principally designed to
give executives strong incentives to focus on and achieve the Company's business
objectives, the principal ones being to increase free cash flow and long-term
stockholder value. Key elements of the incentive compensation programs are an
annual performance-based incentive bonus, which seeks to recognize individual
performance each year, and stock options, which provide substantial long-term
financial reward to an executive only if the stockholders also gain long-term
stock price appreciation over the option period.
The Company's executive officers are employed under employment agreements
providing for their services for an extended period. The terms of the employment
agreements of the principal executive officers are outlined under "Employment
Arrangements." While a minimum salary is contractually specified, the largest
elements of executive compensation, the annual bonus and stock option awards,
are generally subject to the discretion of the Compensation Committee, which is
comprised entirely of Unaffiliated Directors.
The Compensation Committee, with the assistance of a leading outside
compensation consultant, reviewed total compensation for the Company's executive
officers in the context of total compensation packages awarded to executives
with similar responsibilities at selected public companies in consumer product,
technology-based, entertainment and media businesses. The Compensation Committee
believes that the Company's most direct competitors for executive talent are
composed of a broader range of companies than those with which the Company would
ordinarily be compared for stock performance purposes. Thus, the compensation
comparison group included companies that are not included in the peer group
index in the graph that appears below.
1999 Annual Bonus Determinations
Annual Bonus Plan. The Compensation Committee's determination of the
annual incentive bonus for Mr. Levin and each other executive officer of the
Company named in the Summary Compensation Table appearing below starts with the
calculation of his 1999 maximum bonus under the stockholder-approved Annual
Bonus Plan. This calculation is based on a percentage of the amount by which the
Company's 1999 earnings before interest, taxes, depreciation and amortization
("EBITDA"), as adjusted pursuant to the Annual Bonus Plan, exceeded the
Company's average EBITDA for the preceding three years. This calculation
resulted in maximum individual annual bonuses substantially in excess of the
actual bonuses paid as shown in the Summary Compensation Table below.
13
17
1999 Accomplishments. The Compensation Committee considered a variety of
factors in making its compensation decisions and no specific weighting was
assigned to any one of those factors. The accomplishments that the Committee
thinks contributed to a successful 1999 included:
- The Company achieved its aggressive 1999 cash-flow and EBITA (operating
income before non-cash amortization of intangible assets) targets on a
Company-wide basis and set record aggregate divisional EBITA levels,
achieved through record levels at most divisions.
- The Company achieved those results while growing its operating businesses
and using free cash flow to repurchase Common Stock.
- The Company continued to implement, refine and expand the scope of its
cross-divisional, collaborative, long-term business plan that focuses on
(i) financial returns, cost controls, capital allocation and generation
of free cash flow for common stock repurchase and (ii) growing all of the
operating businesses at sustainable rates by, among other things,
identifying potential areas of long-term growth, including new media and
electronic commerce, and identifying and initiating other
cross-divisional, coordinated strategies in such areas as consumer
research, marketing, international business development and new
technologies.
- The Company created Time Warner Digital Media as the digital override to
the Company's cross-divisional strategy and began to create and staff
digital hubs, such as Entertaindom.
- The Company repurchased approximately 28 million shares of Common Stock
during 1999, at an average price of approximately $67 per share.
- The Company continued to run its cost management program, started in
1997, ahead of schedule and realized in 1999 approximately $300 million
of incremental cost savings, thereby increasing the aggregate cost
reductions under this program to approximately $900 million in savings
annually.
- The Company continued to develop and communicate a Company statement of
core values, commitments and social responsibilities, which includes
making the Company a workplace of choice for a diverse population. This
initiative, under the watch of the Company's Values and Human Development
Committee of the Board of Directors, is carried forward by a 14-member
working group, including two senior executives from each division, as
well as divisional working groups. Over 400 of a planned 1,000 executives
have attended leadership forums designed to develop a deeper
understanding of the Company's values and a broader view of the Company's
strategy.
Mr. Levin's Annual Bonus. Mr. Levin's 1999 annual incentive bonus as
Chairman of the Board and Chief Executive Officer was determined by the
Compensation Committee and ratified by all of the Unaffiliated Directors. In
determining his bonus, the Committee reviewed the calculation of his maximum
bonus payable under the Annual Bonus Plan, the level of achievement of his 1999
financial performance goals (based on operational targets for divisional and
aggregate EBITA and cash flow) and the Company's other accomplishments during
1999, as described above. Mr. Levin's 1999 bonus reflects the Compensation
Committee's belief that Mr. Levin's performance warranted placing his total cash
compensation for 1999 in the upper quartile of compensation paid to the chief
executives in the comparison group discussed above. This determination was based
on the Committee's overall evaluation of Mr. Levin's stewardship of the Company
during 1999, the leadership he was providing and his positioning of the Company,
its management, product lines and services for the future.
Annual Bonuses for Executive Officers Other than the Chief Executive
Officer. The Chief Executive Officer reviewed with the Compensation Committee
the 1999 performance of each other executive officer, and recommended an annual
bonus for each such executive. These recommendations primarily reflected
individual qualitative executive contributions based upon the level of the
executive's responsibilities, the efficiency and effectiveness with which he or
she oversaw the matters under his or her supervision, and the degree to which he
or she contributed to the accomplishment of the
14
18
Company's goals. As these officers have overall corporate policy-making and
administrative responsibilities, and, except for Mr. Turner and Mr. Bressler
(for the latter part of the year), do not directly oversee principal operating
units of the Company, the Compensation Committee's assessment of these
executives relates generally to the accomplishment of their personal goals and
the Company's achievements as a whole. However, the Company's financial
performance was a key factor that affected the overall bonus level for all
executive officers.
Stock Option Awards
During 1999, each of the Company's executive officers was awarded stock
options. These awards were made after a review of the exercise prices, numbers
and dates of their previous option awards and the option awards made to other
executives at the Company and in the comparison group. Although there are no
precise targets with respect to the number of stock options for the executive
officers, the Compensation Committee believes that the higher the level of an
executive's responsibilities, the larger the stock-based component of his or her
compensation should be, and that compensation based on stock price performance
should be paid via stock-based compensation. In addition, the Compensation
Committee believes that a highly effective way of furthering the interests of
the Company's stockholders is by awarding the Company's most senior executive
officers stock options with stock-performance thresholds. Experience bears this
out. The vesting of Mr. Levin's 1998 special stock option award, for example,
was conditional on the Common Stock price doubling within five years. The goal
was met in just one year, and the 100% appreciation in the Company's Common
Stock price was shared by all stockholders. In 1999, each of Messrs. Levin,
Turner and Parsons was awarded a regular annual grant of stock options, one
quarter of which have exercise prices 25% above the fair market value of the
Common Stock on the date of grant and one quarter of which have exercise prices
50% above such fair market value. Mr. Turner's award of stock options in 1999
was made pursuant to the terms of his employment agreement with the Company and
approved by the Compensation Committee.
Section 162(m) Considerations
The Company expects that the compensation paid to executive officers under
the Annual Bonus Plan will qualify for income tax deductibility under Section
162(m) of the Internal Revenue Code. In addition, the Company has adopted a
general policy of awarding stock options to its executive officers only pursuant
to plans that the Company believes will satisfy the requirements of Section
162(m). In 1999, the Company did not pay its executive officers compensation
that would not be deductible as a result of the Section 162(m) deductibility
limit.
Members of the Compensation Committee
Stephen F. Bollenbach
Carla A. Hills
Reuben Mark (Chair)
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,
1999 (the "named executive officers") for services rendered to the Company
during each of the last three fiscal years in their capacities as executive
officers. All share numbers reflect the two-for-one stock split in December
1998.
15
19
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION(4)
----------------------------------------- ---------------
OTHER SECURITIES
NAME AND PRINCIPAL ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(3) OPTIONS AWARDED COMPENSATION(5)
------------------ ---- ------ ----- --------------- --------------- ---------------
Gerald M. Levin........ 1999 $1,000,000 $9,000,000 $218,477 437,500 $590,167
Chairman of the 1998 1,000,000 7,800,000 186,861 1,400,000 597,885
Board and Chief 1997 700,000 6,500,000 198,554 700,000 458,701
Executive Officer
R.E. Turner............ 1999 $ 700,000 $6,900,000 $ -- 375,000 $619,657
Vice Chairman 1998 700,000 6,000,000 -- 600,000 637,339
1997 700,000 5,000,000 -- 600,000 438,085
Richard D. Parsons..... 1999 $ 750,000 $4,750,000 $170,695 250,000 $498,245
President 1998 600,000 3,300,000 122,907 300,000 398,650
1997 600,000 2,750,000 117,593 300,000 406,299
Richard J. Bressler.... 1999 $ 600,000 $2,000,000 $ 78,573 100,000 $371,532
Executive Vice 1998 450,000 1,500,000 60,141 100,000 310,428
President(1) 1997 350,000 1,200,000 53,338 100,000 228,175
Peter R. Haje.......... 1999 $ 550,000 $1,250,000 $ 72,866 60,000 $383,418
Executive Vice 1998 550,000 1,250,000 69,294 90,000 387,321
President and 1997 550,000 1,200,000 64,939 90,000 395,816
General Counsel(2)
- ---------------
(1) Mr. Bressler became Executive Vice President of the Company and Chairman and
Chief Executive Officer of its Time Warner Digital Media division on July
15, 1999 having served as Executive Vice President and Chief Financial
Officer of the Company from January 15, 1998 and as Senior Vice President
and Chief Financial Officer prior to that.
(2) Mr. Haje retired from service as an executive officer of the Company on
January 1, 2000.
(3) In accordance with SEC rules, amounts totalling less than $50,000 have been
omitted. The amounts of personal benefits shown in this column for 1999 that
represent more than 25% of the applicable executive's total Other Annual
Compensation include financial services of $90,000 to each of Messrs. Levin
and Parsons, $53,333 to Mr. Bressler and $35,000 to Mr. Haje,
transportation-related benefits (including an automobile allowance) of
$114,662 to Mr. Levin and $76,465 to Mr. Parsons and automobile allowances
of $24,000 to each of Messrs. Bressler and Haje.
(4) None of the options indicated was awarded with tandem stock appreciation
rights. None of such executive officers was awarded restricted stock during
the relevant period and, as of December 31, 1999, only Mr. Parsons held any
such shares. Those shares were awarded in or prior to 1994 under the
Directors' Restricted Stock Plan in his capacity then as an Unaffiliated
Director. The value of Mr. Parsons' 8,426 restricted shares based on the
closing price of the Common Stock on the New York Stock Exchange Composite
Listing on December 31, 1999 was $609,305. Mr. Parsons receives the
dividends paid in cash on such shares. The restrictions on these shares were
removed effective January 9, 2000 as a result of the approval of the AOL
Merger Transaction by the Company's Board of Directors. See "Corporate
Governance -- Director Compensation."
(5) The amounts shown in this column for 1999 include the following:
(a) In lieu of supplemental retirement plan benefits, the Company, as
required by individual employment agreements, credited to an account for
each named executive officer an amount equal to one-half of the total shown
under the "salary" column for each of 1999, 1998 and 1997. See "Non-Current
Compensation Accounts."
(b) Pursuant to the Time Warner Savings Plan (the "Savings Plan"), a
defined contribution plan available generally to employees of the Company,
for the 1999 plan year, each executive named above deferred a portion of his
annual compensation and the Company contributed $2,000 for the first $3,000
so deferred by the executive ("Matching Contribution"). These Matching
Contributions were invested under the Savings Plan in a Common Stock fund.
In addition, pursuant to a profit-sharing component of the Savings Plan, the
Company may make annual contributions for the benefit of eligible employees
of up to 12% of total eligible compensation; for 1999, the Company
contributed 10%, including $16,000 for the account of each executive named
above.
(c) The Company maintains a program of life and disability insurance
generally available to all salaried employees on the same basis. This group
term life insurance coverage is reduced to $50,000 for each of the named
executive officers, who are given an annual cash payment equal to the cost
of replacing such reduced coverage under a voluntary group program available
to employees generally. Such payments are included in the "Other Annual
Compensation" column. In addition, during 1999, the Company maintained for
certain members of senior management, including the named executive
officers, certain supplemental life insurance benefits and paid premiums for
this supplemental coverage of approximately $250 each. The Company also
maintained split-dollar life insurance policies on the lives of the named
executive officers and paid the following amounts allocated to the term
portion of the split-dollar coverage for 1999: Mr. Levin, $17,687; Mr.
Turner, $16,740; Mr. Parsons, $5,631; Mr. Bressler, $2,225; and Mr. Haje,
$9,840. The actuarial equivalent of the value of the premiums paid by the
Company for 1999 based on certain assumptions regarding interest rates and
periods of coverage are: Mr. Levin, $71,917; Mr. Turner, $251,407; Mr.
Parsons, $104,995; Mr. Bressler, $53,282; and Mr. Haje, $90,168. It is
(footnotes continued on next page)
16
20
(footnotes continued from previous page)
anticipated that the Company will recover the net after-tax cost of the
premiums on these policies or the cash surrender value thereof. For a
description of life insurance coverage for certain executive officers
provided pursuant to the terms of their employment agreements, see
"Employment Arrangements."
STOCK OPTION GRANTS DURING 1999
The following table sets forth certain information with respect to employee
options to purchase shares of Common Stock ("options") awarded during 1999 to
the named executive officers. All such options were nonqualified options. No
stock appreciation rights ("SARs"), alone or in tandem with such stock options,
were awarded in 1999.
STOCK OPTION GRANTS IN 1999
INDIVIDUAL GRANTS(1)
--------------------------------------------------
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED IN 1999 ($/SH) DATE VALUE(2)
---- ---------- ---------- -------- ---------- ----------
Gerald M. Levin......................... 218,750 1.7% $ 69.16 3/16/09 $6,138,125
109,375 .8 86.45 3/16/09 2,393,125
109,375 .8 103.74 3/16/09 1,869,219
R.E. Turner............................. 187,500 1.4% $ 69.16 3/16/09 $5,261,250
93,750 .7 86.45 3/16/09 2,051,250
93,750 .7 103.74 3/16/09 1,602,188
Richard D. Parsons...................... 125,000 1.0% $ 69.16 3/16/09 $3,507,500
62,500 .5 86.45 3/16/09 1,367,500
62,500 .5 103.74 3/16/09 1,068,125
Richard J. Bressler..................... 100,000 .8% $ 69.16 3/16/09 $2,806,000
Peter R. Haje........................... 60,000 .5% $ 69.16 3/16/09 $1,683,600
- ---------------
(1) Options for executive officers are generally awarded pursuant to plans
approved by the Company's stockholders and the terms are governed by the
plans and the recipient's option agreement. The option exercise price is the
fair market value of the Common Stock on the date of grant except for the
awards to Messrs. Levin, Turner and Parsons of which one quarter of the
total award has an exercise price 25% above the fair market value of the
Common Stock on the date of grant and one quarter of which has an exercise
price 50% above such fair market value. As of December 31, 1999, the options
shown in the table become exercisable in installments of one-third on the
first three anniversaries of the date of grant, subject to acceleration upon
the occurrence of certain events. As a result of the approval of the AOL
Merger Transaction by the Company's Board of Directors on January 9, 2000,
these options vested and are currently exercisable. Payment of the exercise
price of an option may be made in cash or, in whole or in part, in full
shares of Common Stock already owned by the holder of the option. The
payment of withholding taxes due upon exercise of an option may generally be
made with shares of Common Stock.
(2) These amounts represent the estimated present value of stock options at the
date of grant calculated using the Black-Scholes option pricing model, based
upon the following assumptions used in developing the grant valuations: an
expected volatility of 23.0% based on a three-year period ending March 31,
1999; an expected term to exercise of eight years; a risk-free rate of
return based on the interest rate of a U.S. Treasury Strip in effect on the
date of the award with an eight-year maturity (March 17, 1999 -- 5.38%); and
a dividend yield of .26%. The actual value of the options, if any, realized
by an officer will depend on the extent to which the market value of the
Common Stock exceeds the exercise price of the option on the date the option
is exercised. Consequently, there is no assurance that the value realized by
an officer will be at or near the value estimated above. These amounts
should not be used to predict stock performance.
OPTION EXERCISES AND VALUES IN 1999
The following table sets forth as to each of the named executive officers
information on option exercises during 1999 and the status of his options on
December 31, 1999: (i) the number of shares of Common Stock underlying options
exercised during 1999; (ii) the aggregate dollar value realized upon exercise of
such options; (iii) the total number of shares of Common Stock underlying
exercisable and
17
21
nonexercisable stock options held on December 31, 1999; and (iv) the aggregate
dollar value of in-the-money exercisable and nonexercisable stock options on
December 31, 1999.
AGGREGATE OPTION EXERCISES DURING 1999
AND
OPTION VALUES ON DECEMBER 31, 1999
DOLLAR VALUE OF
NUMBER OF NUMBER OF SHARES UNEXERCISED
SHARES DOLLAR UNDERLYING UNEXERCISED IN-THE-MONEY
UNDERLYING VALUE OPTIONS ON 12/31/99(4) OPTIONS ON 12/31/99*(4)
OPTIONS REALIZED ---------------------------- -----------------------------
NAME EXERCISED ON EXERCISE EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
---- ---------- ----------- ----------- -------------- ----------- --------------
Gerald M. Levin(1)...... 70,032 $3,091,212 6,740,006 1,137,494 $352,922,985 $24,804,976
R.E. Turner............. -- -- 3,200,000 975,000 $147,963,003 $21,261,594
Richard D. Parsons...... -- -- 1,500,000 550,000 $ 72,716,748 $10,729,312
Richard J.
Bressler(2)........... -- -- 692,218 199,998 $ 36,345,826 $ 4,358,077
Peter R. Haje(3)........ 80,000 $4,747,807 1,380,000 150,000 $ 82,606,851 $ 3,827,775
- ---------------
* Calculated using the closing price of $72.3125 per share on December 31,
1999 minus the option exercise price.
(1) The options exercised by Mr. Levin were awarded in 1989. Mr. Levin is the
only executive officer listed above who holds SARs awarded in tandem with
any of his stock options. 200,000 of Mr. Levin's options held on December
31, 1999 were awarded with tandem SARs; they all were awarded on or prior to
September 22, 1989 and are currently exercisable; and at December 31, 1999,
they had a value of $11,024,500, 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.
(2) Includes 196,000 exercisable options that Mr. Bressler has transferred to a
family-owned limited partnership. At December 31, 1999, these options had a
value of $10,142,542.
(3) Includes 60,000 exercisable options that Mr. Haje has transferred to a
family-owned limited partnership. At December 31, 1999, these options had a
value of $2,550,150.
(4) All options held by the named executive officers became immediately
exercisable in full upon the approval by the Company's Board of Directors of
the AOL Merger Transaction on January 9, 2000.
The option exercise price of all the options held by the named executive
officers is the fair market value of the Common Stock on the date of grant
except for half of the regular annual options awarded to Messrs. Levin, Turner
and Parsons in 1996 through 1999 (see "Stock Option Grants in 1999") and
1,000,000 of Mr. Levin's options awarded in 1993, half of which have an exercise
price 25% above the fair market value of the Common Stock on the date of grant
and the other half of which have an exercise price 50% above such fair market
value. All such nonqualified options permit a portion of each award to be
transferred by gift directly or indirectly to members of the holder's immediate
family. In November 1999, the Company's Board of Directors approved amendments
to the Company's stock option plans to permit optionees to defer receipt of the
shares of Common Stock receivable upon exercise of options to a future date
elected by the optionee, thereby deferring the recognition of income by the
optionee (and the Company's tax deduction) until such future date. During the
deferral period, the shares are not outstanding, do not vote and do not pay
dividends, however, the Company has agreed to pay the optionee dividend
equivalents during the deferral period.
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 of their
options remain exercisable for the full term of the options if their employment
is terminated for any reason other than for cause, including death. Otherwise,
options may generally be exercised for one or three years after death or total
disability (depending on their date of grant) and five years after retirement.
All options terminate one month after the holder's employment is terminated for
cause or immediately if such termination for cause is for fraud,
misappropriation or embezzlement. The terms of the options shown in the chart
are generally ten years, although 640,000 options held by Mr. Levin have a term
of 15 years from the date of their award in 1989.
18
22
EMPLOYMENT ARRANGEMENTS
The Company is, and during 1999 was, a party to employment agreements with
the named executive officers of the Company. These agreements have been filed
with the SEC as exhibits to the Company's periodic filings.
Among other things, the agreements with the Company's named executive
officers typically provide for: a fixed term of employment in a specified
executive post; annual salary; contributions to a non-current compensation
account, generally equal to 50% of annual salary, which is invested and paid out
as described below under "Non-Current Compensation Accounts"; an annual bonus in
the discretion of the Compensation Committee, all or a portion of which may be
deferred at the election of the executive officer (Mr. Levin may also defer a
portion of his salary); and life insurance benefits to be provided by split
dollar policies, generally for the life of the executive and pursuant to which
the Company recovers an amount equal to the net after-tax cost to the Company of
the premiums on such policy or the cash surrender value thereof, as well as
$50,000 of group term life insurance under an insurance program generally
provided by the Company to its employees and a cash payment equal to the premium
for the coverage that would have otherwise been provided under the general terms
of such program. The agreements also typically include provisions for the
executive's participation in Company stock option and other compensation and
benefit plans.
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 contributions to
the non-current compensation account accrued through such date of termination.
These agreements typically provide that in the event of the Company's
material breach or termination of the executive's employment during the term of
employment without cause, the executive will be entitled to elect either (a) to
receive a lump-sum payment equal to the present value of the compensation
otherwise payable during the remaining portion of the executive's term of
employment (including any advisory period) or (b) to remain an employee of the
Company through the end of such period and, without having to perform any
services, receive such compensation as if there had been no breach or
termination. Mr. Bressler is also entitled to a minimum of one year of severance
and to receive from the Company either the stock options he would have received
for the remainder of his term of employment or the value of such options in
cash. 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 Internal Revenue Code of 1986,
as amended (the "Code"). In addition, except for Mr. Turner's agreement, these
agreements typically provide that if an executive thereafter obtains other
employment, the total cash salary and bonus received therefrom for services
prior to the expiration of the executive's employment term (up to the amount of
compensation paid to the executive by the Company for such period) must be paid
over to the Company as received except that the executive officer may retain and
not pay over to the Company an amount equal to the severance he would have
received in accordance with the Company's personnel policies if he had been job
eliminated.
If an executive becomes disabled during the term of his employment
agreement, the executive typically will receive full salary, bonus and
non-current compensation contribution for six months and 75% thereof through the
end of the employment term or, in the case of Mr. Bressler, for one year, if
longer. Non-current compensation contributions 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 non-current compensation
19
23
contribution 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 non-current compensation contributions
under these agreements for the named executive officers are as shown for 1999 in
the Summary Compensation Table, except for Mr. Bressler, whose current annual
salary is $700,000 with a non-current compensation contribution equal to
one-half of the annual salary, and for Mr. Haje, who has retired from service as
an executive officer effective January 1, 2000. The expiration dates of these
agreements and the amounts of the individual life insurance coverage for the
lifetime of such persons are: Mr. Levin -- December 31, 2003 and $6 million; Mr.
Turner -- December 31, 2001 and $6 million; Mr. Parsons -- December 31, 2004 and
$5 million; Mr. Bressler -- December 31, 2004 and $4 million; and Mr.
Haje -- December 31, 1999 (not including a two-year advisory period) and $4
million. Mr. Levin's agreement allows him, effective no earlier than June 30,
2002 and with not less than six months' prior notice to the Company, to give up
his executive positions and become an advisor to the Company for the remainder
of the agreement term. In that case, his advisory compensation would be equal to
his annual salary and non-current compensation contribution. Mr. Parsons'
agreement will terminate on December 31, 2001 if Mr. Parsons has not been
designated Chief Operating Officer by June 30, 2001 with an effective date no
later than January 1, 2002. Pursuant to the terms of their employment
agreements, so long as each of Messrs. Levin, Turner and Parsons, respectively,
is employed by the Company, the Company has agreed to include him in
management's slate for election as a director and to use its best efforts to
cause his election.
In addition, in 1999 Mr. Turner was awarded stock options to purchase
375,000 shares of Common Stock half of which have exercise prices above the fair
market value on the date of grant. See "Stock Option Grants in 1999." Mr. Turner
is also entitled to one further annual award of stock options under his
employment agreement.
NON-CURRENT COMPENSATION ACCOUNTS
The Company deposited non-current compensation contributions for each named
executive officer in 1999 into separate accounts in a grantor trust established
by the Company. An investment advisor is appointed for each such account subject
to approval by the relevant executive. Funds are invested in securities as
directed by the investment advisor, with the assumed after-tax effect upon the
Company of gains, losses and income, and distributions thereof, and of interest
expenses and brokerage commissions and other direct expenses attributed thereto,
being credited or charged to the account. Payments are generally made to the
officer from the account in installments to liquidate the account over a period
of ten years, or such shorter period as the officer elects, commencing on the
later of the end of the employment term or the date the executive ceases to be
an employee. 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. Commencing in
1999, the Company's executive officers could elect to have half or all of these
non-current compensation contributions credited to the Company's Deferred
Compensation Plan instead of the grantor trust accounts. This Plan is an
unfunded, nonqualified plan that permits higher-paid employees to make
tax-deferred savings of certain compensation that exceeds the federal law limits
for tax qualified benefit plans. Participants select crediting rates for their
amounts credited to the Plan. These rates are based on the actual returns of
mutual funds and other investments offered under the Savings Plan.
Amounts paid by the Company to the non-current compensation accounts of the
named executive officers for 1999 and the portion, if any, of the 1999 annual
bonus elected to be deferred by any such officer are included in the amounts
shown in the Summary Compensation Table above.
20
24
TIME WARNER EMPLOYEES' PENSION PLAN
The Time Warner Employees' Pension Plan (the "Old Pension Plan"), which
provides benefits to eligible employees, including officers, of the Company and
certain of its subsidiaries, was amended effective as of January 1, 2000, as
described below, and renamed the Time Warner Pension Plan--TWI (the "Amended
Pension Plan" and, together with the Old Pension Plan, the "Pension Plans").
Because of certain grandfathering provisions, the benefit of participants with a
minimum of ten years of benefit service whose age and years of benefit service
equal or exceed 65 years as of January 1, 2000, including Mr. Levin, will be
determined under either the provisions of the Old Pension Plan or the Amended
Pension Plan, whichever produces the greater benefit. Directors who are not also
employees of the Company are not eligible to participate in the Pension Plans.
Under the Old Pension Plan, a participant accrues benefits on the basis of
1 2/3% of the average annual compensation (defined as the highest average annual
compensation for any five consecutive full and partial calendar years of
employment, which includes regular salary, overtime and shift differential
payments, and non-deferred bonuses paid according to a regular program) for each
year of service up to 30 years and 1/2% for each year of service over 30.
Compensation for purposes of calculating average annual compensation under the
Pension Plans is limited to $200,000 per year for 1988 through 1993 and $150,000
per year for 1994 and thereafter (each subject to adjustments provided in the
Code). Eligible employees become vested in all benefits under the Pension Plans
on the earlier of five years of service or certain other events.
Under the Amended Pension Plan, a participant accrues benefits equal to the
sum of 1.25% of a participant's average annual compensation not in excess of his
covered compensation up to the average Social Security wage base and 1.67% of
his average annual compensation in excess of such covered compensation
multiplied by his years of benefit service (not in excess of 30).
Under the Old 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 the
lesser of 35% of such person's average compensation determined under the Old
Pension Plan or such person's accrued benefit at age 60 plus Social Security
benefits at age 65. The supplement ceases when the regular pension commences at
age 60. Under the Amended Pension Plan, employees who are at least 62 years old
and have completed at least ten years of service may elect early retirement and
receive the full unreduced amount of their annual pension.
Annual pension benefits under the Old Pension Plan 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"). Under both of the Pension Plans, 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").
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 both of the Pension Plans.
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 Plans 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
21
25
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 under the Amended Pension Plan. The amounts shown in the table
do not reflect the effect of the previously-described (1) Profit Sharing Plan
Offset or (2) early retirement supplements. The amount of the estimated annual
pension is based upon a pension formula which applies to all participants in
both the Amended Pension Plan and the Excess Plan. The estimated amounts are
based on the assumption that payments under the Amended Pension Plan will
commence upon normal retirement (generally age 65) or early retirement, that the
Amended 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.
ESTIMATED ANNUAL PENSION FOR
HIGHEST CONSECUTIVE YEARS OF CREDITED SERVICE
FIVE YEAR AVERAGE ----------------------------------------------------
COMPENSATION 10 15 20 25 30
------------------- -- -- -- -- --
$200,000............................... $ 31,870 $ 47,800 $ 63,740 $ 79,670 $ 95,610
400,000............................... 65,200 97,800 130,410 163,010 195,610
600,000............................... 98,530 147,800 197,070 246,340 295,610
800,000............................... 131,870 197,810 263,740 329,680 395,620
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 Plans and the Excess Plan for each of Messrs.
Levin, Turner, Parsons, Bressler and Haje is limited as a result of the
imposition of the limitations on eligible compensation. However, because
combined payments under the Pension Plans and the Excess Plan are based on the
highest average annual compensation for any five consecutive full or partial
calendar years of employment (taking into account the compensation limits only
for 1988 and thereafter), the compensation used for determining benefits under
such Plans for Mr. Levin (and employees who participated in the Old 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 Amended
Pension Plan and the Excess Plan, as of February 1, 2000, would be based on
average compensation of $729,248 for Mr. Levin; $304,117 for Mr. Turner;
$290,095 for Mr. Parsons; $290,095 for Mr. Bressler; and $290,095 for Mr. Haje,
with 27.8, 3.4, 5.0, 11.2 and 9.4 years of credited service, respectively. In
addition, pursuant to his employment agreement, Mr. Parsons will be entitled to
receive supplemental payments from the Company that will achieve a total
retirement benefit equal to what he would have received if he had five
additional years of credited service under the Amended Pension Plan. The
estimated annual pension payable to Mr. Levin under the Old Pension Plan and the
Excess Plan upon his retirement based on the indicated remuneration and years of
service would be $337,889, without reflecting the effect of the
previously-described Social Security or Profit Sharing Plan Offsets.
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, 1994 plus reinvested dividends and distributions. Pursuant to
the SEC's rules, the Company has created a peer group index with which to
compare its own stock performance since a published industry or line-of-business
index does not exist. The Company has attempted to select a grouping of
companies that includes companies in lines of business similar to its own.
Because of the Company's involvement in a broad mix of several major media and
entertainment businesses and the fact that no other public companies are engaged
in
22
26
all of these businesses, no grouping could closely mirror the Company's
businesses or weight those businesses to match the relative contributions of
each of the Company's business units to the Company's performance. All of the
companies included in the Company's Peer Group Index are engaged in only some of
the businesses in which the Company is engaged and some are also engaged in
businesses in which the Company does not participate. The common stocks of the
following companies have been included in the Peer Group Index: Cablevision
Systems Corporation, Comcast Corporation, McGraw-Hill Inc., Meredith
Corporation, The News Corporation Limited, Viacom Inc. and The Walt Disney
Company. Tele-Communications, Inc., which was previously included in the Peer
Group, has been removed from the Peer Group Index because of its acquisition in
1999 by AT&T Corp. The chart assumes $100 was invested on December 31, 1994 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.
[GRAPH]
Value at Time Warner Peer Group S&P 500
December 31, Common Stock Index Index
- ------------ ------------ ---------- -------
1994 $ 100.00 $ 100.00 $ 100.00
1995 109.00 126.00 138.00
1996 109.00 128.00 169.00
1997 181.00 180.00 226.00
1998 364.00 216.00 290.00
1999 426.00 281.00 351.00
ADDITIONAL INFORMATION
During 1999, the Company and its subsidiaries engaged in transactions in
the ordinary course of business, on normal commercial terms, with ITOCHU
Corporation and Toshiba Corporation and leased office space in Liberty, NY from
an entity affiliated with Mr. Alan Gerry, each the beneficial owner during 1999
of more than five percent of the voting power of separate series of the Voting
Preferred Stock. In addition, the Company maintains arrangements with
subsidiaries of FMR Corp., a beneficial owner of more than five percent of the
voting power of the Company's outstanding Common
23
27
Stock, in connection with certain of the Company's employee benefit plans. The
amounts involved in such transactions were not material to the Company or any of
such companies.
A company wholly owned by Mr. Turner is reimbursed by TBS for Mr. Turner's
business use of a plane owned and operated by such company. During 1999, TBS
reimbursed such company for an aggregate of $627,198 relating to Mr. Turner's
business use of such plane during 1998 and 1999. Mr. Danforth, a director, is a
partner at Bryan Cave LLP, a law firm that historically provided legal services
to the Company and its subsidiaries prior to Mr. Danforth's service as a
director. In 1999, the firm continued to render legal services to the Company
and is expected to do so in the future. As previously disclosed, Gerald
Greenwald, a director, has a contract with Warner Books, Inc., one of the
Company's subsidiaries, for the publication of a book to be written by Mr.
Greenwald. Consistent with Warner Books' customary practices, Mr. Greenwald was
paid an advance in 1998 upon signing, and will be paid additional advances upon
acceptance of the manuscript and upon publication, with royalty payments
dependent on book sales, all of which Mr. Greenwald has committed to donate to
charity. As part of Mr. Greenwald's advance, Warner Books has paid $60,000 to
Mr. Greenwald's collaborator.
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 2000
and has determined that it would be desirable to request that the stockholders
approve such appointment.
Ernst & Young LLP has served the Company and its subsidiaries as
independent auditors for many years. Representatives of Ernst & Young LLP will
be present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and to respond to appropriate questions from stockholders.
VOTE REQUIRED FOR APPROVAL
Stockholder approval is not required for the appointment of Ernst & Young
LLP, since the Board of Directors has the responsibility for selecting auditors.
However, the appointment is being submitted for approval at the Annual Meeting.
No determination has been made as to what action the Board of Directors would
take if stockholders do not approve the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and certain officers, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the SEC and the New York Stock Exchange. These officers, directors and greater
than ten-percent stockholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms furnished to the Company, or written
representations that no Forms 5 were required, the Company believes that during
1999, these officers, directors and greater than ten-percent beneficial owners
complied with all applicable Section 16(a) filing requirements.
EXPENSES OF SOLICITATION
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be borne by the Company. In addition to
solicitation by use of the mails, proxies and voting instructions may be
solicited by directors, officers and employees of the Company in person or by
telephone, telegram or other means of communication. Such directors, officers
and employees will not
24
28
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 $12,000, 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
2001 Annual Meeting, stockholder proposals must be received by the Company no
later than December 1, 2000, and must otherwise comply with the requirements of
Rule 14a-8. In addition, the Company's By-laws establish an advance notice
procedure with regard to certain matters, including stockholder proposals not
included in the Company's proxy statement, to be brought before an annual
meeting of stockholders. In general, notice must be received by the Secretary of
the Company not less than 70 days nor more than 120 days prior to the
anniversary date of the immediately preceding annual meeting and must contain
specified information concerning the matters to be brought before such meeting
and concerning the stockholder proposing such matters. Therefore, to be
presented at the Company's 2001 Annual Meeting, such a proposal must be received
by the Company after January 18, 2001 but no later than March 9, 2001. If the
date of the annual meeting is more than 30 days earlier or more than 60 days
later than such anniversary date, notice must be received not earlier than the
120th day prior to such annual meeting and not later than the close of business
on the later of the 70th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of such meeting is
first made. If a stockholder who has notified the Company of his intention to
present a proposal at an annual meeting does not appear or send a qualified
representative to present his proposal at such meeting, the Company need not
present the proposal for a vote at such meeting. If the AOL Merger Transaction
is completed before the Company's 2001 annual meeting of stockholders, the
Company would not convene such a meeting at which such a proposal could be
presented.
All notices of proposals by stockholders, whether or not to be included in
the Company's proxy materials, should be sent to the attention of the Secretary
of the Company at 75 Rockefeller Plaza, New York, New York 10019.
GENERAL
The Board of Directors does not know of any other matters to be presented
at the Annual Meeting. If any additional matters are properly presented, the
persons named in the proxy will have discretion to vote in accordance with their
own judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS,
GERALD M. LEVIN
Chairman of the Board and
Chief Executive Officer
March 30, 2000
25
29
TIME WARNER INC.
P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
R TIME WARNER INC. FOR THE ANNUAL MEETING ON MAY 18, 2000
O
X The undersigned hereby constitutes and appoints Christopher P. Bogart,
Y Joseph A. Ripp and John A. LaBarca, 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
18, 2000, 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.
Please mark, sign and date this Proxy Card on the reverse side and return
it promptly using the enclosed reply envelope or submit your proxy by
telephone or the Internet.
(Continued, and to be completed, on reverse side)
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
-----------
TIME WARNER
-----------
ADMISSION TICKET
2000 ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 18, 2000
10:00 AM
APOLLO THEATRE
253 WEST 125TH STREET
NEW YORK, NY
THIS TICKET MUST BE PRESENTED TO ENTER THE THEATRE
ADMITS TWO PERSONS
30
- ------------------------------------------------------------------------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. Please mark your votes as
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED AND indicated in this example [ X ]
FOR PROPOSAL 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES IN ITEM 1 AND FOR PROPOSAL 2.
1. Election of Directors Nominees: 01 J. Carter Bacot, 02 Stephen F. Bollenbach, 03 John C. Danforth,
04 Gerald Greenwald, 05 Carla A. Hills, 06 Gerald M. Levin, 07 Reuben Mark,
FOR all nominees WITHHOLD 08 Michael A. Miles, 09 Richard D. Parsons, 10 R. E. Turner and
listed to the right AUTHORITY 11 Francis T. Vincent Jr.
(except as marked to vote for all nominees
to the contrary) listed to the right For, except vote withheld from the following nominee(s):
[ ] [ ] -----------------------------------------------------------------------------
================================
2. Approval of Auditors 3. In their discretion, upon such - IF YOU WISH TO SUBMIT YOUR
other matters as may properly PROXY BY TELEPHONE OR INTERNET,
FOR AGAINST ABSTAIN come before the Meeting. SEE THE INSTRUCTIONS BELOW. -
================================
[ ] [ ] [ ] 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 SIGNATURE DATE
---------------------------------------------- ----------------------------------- --------------------------
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
- ------------------------------------------------------------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
-------------------------------------------------------------------
SUBMIT YOUR PROXY BY TELEPHONE OR INTERNET
[TELEPHONE GRAPHIC] [COMPUTER GRAPHIC]
QUICK *** EASY *** IMMEDIATE
-------------------------------------------------------------------
YOUR VOTE IS IMPORTANT! - YOU CAN SUBMIT YOUR PROXY IN ONE OF THREE WAYS:
1. BY TELEPHONE: Call toll-free 1-800-840-1208 in the U.S., Canada or Puerto Rico on a touch tone telephone
24 HOURS A DAY - 7 DAYS A WEEK
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form.
- ------------------------------------------------------------------------------------------------------------------------------------
OPTION 1: To vote as the Board Of Directors recommends on ALL proposals, press 1
- ------------------------------------------------------------------------------------------------------------------------------------
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
- ------------------------------------------------------------------------------------------------------------------------------------
OPTION 2: If you choose to vote on each proposal separately, press 0. You will hear these instructions:
- ------------------------------------------------------------------------------------------------------------------------------------
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees, press 9;
to WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to the instructions.
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OR
2. BY INTERNET: Follow the instructions at our Website Address: http://www.eproxy.com/twx
OR
3. BY PROXY CARD: Mark, sign and date your proxy card and return it promptly in the enclosed envelope.
NOTE: If you submit a proxy by Internet or telephone, you must do so by 4:00 p.m., New York time, on May 17, 2000 and
THERE IS NO NEED TO MAIL BACK your Proxy Card.
THANK YOU FOR VOTING.
31
========================================================
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 18, 2000
The undersigned hereby constitutes and appoints Christopher P. Bogart,
Joseph A. Ripp and John A. LaBarca, 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 18, 2000, and any
adjournment thereof, and to vote on the matters indicated all the shares of
Preferred Stock which the undersigned would be entitled to vote if personally
present.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR all nominees
listed in item 1 and FOR proposal 2.
- ---------------- ------------------------- ----------------
Name of Holder Series of Preferred Stock Number of Shares
THE TIME WARNER INC. BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES IN ITEM 1 AND FOR PROPOSAL 2.
1. Election of Directors for terms expiring in 2001 -- J. Carter Bacot,
Stephen F. Bollenbach, John C. Danforth, Gerald Greenwald, Carla A.
Hills, Gerald M. Levin, Reuben Mark, Michael A. Miles, Richard D.
Parsons, R.E. Turner and Francis T. Vincent, Jr., nominees.
FOR [ ] WITHHELD [ ]
[ ] FOR, except vote withheld from the following nominee(s):
-----------
-----------------------------------------------------------------
2. Approval of Auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, upon such other matters as may properly come
before the meeting.
Please check this box if you plan to attend the meeting. [ ]
Signature(s)
----------------------------
-------------------------------------- -------
Note: Please sign exactly as name Date
appears hereon. When signing
as attorney, officer, administrator
or trustee, please give full title as
such.
32
CONFIDENTIAL VOTING INSTRUCTIONS
TIME WARNER SAVINGS PLAN
TIME WARNER THRIFT PLAN
TWC SAVINGS PLAN
INSTRUCTIONS SOLICITED BY FIDELITY MANAGEMENT TRUST COMPANY ON BEHALF OF THE
BOARD OF DIRECTORS FOR THE TIME WARNER INC. ANNUAL MEETING ON MAY 18, 2000.
Under the provisions of the Trust relating to these Plans, Fidelity Management
Trust Company ("Fidelity"), as Trustee, is required to request your confidential
instructions as to how your proportionate interest in the shares of Time Warner
Common Stock held in the Time Warner Common Stock fund under those Plans (an
"interest") is to be voted at the Annual Meeting of Stockholders scheduled to be
held on May 18, 2000. 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 15, 2000, your interest, if any, attributable to
(a) accounts transferred from the Time Incorporated Payroll-Based Employee Stock
Ownership Plan ("PAYSOP") and the WCI Employee Stock Ownership Plan ("WCI ESOP")
will not be voted and (b) the remainder of your Plan accounts, if any, will be
voted at the Annual Meeting in the same proportion as other participants'
interests in each such respective Plan for which Fidelity has received voting
instructions (excluding PAYSOP and WCI ESOP accounts).
This instruction card must be
signed exactly as name appears
hereon.
------------------------------
------------------------------
Signature(s) Date
(CONTINUED ON REVERSE SIDE)
33
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 18, 2000 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.
Please vote by filling in the appropriate boxes.
1. Election of Directors for terms expiring in 2001 - J. Carter Bacot,
Stephen F. Bollenbach, John C. Danforth, Gerald Greenwald, Carla A.
Hills, Gerald M. Levin, Reuben Mark, Michael A. Miles, Richard D.
Parsons, R.E. Turner and Francis T. Vincent, Jr., nominees.
FOR [ ] WITHHELD [ ]
[ ] FOR, except vote withheld from the following nominee(s):
-----------
2. Approval of Auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To grant discretionary voting authority to management persons regarding
such other matters as may properly come before the meeting.
Please check this box if you plan to attend the meeting. [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
34
=========================================================
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 18, 2000
The undersigned hereby constitutes and appoints Christopher P. Bogart,
Joseph A. Ripp and John A. LaBarca, 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 18, 2000, and any
adjournment thereof, and to vote on the matters indicated all the shares of
SERIES LMCN-V COMMON STOCK which the undersigned would be entitled to vote if
personally present.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR all nominees
listed in item 1.
- ------------------------- ----------------
Name of Holder Number of Shares
THE TIME WARNER INC. BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES IN ITEM 1.
1. Election of Directors for terms expiring in 2001 - J. Carter Bacot,
Stephen F. Bollenbach, John C. Danforth, Gerald Greenwald, Carla A.
Hills, Gerald M. Levin, Reuben Mark, Michael A. Miles, Richard D.
Parsons, R. E. Turner and Francis T. Vincent, Jr., nominees.
FOR [ ] WITHHELD [ ]
[ ] FOR, except vote withheld from the following nominee(s):
-----------
------------------------------------------------------------------
2. In their discretion, upon such other matters as may properly come
before the meeting.
Please check this box if you plan to attend the meeting. [ ]
Signature(s)
------------------------------
----------------------------------- --------
Note: Please sign exactly as name Date
appears hereon. When signing
as attorney, officer, administrator
or trustee, please give full title
as such.