Time Warner paid topper Richard Parsons a cash bonus of $8 million in 2003 compared with zip the year before, part of a rich package the company attributed to its improved performance and the fact Parsons added the chairman title to that of CEO.
In its annual proxy statement filed with the SEC Thursday, Time Warner said Parsons’ 2003 base salary of $1.5 million was up from $1 million the year before, and he received a restricted stock grant worth just over $2.1 million. He wasn’t awarded any restricted stock in 2002.
Other top execs also made out nicely. Jeff Bewkes, head of the Entertainment & Networks Group, and Don Logan, head of the Media & Communications Group, each earned a $1 million base salary and a $6.5 million bonus — up from $5 million the year before. Bewkes was awarded restricted stock worth nearly $10.8 million. Logan’s grant was worth $1.8 million.
Time Warner cited a number of accomplishments during the year, including hitting its main financial targets, strengthening its balance sheet, settling litigation with Microsoft, restructuring Time Warner Entertainment and generally achieving “an improved work environment.” The company also noted Parsons’ bonuses in 2001 and 2002 were granted solely in stock options, half of which had an exercise price well above the value of the stock when the options were granted: in other words, they may be worthless.
The company’s shares rose more than 34% during 2003 to end the year at $17.90. The stock closed Thursday at $16.97.
The compensation committee said it “determined that an annual cash bonus would provide a clearer and stronger link between Mr. Parsons’ compensation and the company’s annual financial performance.”
Proxies disclose the pay packages of companies’ five best-compensated execs. Chief financial officer Wayne Pace earned a $1 million base salary, a $2.7 million bonus and a restricted stock award worth $813,969. Robert Kimmitt, head of global public policy, earned a $480,000 salary, a $900,000 bonus and a restricted stock grant worth $348,560.
Parsons, Bewkes and Logan are sitting on millions of dollars worth of unexercised stock options.
Parsons’ employment contract expires in 2008, Bewkes’ in 2007 and Logan’s at the end of this year.
The proxy also revealed that Franklin Raines, chairman of mortgage company Fannie Mae, will step down as a Time Warner director this year. Raines had been on the board of America Online and joined the Time Warner board after the companies merged in 2001.
The move brings the number of directors to 13 and gives Parsons, who has indicated he’d like to see more diversity on the board, additional room to maneuver. Last December, former Harvard Law School dean Robert Clark was named to the board.
The company said it sees an ideal board size of between 12 and 16 directors.
Shareholder will vote on directors and other issues at Time Warner’s annual shareholders’ meeting, scheduled for May 20 at Warner Bros. studio in Los Angeles.
At that same meet a year ago, the company was still called AOL Time Warner and Steve Case had just resigned as chairman. But he stayed on the board, and board composition was a hot topic.
A large number of shareholders withheld support for the reelection of Case and two of his former advisors at AOL, Kenneth Novack and Miles Gilburne. In the absence of an alternate slate, all three were reelected, but they may face pressure again this year.
Novack resigned as vice-chairman of the company in December.
One shareholder resolution that will be presented at the annual meeting asks the company to initiate a detailed review of its executive compensation policies.
Time Warner also noted that as of March 2004, 11 shareholder lawsuits have been filed against the company and certain current and former executives for allegedly misrepresenting the financial health of America Online and the growth potential of the merged company.
The SEC and the Dept. of Justice are also investigating accounting irregularities at AOL, probes that are weighing on the stock price.