TW puts stock in Bewkes' work

New CEO's compensation tied to share performance

Time Warner is tying a big part of the compensation for CEO-designate Jeffrey Bewkes to the conglomerate's stock price performance and signaling his likely addition of the chairman title within a year.

A regulatory filing late Friday signaled that current chairman and CEO Richard Parsons could stay on as chairman until the end of 2008 rather than the end of his contract in May.

However, it also mentioned a clause in Bewkes' new five-year contract that allows him to quit and go to work for a competitor if he doesn't also get named to the chairman post by Jan. 1, 2009. In that case, he wouldn't be eligible for severance.

Bewkes and Parsons said last week that it makes sense to have the chairman and CEO posts held by the same executive (HR 11/8).

Amid a broader market sell-off because of the latest economic worries, TW shares hit 52-week lows Friday.

Bewkes has signed a new employment agreement with the conglomerate that ends Dec. 31, 2012, according to a filing with the U.S. Securities and Exchange Commission that came out after Friday's market close.

In his new role as president and CEO, he will get a minimum annual salary of $1.75 million, up from the $1 million he was promised in his previous package and the $1.5 million Parsons made in 2006. Bewkes' salary would rise to $2 million if he is elected chairman.

In other compensation, Bewkes gets an annual cash target bonus of $8.5 million beginning in 2008, up from the previous $4.5 million and Parsons' $5.5 million previous target, as well as annual long-term incentive compensation with a target value of $8.5 million.

Bewkes' total 2006 compensation amounted to $18.66 million and Parsons' to $22.48 million, according to previous SEC filings. For Bewkes, this included a salary of $1.25 million and a cash bonus of $7.5 million.

For 2008, Bewkes' long-term incentive compensation will be in the form of stock options. Thereafter, it might include options, restricted stock units, performance stock units or other awards, the TW filing said.

In addition, the TW board's compensation committee approved a grant of 950,000 stock options following the execution of Bewkes' employment agreement and the award of 250,000 target performance stock units in January.

"The upfront PSUs will be paid out in a number of shares of common stock determined based on the company's total stockholder return relative to the TSR of other companies in the S&P 500 index over a five-year performance period beginning January 2008," the filing indicated.

Bewkes will receive 0%-200% of his target award following the five-year performance period.

Parsons' new employment contract extends the agreement's end through the end of 2008, but its terms are otherwise pretty much unchanged.

He will be eligible for a minimum annual salary of $1.5 million, a discretionary target cash bonus of $2.9 million and long-term incentive compensation comprising stock options and restricted stock units with a target value of $3.2 million.

Outgoing CFO Wayne Pace will become a part-time employee of TW and provide advisory services through Dec. 31, 2009, with an annual salary of $1 million, according to the SEC filing.

TW shares closed down 2.6% on Friday at $17.24 after falling as low as $17.16 intraday. The stock's previous 52-week low was $17.37.
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