Company Name: Time Warner Inc.
Public Availability Date: March 2, 2006
Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENCIX 2
INQUIRY LETTER
APPENDIX 3
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
January 5, 2006
VIA OVERNIGHT MAIL
Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: Time Warner Inc. - Proposal Submitted by Kenneth Steiner
Ladies and Gentlemen:
This letter respectfully requests that the staff of the Division of Corporation
Finance (the "Staff") of the Securities and Exchange Commission (the "SEC")
advise Time Warner Inc. (the "Company") that it will not recommend any
enforcement action to the SEC if the Company omits from its proxy statement and
proxy to be filed and distributed in connection with its 2006 annual meeting of
stockholders (the "Proxy Materials") a proposal (the "Proposal") it received
from Kenneth Steiner (the "Proponent"), naming John Chevedden as his proxy. The
Proposal, which is titled "Independent Board Chairman," requests that the
Company's board of directors (the "Board") amend the Company's organizational
documents "to require that the Chairman of [the] Board serve in that capacity
only and have no management duties, titles, or responsibilities."
The Company intends to omit the Proposal from its Proxy Materials pursuant to
Rule 14a-8(i)(11) because it substantially duplicates another proposal (the
"Prior Proposal") previously submitted to the Company by another proponent that
will be included in the Company's Proxy Materials.
Pursuant to Rule 14a-8(j) under the Securities Exchange Act of 1934, we are
enclosing six copies of each of this letter, the Proposal (Exhibit A) and the
Prior Proposal (Exhibit B). By copy of this letter, the Company hereby notifies
the Proponent as required by Rule 14a-8(j) of its intention to exclude the
Proposal from its Proxy Materials.
Ground for Omission
The Proposal substantially duplicates a prior proposal that will be included in
the Company's Proxy Materials, and the Proposal may therefore be omitted from
the Proxy Materials pursuant to Rule 14a-8(i)(11).
The Company received the Proposal on November 30, 2005, which the Proponent
revised on December 6, 2005. As noted above, it requests that the Company amend
its organizational documents to require that the chairman of the Board serve
only as chairman and not in any management capacity at the Company, and its
thrust is that the chairman of the Board be an independent director. The Company
received the Prior Proposal from Christian Brothers Investment Services, Inc. on
November 23, 2005, and is joined by each of the parties listed on Annex 1 as
co-filers. The Prior Proposal requests that the Board "establish a policy of,
whenever possible, separating the roles of [c]hair[man] and [c]hief [e]xecutive
[o]fficer so that an independent director who has not served as an executive
officer of the Company [will] serve[] as [c]hair[man] [of the Board]," and its
thrust is also that the chairman of the Board be an independent director. The
Company will include the Prior Proposal in its Proxy Materials. It is the
Company's view that the Proposal substantially duplicates the Prior Proposal
that will be included in the Company's Proxy Materials and, therefore, may be
omitted from the Proxy Materials pursuant to Rule 14a-8(i)(11).
Rule 14a-8(i)(11) permits the exclusion from the Company's Proxy Materials of
any stockholder proposal that substantially duplicates another proposal
previously submitted by another proponent that will be included in the Company's
Proxy Materials for the same meeting. The Staff has previously indicated that a
company does not have the option of selecting between duplicative proposals but
must include in its proxy materials the first of such proposals. See
Constellation Energy Group, Inc. (February 19, 2004); Wells Fargo & Company
(February 5, 2003). The Staff has stated that Rule 14a-8(i)(11) was adopted, in
part, to eliminate the possibility that stockholders would have to consider two
or more substantially identical proposals submitted by proponents acting
independently of each other. See Exchange Act Release No. 34-12999 (November 22,
1976).
Notably, the Staff has previously granted relief under Rule 14a-8(i)(11) where
the two proposals at issue were virtually identical to those received by the
Company. In Comcast Corporation (March 22, 2005), the company received a
proposal requesting that the company's board adopt a resolution requiring that
the chairman of the board serve in that capacity only and have no management
duties, titles, or responsibilities, which proposal substantively mirrors the
Proposal. Later, the company received a proposal requesting that the company's
board amend the company's charter to require that the chairman of the board be
an independent director who had not previously served as an executive officer of
the company, which proposal substantively mirrors the Prior Proposal. Although
the two proposals differed immaterially in that one proposal sought to prevent
the chairman of the board from having any management duties, titles or
responsibilities, whereas the other proposal sought only to prevent the chairman
of the board from also serving as an executive officer, the Staff concluded that
the two proposals were substantially duplicative. This is the precise factual
analogue that the Company now faces.
Rule 14a-8(i)(11) does not require that a proposal be identical to a previously
submitted proposal for it to be excluded from the Company's Proxy Materials. The
Staff has consistently indicated that proposals with the same "principal thrust
or focus" may be substantially duplicative even if such proposals differ as to
terms and scope. See The Home Depot, Inc. (February 28, 2005) (a proposal
requesting that the company's compensation committee adopt a policy that a
significant portion of restricted stock and deferred stock units granted to
senior executives require the achievement of performance goals as a prerequisite
to vesting was substantially duplicative of a proposal requesting that the
compensation committee adopt a performance and time-based restricted share grant
program for senior executives that included specific time- and performance-based
vesting features). Implicit in the "principal thrust or focus" test is the
concern that the presence of multiple proposals in the same proxy statement that
address the same issue in different terms creates the risk that, if each of the
proposals were adopted by the stockholders, the board of directors would not be
left with a clear expression of stockholder intent on the issue. See General
Electric Company (January 22, 2003). Thus, while Rule 14a-8(i)(11) protects
stockholders from the confusion caused by substantially duplicative proposals,
it also protects a board from being placed in a position where it cannot
effectively consider or implement the stockholders' will because the proposals
request different board actions. For example, in Monsanto Company (February 7,
2000), the company received two proposals, both of which the company interpreted
as seeking to eliminate its classified board. The first proposal requested that
the entire board be elected at every third annual meeting, and the second
proposal requested that all of the directors be elected each year. The Staff, in
permitting the company to exclude the second proposal from its proxy statement
under Rule 14a-8(i)(11), noted that "shareholder approval of both proposals
would require the board to choose between an annual and triennial timetable for
election of candidates for seats on a declassified board."
The Proposal substantially duplicates the Prior Proposal because the principal
thrust and focus of the two proposals is the same in that each proposal seeks an
independent chairman of the Board. The slight difference between the Proposals
is that the Prior Proposal seeks a chairman who is not an executive officer of
the Company, while the Proposal seeks a chairman with no management role at all.
If both or only one of the proposals were adopted, the policy concern behind
Rule 14a-8(i)(11) would be frustrated because the Company either would have to
address conflicting mandates from stockholders (if one proposal were approved
but the other rejected) or would have to address whether stockholders desired a
chairman who did not serve as an executive officer or rather a chairman with no
management role at all (if both proposals were approved).
The Staff has previously granted no-action relief in the context of two
proposals that were virtually identical to those received by the Company. In
addition, the Prior Proposal, by substantively mirroring yet conflicting with
the terms of the Proposal, creates the precise conflict that Monsanto Company
sought to avoid. For these reasons, the Company respectfully submits that the
Proposal be excluded from the Proxy Materials pursuant to Rule 14a-8(i)(11).
*****
The Company respectfully requests that the Staff confirm that it would not
recommend enforcement action if the Company excludes the Proposal from its Proxy
Materials for the foregoing reason. If you have any questions or if the Staff is
unable to agree with our conclusions without additional information or
discussions, we respectfully request the opportunity to confer with members of
the Staff prior to issuance of any written response to this letter. Please do
not hesitate to call the undersigned at (212) 484-7961.
Please acknowledge receipt of this letter and its attachment by date-stamping
the enclosed copy of the first page of this letter and returning it in the
self-addressed stamped envelope provided for your convenience.
Very truly yours,
/s/
Janet A. Silverman
Senior Counsel
cc: Kenneth Steiner
c/o John Chevedden
2215 Nelson Avenue, No. 205
Redondo Beach, CA 90278
Co-filers of the Prior Proposal
Sisters of Charity of the Incarnate Word
Basilian Fathers of Toronto
The Ethical Funds Company
The Marianist Province of the United States
Sisters of the Blessed Sacrament
Missionary Oblates of Mary Immaculate
Unitarian Universalist Association
Benedictine Sisters of Mount St. Scholastica
Congregation of Holy Cross
[APPENDIX 1]
November 23, 2005
Mr. Richard D. Parsons
Chairman and CEO
Time Warner Inc
1 Time Warner Center
New York, NY 10019
RE: Agenda Item for 2006 Annual Shareholder Meeting
Dear Mr. Parsons:
Please include the enclosed proposal in the Company's Proxy Statement and Form
of Proxy relating to the 2006 Annual Meeting of Stockholders of Time Warner,
Inc. A representative of Christian Brothers Investment Services, Inc. (CBIS)
will present this resolution to the assembled stockholders.
Also enclosed is certification from our Custodian, Mellon Bank, of our long
position of 882,550 shares and the fulfillment of the market value amount and
time requirements of SEC Rule 14a-8. CBIS intends to fulfill all requirements of
Rule 14a-8, including holding the requisite amount of equity through the date of
the 2006 Meeting.
It is our understanding that other shareholders may also file this resolution.
The undersigned representative of CBIS has been designated the lead filer and
primary contact on this matter.
Sincerely yours,
/s/
Julie B. Tanner
Corporate Advocacy Coordinator
cc: Paul Washington, Corporate Secretary, Time Warner Susan Waxenberg, Assistant
General Counsel and Assistant Secretary
[APPENCIX 2]
Separate CEO & Chair Time Warner
Resolved: The shareholders of Time Warner request that the Board of Directors
establish a policy of, whenever possible, separating the roles of Chair and
Chief Executive Officer, so that an independent director who has not served as
an executive officer of the Company serves as Chair of the Board of Directors.
This proposal shall not apply to the extent that complying would breach any
contractual obligations in effect at the time of the 2006 shareholder meeting.
Supporting Statement
More companies are recognizing the separation of Chair of the Board and Chief
Executive Officer (CEO) to be sound corporate governance practice. An
independent Chair and vigorous Board will bring greater focus to ethical
imperatives, and be better able to forge solutions that serve the interests of
shareholders and consumers.
We believe:
It is the role of the Chief Executive Officer and management to run the
business of the company.
It is the role of the Board of Directors to provide independent oversight of
management and the CEO. A CEO should not be his own overseer while managing the
business.
Under the leadership of the Chair, the board should give strategic direction
and guidance and represent the best interests of the shareholders in maximizing
value
An independent board structure will also help the board address complex issues,
such as those noted by The Investor Responsibility Research Center's Social
Issues Report on the company, including:
Large Penalties: Time Warner has paid the U.S. Department of Justice and the
Securities and Exchange Commission $350 million dollars in 2004 and 2005.
Numerous Lawsuits: Time Warner is facing 20 class-action shareholder lawsuits
over the drop in its stock price.
Excessive Executive Compensation and Pay Disparity: Time Warner's most senior
executives are among the highest paid in the country at a time when an
investment in the company has underperformed the market. Combined, the five
highest-paid executives received approximately $32 million in salary and bonuses
in 2004. They were awarded restricted stock with an aggregate grantdate value of
$10.8 million and 1.7 million stock options with a grant date present value of
around $10 million while the company discontinued granting stock options to most
employees ("Time Warner Stops Granting Stock Options to Most of Staff," The New
York Times, February 19, 2005).
Several respected institutions recommend separation. The Council of
Institutional Investors adopted as one of its Corporate Governance Policies,
which they suggest for all corporations, "The board should be chaired by an
independent director." The report from The Conference Board's Commission on
Public Trust and Private Enterprise (2003) recommended as Best Practice that
"Each corporation should give careful consideration to separating the offices of
Chairman of the Board and CEO, with those two roles being performed by separate
individuals. The Chairman would be one of the independent directors."
An independent Chair can enhance investor confidence in our Company and
strengthen the integrity of the Board of Directors. We urge a vote FOR this
resolution.
[INQUIRY LETTER]
December 6, 2005
Kenneth Steiner
14 Stoner Ave., 2M
Great Neck, NY 11021
Mr. Richard D. Parsons
Time Warner Inc. (TWX)
1 Time Warner Center
New York NY 10019
Phone: 212 484-8000
Rule 14a-8 Proposal
Dear Mr. Parsons,
This Rule 14a-8 proposal is respectfully submitted in support of the long-term
performance of our company. This proposal is submitted for the next annual
shareholder meeting. Rule 14a-8 requirements are intended to be met including
the continuous ownership of the required stock value until after the date of the
applicable shareholder meeting. This submitted format, with the
shareholder-supplied emphasis, is intended to be used for definitive proxy
publication. This is the proxy for Mr. John Chevedden and/or his designee to act
on my behalf in shareholder matters, including this Rule 14a-8 proposal for the
forthcoming shareholder meeting before, during and after the forthcoming
shareholder meeting. Please direct all future communication to Mr. Chevedden at:
2215 Nelson Ave., No. 205
Redondo Beach, CA 90278
T: 310-371-7872
Your consideration and the consideration of the Board of Directors is
appreciated in support of the long-term performance of our company. Please
acknowledge this proposal within 14-days.
Sincerely,
/s/
Kenneth Steiner
Date 11/28/05
cc: Paul F. Washington Corporate Secretary
PH: 212-484-6753
FX: 212-484-7174
Fax: 212 489-6183
Susan Waxenberg
Assistant Secretary
212-484-7350
212-937-3594
Janet Silverman
Senior Counsel
F: 212-202-4124
[APPENDIX 3]
[December 6, 2005 Update]
3 - Independent Board Chairman
RESOLVED: Stockholders request that our Board change our governing documents
(Charter or Bylaws if practicable) to require that the Chairman of our Board
serve in that capacity only and have no management duties, titles, or
responsibilities. This proposal gives our company an opportunity to cure our
Chairman's loss of independence (in accordance with SEC Staff Legal Bulletin
14C) should it exist or occur once this proposal is adopted.
The primary purpose of our Chairman and Board of Directors is to protect
shareholders' interests by providing independent oversight of management,
including the CEO. Separating the roles of Chairman and CEO can promote greater
management accountability to shareholders and lead to a more objective
evaluation of our CEO. An Independent Chairman of our Board would be better able
to address the weaknesses in our current board and the excess pay problem at our
company. The Council of Institutional Investors www.cii.org, whose members have
$3 trillion invested, recommends adoption of this proposal topic.
According to The Corporate Library http://www.thecorporatelibrary.com/, a
pro-investor research firm, the current compensation strategies at our Company
are egregious. The Chief Executive Officer received a bonus almost 7-times the
size of his base salary. Compounding this are the ongoing distribution of large
chunks of available shares to executives and the result is the compensation
practices of Time Warner fall well short of acceptable standards.
The Corporate Library said that our Board remains one of the weakest, least
effective of current large US boards. Worse yet, it is a board that fails
utterly to recognize its own weaknesses, and will likely fight the Icahn group's
efforts tooth and nail, to the continued disadvantage and dismay of
long-suffering Time Warner shareholders. Our Board may even "win," since our
company's charter and bylaws both concentrate in the hands of our CEO and board
what should be shareholder powers - such as the ability to call a special
meeting. Even so, the pressure applied should at the very least highlight a few
of the key issues facing Time Warner, that the current board has preferred to
ignore these past many months, and there might even be some change for the
better. Time Warner Inc. (current Fortune rank 32), is one of a number of large
US firms whose recent market performance should serve as a stark reminder to
investors of the negative impact of a weak, ineffective board and poor overall
corporate governance.
Also our current CEO/Chairman Mr. Parsons is one of three Time Warner directors
rated "problem directors" by The Corporate Library - because he chaired the
Citigroup executive compensation committee with a record of overcompensation.
Moreover
It is well to remember that at Enron, WorldCom, Tyco, and other legends of
mis-management and/or corruption, the Chairman also served as CEO. If a CEO, who
is also the Chairman, wants to cover up improprieties and directors disagree,
with whom do they lodge complaints? The Chairman?
Notes:
The above format is the format submitted and intended for publication.
Kenneth Steiner, 14 Stoner Ave., 2M. Great Neck, NY 11021 submitted this
proposal.
The company is requested to assign a proposal number (represented by "3" above)
based on the chronological order in which proposals are submitted. The requested
designation of "3" or higher number allows for ratification of auditors to be
item 2.
This proposal is believed to conform with Staff Legal Bulletin No. 14B (CF),
September 15, 2004 including:
Accordingly, going forward, we believe that it would not be appropriate for
companies to exclude supporting statement language and/or an entire proposal in
reliance on rule 14a-8(i)(3) in the following circumstances:
the company objects to factual assertions because they are not supported;
the company objects to factual assertions that, while not materially false or
misleading, may be disputed or countered;
the company objects to factual assertions because those assertions may be
interpreted by shareholders in a manner that is unfavorable to the company, its
directors, or its officers; and/or
the company objects to statements because they represent the opinion of the
shareholder proponent or a referenced source, but the statements are not
identified specifically as such.
See also: Sun Microsystems, Inc. (July 21, 2005).
Please note that the title of the proposal is part of the argument in favor of
the proposal. In the interest of clarity and to avoid confusion the title of
this and each other ballot item is requested to be consistent throughout the
proxy materials.
Please advise if there is any typographical question.
Stock will be held until after the annual meeting.
Please acknowledge this proposal within 14-days and advise the most convenient
fax number and email address for the Corporate Secretary's office.
[INQUIRY LETTER]
December 9, 2005
Mr. John Chevedden
2215 Nelson Avenue, No. 205
Redondo Beach, CA 90278
Re: Proposal Submitted to Time Warner Inc.
Dear Mr. Chevedden:
I am writing about the letter from Kenneth Steiner that was sent via facsimile
to Richard Parsons of Time Warner Inc. ("TWI"), with a copy to me, on December
6, 2005 (indicating "December 6, 2005 UPDATE"). As you are aware, Rule 14a-8
promulgated under the Securities Exchange Act of 1934 governs the requirements
for stockholders submitting proposals to a company for inclusion in the
company's proxy material for its stockholders' meetings and the situations in
which a company is not required to include any such proposal in such proxy
material.
Pursuant to Rule 14a-8(b), to be eligible to have a proposal included in the
proxy material of TWI, the proponent is required to own, at the time of
submitting the proposal, at least $2,000 worth of securities entitled to be
voted on the proposal at the meeting and to have held such securities
continuously for at least a year. Although Mr. Steiner states in his letter to
TWI that "Rule 14a-8 requirements are intended to be met including the
continuous ownership of the required stock value until after the date of the
applicable shareholder meeting," we have not received documentary proof of this
ownership. We also reviewed our records of registered stockholders and could not
confirm Mr. Steiner's ownership. Accordingly, as permitted by Rule 14a-8, TWI
requests a written statement from the "record" holder of the TWI common stock
(usually a broker or bank) verifying that, as of December 6, 2005, Mr. Steiner
continuously held the requisite number of shares of TWI common stock for at
least one year and providing the number of shares owned.
Pursuant to Rule 14a-8(f)(1), this requested documentation must be provided to
TWI within 14 days of your receipt of this request. Pursuant to Mr. Steiner's
instructions, we are directing this request to your attention.
The proxy rules also provide certain substantive criteria pursuant to which a
company is permitted to exclude from its proxy materials a stockholder's
proposal. This letter addresses only the procedural requirements for submitting
your proposal and does not address or waive any of our substantive concerns.
Please address any future correspondence to my attention. Please note that any
correspondence sent to me via fax should be sent to both 212-202-4124 and
212-484-7278.
Sincerely,
/s/
Janet A. Silverman
Senior Counsel
cc: Mr. Kenneth Steiner
14 Stoner Avenue, 2M
Great Neck, NY 11021
[INQUIRY LETTER]
February 16, 2006
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Time Warner Inc. (TWX)
#1 Shareholder Position on Company No-Action Request Rule 14a-8
Proposal: Independent Board Chairman
Shareholder: Kenneth Steiner
Ladies and Gentlemen:
This is in response to the Time Warner January 5, 2006 no action request.
The rule 14a-8 proposal text states:
"3 Independent Board Chairman
"RESOLVED: Stockholders request that our Board change our governing documents
(Charter or Bylaws if practicable) to require that the Chairman of our Board
serve in that capacity only and have no management duties, titles, or
responsibilities. This proposal gives our company an opportunity to cure our
Chairman's loss of independence (in accordance with SEC Staff Legal Bulletin
14C) should it exist or occur once this proposal is adopted."
This is in contrast to the other proposal which states:
"Resolved: The shareholders of Time Warner request that the board of Directors
establish a policy of, whenever possible, separating the roles of Chair and
Chief Executive Officer, so that an independent director who has not served as
an executive officer of he Company serves as Chair of the Board of Directors.
"This proposal shall not apply to the extend that complying would breach any
contractual obligations in effect the time of the 2006 shareholder meeting."
Mr. Steiner's proposal is distinctive in comprehensiveness and furthermore in
its long-term durability by including the text "in our charter or bylaws if
practicable" compared to no such call-out in the other proposal. Also this
proposal is distinctive in explicitly complying with SEC Staff Legal Bulletin
14C with the text "(in accordance with SEC Staff Legal Bulletin 14C)." With the
other proposal the company could argue in its definitive proxy that it did not
comply with SLB 14C.
It is respectfully requested that concurrence not be granted to the company.
It is also respectfully requested that there be an opportunity to submit
additional material in support of the inclusion of the rule 14a-8 proposal.
Also that the shareholder have the last opportunity to submit material since the
company had the first opportunity.
Sincerely,
John Chevedden
cc:
Kenneth Steiner
Janet Silverman<janet-silverman@timewarner.com>
[STAFF REPLY LETTER]
March 2, 2006
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Time Warner Inc. Incoming letter dated January 5, 2006
The proposal requests that the board change the company's governing documents to
require that the chairman serve in that capacity only and have no management
duties, titles, or responsibilities.
There appears to be some basis for your view that Time Warner may exclude the
proposal under rule 14a-8(i)(11), as substantially duplicative of a previously
submitted proposal that will be included in Time Warner's 2006 proxy materials.
Accordingly, we will not recommend enforcement action to the Commission if Time
Warner omits the proposal from its proxy materials in reliance on rule
14a-8(i)(11).
Sincerely,
/s/
Gregory Belliston
Attorney-Adviser
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