Bewkes Wants the Chair
And Time Warner Inc.’s New CEO Has Good Reasons for It
By Mike Farrell -- Multichannel News, 11/18/2007 7:00:00 PM
Incoming Time Warner Inc. CEO Jeff Bewkes might not know exactly what changes he will make once he assumes the top job at the world’s largest media company on Jan. 1, but there is one thing he does appear to be certain of: He wants to be chairman.
Bewkes was named on Nov. 5 to succeed Richard Parsons as CEO in a move that was widely expected. He’s been considered as an agent of change for Time Warner, with several analysts speculating that he will shore up the media giant by either spinning off completely or reducing its 84% interest in Time Warner Cable, or spinning off or selling its AOL online unit or its publishing arm.
Parsons was expected to remain chairman at least until Time Warner’s May annual meeting of shareholders — he too signed a new employment deal that lasts until Dec. 31, 2008. But according to a securities filing on Nov. 9, he would have to pass that baton onto Bewkes shortly after.
According to the filing, Bewkes will receive a compensation package totaling about $10.25 million per year as CEO — $1.75 million in salary and $8.5 million in discretionary cash bonuses.
In the five-year deal, Bewkes also stands to make another $8.5 million annually in stock options as part of a long-term incentive package.
Including the long-term incentives, Bewkes’s new deal would be slightly better than the $18.655 million he pocketed through salary, bonus and incentives in 2006.
If he’s named chairman before Jan. 1, 2009, his annual salary will be bumped up to $2 million in the first year.
But if he isn’t made chairman — a feat that took Parsons less than a year to complete after being named CEO in May 2002 — Bewkes can walk.
It could cost him some money to leave, though. According to the filing, if Bewkes leaves because he was not named chairman, he would only receive compensation earned up to the point of his resignation and he would not be eligible for severance.
But in those conditions, he wouldn’t have to honor a non-compete clause in his contract — meaning that he could take a job immediately with a competitor of Time Warner.
It is unlikely, save a disaster of epic proportions, that Time Warner will let Bewkes go. Although there has been a move in recent years to separate the positions of chairman and CEO, that practice at Time Warner — where Gerald Levin was CEO and Steve Case chairman prior to 2003 — ended with Parsons and has endured little criticism.
The filing said Parsons will receive annual compensation of $1.5 million, a discretionary cash bonus of up to $2.9 million and long-term incentives including stock options and restricted stock units with a target value of $3.2 million.
His deal expires on Dec. 31, 2008.
While Bewkes is expected by many analysts who follow the company to be a more aggressive CEO, he has so far kept his plans close to the vest.
“It’s not appropriate for us to describe our view now,” Bewkes said on a Nov. 8 teleconference to discuss third quarter results. “We will consider it and make decisions in due course.”
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