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Time Warner Inc. – ‘10-K/A’ for 12/31/17

On:  Friday, 4/27/18, at 11:01am ET   ·   For:  12/31/17   ·   Accession #:  1193125-18-137203   ·   File #:  1-15062

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 2: EX-10.1     Material Contract                                   HTML     82K 
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

(Amendment No. 1)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

Commission file number 001-15062

TIME WARNER INC.

(Exact name of Registrant as specified in its charter)

One Time Warner Center

New York, NY 10019-8016

(Address of Principal Executive Offices)(Zip Code)

(212) 484-8000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of the close of business on April 20, 2018, there were 782,319,431 shares of the registrant’s Common Stock outstanding. The aggregate market value of the registrant’s voting and non-voting common equity securities held by non-affiliates of the registrant (based upon the closing price of such shares on the New York Stock Exchange on June 30, 2017) was approximately $78.17 billion.

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EXPLANATORY NOTE

On February 22, 2018, Time Warner Inc. (the “Company” or “Time Warner”) filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “2017 Form 10-K”). This Amendment No. 1 (the “Amendment”) amends Part III, Items 10 through 14, of the 2017 Form 10-K to include information previously omitted from the 2017 Form 10-K in reliance on General Instruction G(3) to Form 10-K. General Instruction G(3) to Form 10-K provides that registrants may incorporate by reference certain information from a definitive proxy statement which involves the election of directors if such definitive proxy statement is filed with the Securities and Exchange Commission (“SEC”) within 120 days after the end of the fiscal year. Due to the pending merger between Time Warner and AT&T Inc., the Company will not file a definitive proxy statement that involves the election of directors by April 30, 2018 (i.e., within 120 days after the end of the Company’s 2017 fiscal year). Accordingly, Part III of the 2017 Form 10-K is hereby amended to add the information set forth below.

In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), certifications by the Company’s principal executive officer and principal financial officer are filed as exhibits to this Amendment under Item 15 of Part IV. The certifications are filed with this Amendment as Exhibits 31.1 and 31.2. Because no financial statements are included in this Amendment and this Amendment does not contain or amend any disclosures with respect to Items 307 or 308 of Regulation S-K, paragraphs 3, 4 and 5 of the certifications have been omitted. This Amendment does not include the certifications under Section 906 of the Sarbanes-Oxley Act of 2002 because no financial statements are included in this Amendment.

Except as stated herein, this Amendment does not reflect events occurring after the filing of the 2017 Form 10-K with the SEC on February 22, 2018 and no attempt has been made in this Amendment to modify or update other disclosures contained in the 2017 Form 10-K.

PART III

Executive Officers

For information relating to the Company’s executive officers, see Part I, “Executive Officers of the Company” in the 2017 Form 10-K.

Board of Directors

Set forth below is information regarding the members of the Board of Directors of the Company (the “Board”), including their ages as of April 26, 2018 and their key skills and professional qualifications. The Board and the Nominating and Governance Committee (the “Nominating Committee”) believe that the depth and breadth of qualifications, skills and experiences of the directors, all of whom are seasoned leaders, have contributed to an effective and well-functioning Board and that, individually and as a whole, the directors possess the necessary qualifications to provide effective oversight of and advice to the Company’s management and businesses.

The Board has three standing committees: the Audit and Finance Committee (the “Audit Committee”), the Nominating Committee and the Compensation and Human Development Committee (the “Compensation Committee”). All members of the committees are independent and satisfy the standards of independence applicable to the respective committee.

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Board Leadership

The current leadership structure consists of one individual serving as Chairman of the Board and CEO and an independent director serving as Lead Independent Director with meaningful responsibilities and authority, who serve as part of a Board consisting of nine engaged and effective directors, eight of whom are independent. The Lead Independent Director’s authority and responsibilities include:

The Board’s Policy on Determining the Leadership Structure of the Board of Directors requires the Nominating Committee and the Board to conduct an annual review of the Board’s leadership structure. In its annual review in January 2018, the Board determined that the current leadership structure is effective and continues to be the optimal structure for the Company. The report on the Board’s determination of its leadership structure is posted on the Company’s website at www.timewarner.com/leadership.

Audit Committee

The members of the Audit Committee are Robert C. Clark, Jessica P. Einhorn, Carlos M. Gutierrez and Deborah C. Wright (Chair). The Board has determined that all members of the Audit Committee are independent, satisfy the standards of independence applicable to the committee and are financially literate in accordance with the listing standards of the New York Stock Exchange (the “NYSE”). In addition, the Board has determined that each of Ms. Wright and Messrs. Clark and Gutierrez is an “audit committee financial expert” as defined under SEC rules.

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Corporate Governance Documents and Website

The following documents are available on the Company’s website at www.timewarner.com/governance and are also available in print to any shareholder who requests them by writing to the Office of the Corporate Secretary, Time Warner Inc., One Time Warner Center, New York, New York 10019-8016:

There were no waivers in 2017 under either the Code of Ethics or the Standards of Business Conduct with respect to any of the Time Warner senior executives covered by the Code of Ethics.

The references to the Company’s website in this Amendment are solely for the information of investors. The Company does not intend these addresses to be active links or to incorporate any information included on or accessible through its website into this Amendment or the 2017 Form 10-K.

Communicating with the Board of Directors

The Board has established processes to facilitate communications by the shareholders with the Board, any of its committees, or an individual member of the Board. Communications can be addressed to the Board, any of the Board’s committees, the non-employee directors as a group, the Chairman of the Board or any individual non-employee director in care of the Office of the Corporate Secretary, Time Warner Inc., One Time Warner Center, New York, NY 10019-8016.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE. Officers, directors and greater than 10% shareholders 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 such filings were required, the Company believes that its officers, directors and greater than 10% shareholders complied with all applicable Section 16(a) filing requirements in a timely manner during 2017.

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Compensation Discussion and Analysis (“CD&A”)

This CD&A describes the Company’s executive compensation principles and programs, with a focus on the Compensation Committee’s decisions regarding 2017 compensation for the Company’s named executive officers (“NEOs”) in the context of having entered into the Agreement and Plan of Merger with AT&T Inc. (“AT&T”) in October 2016 (the “Merger Agreement”). The NEOs for 2017 are:

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Section 1 – Overview of Company and Executive Compensation Decisions

This section provides an overview of the Company’s businesses, its strategy, the continued execution of such strategy in 2017, how the merger with AT&T is expected to advance the Company’s strategy, the Company’s strong 2017 financial performance, and the Compensation Committee’s key compensation decisions as part of the regular annual compensation review and in connection with the merger.

Time Warner’s Businesses

Time Warner is a global leader in media and entertainment that owns and operates television networks and produces and distributes television programming, films, games and other high-quality video content worldwide on a multi-platform basis. The Company has three operating divisions: Turner, Home Box Office and Warner Bros.

Leading domestic and international television networks and related digital properties in entertainment, sports, kids and news 2017 Revenues: $12.1 billion; 38% of Company’s total revenues		Leading global premium pay television services – HBO and Cinemax   2017 Revenues: $6.3 billion; 20% of Company’s total revenues		Largest integrated television, film and game studio in the world   2017 Revenues: $13.9 billion; 42% of Company’s total revenues

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Time Warner’s Strategy

During 2017, while the Company took actions to obtain the necessary shareholder and regulatory approvals, satisfy the other conditions required to close the merger with AT&T, and plan for integrating the companies following the closing, the Company also continued to execute its longstanding strategy of using its leading brands, distinctive intellectual property and global scale to capitalize on the growing demand for high-quality video content around the world. First, the Company invests in a concentrated portfolio of leading television networks, compelling television programming, top Hollywood movies, games and other forms of video and digital content that appeal to audiences globally and across distribution platforms. Second, the Company uses its scale and technology to meet consumer demand for the Company’s networks and content in the evolving TV ecosystem, including delivering content directly to consumers. Third, the Company continues to expand its businesses internationally with a focus on increasing scale in territories with strong long-term growth potential. Finally, the Company’s on-going focus on operating and capital efficiency delivers healthy profits and helps fund investments for future growth while providing attractive returns to shareholders. The Board engages with management throughout the year in overseeing the execution of the Company’s strategy, as well as evaluating and refining the strategy to address changes in the industry.

The Company believes that combining its content with AT&T’s distribution capabilities will accelerate the execution of the Company’s strategy of offering consumers more choice and value in television network bundles, developing and launching innovative video services delivered directly to consumers over the internet and on mobile devices, and providing more value to advertisers and consumers through targeted advertising.

Strong Financial Performance in 2017

The Company delivered strong financial performance in 2017, including 7% growth in revenues, 5% growth in Operating Income and 34% growth in Diluted Income per Common Share from Continuing Operations (“EPS”), as it continued to execute its strategy and worked to close the merger.

Executive Compensation Program for 2017

The Company’s executive compensation program for 2017 was shaped by the Compensation Committee’s decisions in October 2016 in connection with entering into the Merger Agreement. The Committee recognized that the merger would present unique retention and incentive challenges, including due to the extended time period it could take to complete the merger, the significant amount of work associated with closing the merger, and the uncertainty associated with working at a company in the process of undertaking a fundamental change. In addition, the Committee faced further challenges in providing appropriate incentives arising from the fact that the Company’s equity plan would expire in August 2017. Although in October 2016, when the Merger Agreement was signed, the Company expected the merger would be completed by year-end 2017, the potential existed (and the Merger Agreement reflected) that the merger might not be closed until sometime in 2018. Taking into consideration these factors, on October 22, 2016, the Committee approved a transaction-related program with cash and equity components to provide targeted incentives to certain employees, including the NEOs (but, with respect to the cash component, excluding Mr. Bewkes), to support the closing of the merger, the continued focus on the delivery of strong operating results and the retention of key employees. The transaction-related program took the place of the Company’s traditional long-term incentive program for the NEOs in 2017 and also has done so for 2018. For more information on the transaction-related program see “Key Executive Compensation Decisions for 2017—Transaction-Related Program.” In addition, in connection with entering into the Merger Agreement, the Compensation Committee approved extending the term of the employment agreements for each NEO (other than Mr. Bewkes) through 2019, and entering into new employment agreements with Mr. Ginsberg and Ms. Melton, both with a term through 2019. For more information on these employment agreements, see “Key Executive Compensation Decisions for 2017—Extension of Terms of Employment Agreements.” The Committee subsequently followed its regular process in setting performance goals under the annual bonus program in January 2017, and approved bonus payouts for the NEOs at the end of 2017.

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Executive Compensation Program Designed to Support Sustained Performance and Achievement of Key Goals

Compensation Principles and Programs Support Pay-for-Performance Approach. The Compensation Committee is guided by the following key principles in making compensation decisions: the executive compensation program should (i) support the NEO’s accountability for the Company’s and the NEO’s individual performance; (ii) promote alignment of the NEO’s and shareholders’ interests; (iii) help attract, retain and motivate talent; and (iv) be determined by an independent committee responsible for making compensation decisions. The executive compensation program design has been informed by the Company’s engagement with shareholders, as described in more detail in “Section 5 – Shareholder Engagement on Executive Compensation.”

The Committee historically has applied these principles in the following manner to support sustained performance and tie compensation earned to the performance achieved:

When the Company entered into the Merger Agreement, the Committee adapted its approach, while applying the same compensation principles, to take into account the unique circumstances presented by the merger, as discussed above and in more detail below. The Committee implemented the transaction-related program in October 2016 to support the closing of the merger and provide incentives for employees in key positions to continue to focus on delivering strong results before and after the merger.

Compensation Mix that Ties Pay to Performance. The Compensation Committee believes that the NEOs’ compensation should be structured so that the vast majority is variable and performance-based. In addition, a substantial portion of their compensation should be equity-based to align with shareholder interests and further support the Company’s long-range plans and enterprise-wide value creation. However, taking into account the expected timing to close the merger, the Committee determined in October 2016 to implement the transaction-related program, which has taken the place of the long-term incentive program for 2017 (and for 2018). The decision reflected the Committee’s conclusion that granting time-vesting restricted stock units (“RSUs”) would represent the most effective approach to long-term incentive compensation given that the Company had agreed to undertake a fundamental change and be acquired by another company in the near term. Accordingly, to address the unique circumstances presented by the merger, the Committee determined in October 2016 to grant RSUs to the NEOs for the long-term incentive component of their compensation, rather than the mix of stock options, PSUs and RSUs that had previously been granted to the NEOs.

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Balanced Mix of Performance Measures. The Compensation Committee has selected a balanced mix of performance measures for the Company’s incentive programs, which support the execution of the Company’s long-range plans, encourage collaboration among businesses, and drive sustained financial performance and shareholder value. The following table summarizes the Company’s performance-based incentive compensation components, the performance measure(s) used in each and the performance delivered in 2017 and resulting payouts.

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Incentive Payouts Based on Challenging Performance Goals. For many years, the Compensation Committee has followed the rigorous process described below in setting challenging performance goals for the annual bonus and for PSU awards.

Although the Company did not grant PSUs in 2017, the performance goals used in determining payouts for PSUs whose performance period ended in 2017 were set by the Committee at the beginning of 2015 following the same process. The Committee also followed this process in setting Company financial goals for the 2017 annual bonus based on the budget and long-range plan approved by the Board in January 2017, which provided for strong earnings growth during the year. To help assess whether the Company financial goals for the annual bonus, and particularly the relative difficulty of achieving them, were appropriate, the Committee compared the goals to the following information:

The Committee concluded that the goals appropriately reflected the difficulty of achieving the 2017 budget and supported the delivery of the growth reflected in the Company’s 2017 budget and long-range plan.

The Committee also approved individual goals for each NEO that were focused on: supporting the successful completion of the merger; supporting the Company’s key long-term strategic objectives, including strengthening and diversifying the Company’s content slate, executing Turner’s and Home Box Office’s distribution strategies, enhancing technological capabilities, expanding internationally in territories with strong long-term growth potential, and effective capital management; and fostering talent development and diversity.

Key Executive Compensation Decisions for 2017

As noted above, the Company’s executive compensation program for 2017 was shaped by the Compensation Committee’s decisions in October 2016 in connection with entering into the Merger Agreement. On October 22, 2016, the Committee approved a transaction-related program with cash and equity components to provide targeted incentives to certain employees, including the NEOs (but, with respect to the cash component, excluding Mr. Bewkes), to support the closing of the merger, the continued focus on the delivery of strong operating results and the retention of key employees. The equity component of the transaction-related program (including the Transaction RSUs (as defined below) granted to Mr. Bewkes in February 2017) took the place of the Company’s traditional long-term incentive program for the NEOs in 2017 and also has done so for 2018. The Committee also approved extending the term of the employment agreements for each NEO (other than Mr. Bewkes) through 2019, and entering into new employment agreements with Mr. Ginsberg and Ms. Melton, each with a term through 2019.

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Transaction-Related Program. On October 22, 2016, the Committee approved a transaction-related program with cash and equity components to provide targeted incentives to certain employees.

Extension of Terms of Employment Agreements. The Compensation Committee determined it was in the interest of the Company and its shareholders to provide continuity of senior management through the closing of the merger and the integration process following the closing, and, as a result, on October 22, 2016, approved extending the term of the employment agreements for Messrs. Averill and Cappuccio through 2019. The extensions did not increase their compensation or severance benefits. The Committee also approved the entry into amended and restated employment agreements with Ms. Melton and Mr. Ginsberg. For Ms. Melton, whose employment agreement had a term ending on December 31, 2017, the amended and restated employment agreement extended the term of her employment through December 31, 2019 and did not increase her compensation or benefits. For Mr. Ginsberg, whose employment agreement had a term ending on December 31, 2016, and whose agreement extension and corresponding compensation change the Committee originally planned to review during its regular meeting scheduled for late October, the Committee approved the extension of the term of Mr. Ginsberg’s employment agreement through December 31, 2019. Considering Mr. Ginsberg’s strong ongoing performance in communicating the Company’s strategy and long-term growth plans, the Committee approved in the ordinary course, effective January 1, 2017, an increase in his annual salary to $900,000 and the target value of his annual long-term incentive compensation to $1,250,000.

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Strong Governance of Executive Compensation

The Company’s compensation governance policies and practices are designed to support effective oversight and implementation of the Company’s executive compensation program, thereby helping to drive the Company’s performance while mitigating compensation-related risk.

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Section 2 – Components of Executive Compensation

The following table describes the components of the compensation program that has historically been used to compensate the NEOs, and the purpose of each component. When the Company entered into the Merger Agreement, to reflect the unique circumstances presented by the merger, the Compensation Committee implemented the transaction-related program, which replaced the long-term incentive component of the compensation program (and included a cash component), as discussed in more detail throughout this CD&A.

Component				Description				Objectives
		Base Salary		●  Represents smallest component of total target direct compensation, consistent with pay-for-performance principles				●  Attract and retain NEOs by providing competitive level of fixed compensation
		Annual Cash Bonus		●  Performance-based annual compensation component linked to Company financial performance and individual performance compared to pre-set goals				●  Motivate and reward executives and promote alignment with shareholder interests by determining bonus amounts based on both annual financial performance and progress made during the year on key long-term strategic objectives
		Long-Term Incentive Awards		●  Performance-based multi-year compensation component linked to stock price and Company performance ●  Value ultimately earned by NEOs depends on stock price at vesting or exercise and, for PSUs, also on Company financial and relative TSR results over 3-year performance period ●  Value delivered through stock options, RSUs and PSUs prior to entry into the Merger Agreement and through RSUs thereafter (the Company’s equity plan expired in August 2017)				●  Provide incentives for executives to deliver strong Company stock and financial performance over the long-term ●  Reinforce alignment between interests of NEOs and shareholders ●  Promote retention
		Retirement Programs		●  A qualified savings plan and nonqualified deferred compensation plans and programs. The Company also has a qualified defined benefit pension plan and a nonqualified defined benefit plan (both now frozen)				●  Enable employees to plan and save for retirement at a reasonable cost to the Company
		Personal Benefits		●  Financial services reimbursement, life insurance benefits and transportation-related services ●  No tax gross-up – taxes on personal benefits are sole responsibility of the NEOs				●  Provide a competitive level of benefits at a reasonable cost to the Company ●  To improve security and efficiency, provide the Chairman and CEO a car and driver and encourage him to use Company aircraft for business and personal use

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Section 3 – Executive Compensation Decisions

This section describes the Compensation Committee’s decisions regarding 2017 compensation for the NEOs in more detail, including decisions made both as part of the regular annual compensation review and those made in connection with the merger.

Considerations in Determining 2017 Compensation

At the beginning of each year (or in connection with the entry into or extension of an employment agreement with an NEO), the Compensation Committee sets target compensation levels for each NEO. In determining target compensation levels, the Committee considers:

In addition, for 2017, the Committee considered the actions it approved in October 2016 and the additional context of the merger with AT&T.

Base Salary

The Compensation Committee reviews the NEOs’ base salaries annually and in connection with the entry into or renewal of an employment agreement with an NEO. The Committee determined to keep the base salaries for the NEOs (other than Mr. Ginsberg) unchanged for 2017. Mr. Bewkes’ base salary has been the same since 2010. Mr. Ginsberg’s base salary was increased effective January 1, 2017 in connection with the entry into his amended and restated employment agreement in October 2016. For more information on the amendment of Mr. Ginsberg’s employment agreement, see “Section 1 – Overview of Company and Executive Compensation Decisions—Key Executive Compensation Decisions for 2017—Extension of Terms of Employment Agreements.”

Performance-Based Compensation – Annual Cash Bonuses

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The Committee also approved individual performance goals for the NEOs that were focused on supporting the successful completion of the merger, supporting the Company’s key long-term strategic objectives, and fostering talent development and diversity. In addition, taking into account input from the Company’s shareholders, the Committee approved individual performance goals for Messrs. Bewkes and Averill that again included return on invested capital (“ROIC”) as a measure of their performance on capital allocation goals.

The Committee assigned a 70% weighting to the financial performance measures and a 30% weighting to the individual goals to emphasize the Committee’s view of the importance of achieving strong financial performance while reinforcing individual accountability for each NEO’s performance. The Committee also assigned a weighting of 70% to ADPTI and 30% to Free Cash Flow based on its view of the relative importance of these measures as indicators of the Company’s operating performance over both the short- and long-term.

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Mr. Bewkes (Chairman and CEO)

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Mr. Averill (EVP and CFO)

Mr. Cappuccio (EVP and General Counsel)

Mr. Ginsberg (EVP, Corporate Marketing & Communications)

Ms. Melton (EVP, Global Public Policy)

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Long-Term Incentives

In January 2017, the Compensation Committee approved the grant of Transaction RSUs with a target value equal to two times Mr. Bewkes’ $16 million target annual long-term incentive compensation (332,226 Transaction RSUs were granted in February 2017). The other NEOs had been granted Transaction RSUs in October 2016 with a target value equal to two times their respective 2017 target annual long-term incentive compensation as part of the Committee’s actions taken in connection with entering into the Merger Agreement and were not granted any long-term incentive awards in 2017. There is no plan to grant long-term incentive compensation awards to the NEOs in 2018.

PSUs Granted in Prior Periods.

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The chart below illustrates how the two measures are used to determine the final payout of shares for the PSUs. For example, if 100 target PSUs were awarded and after the three-year performance period (i) the Company’s cumulative Adjusted EPS is at a level that would result in a payout of 100% of the target PSUs and (ii) the relative TSR of the Common Stock is at the 75^th percentile, the final PSU payout would be calculated by multiplying the 100 target PSUs by an EPS Factor of 100% and a TSR Modifier of 120%, resulting in a payout of 120 shares of Common Stock.

Relative TSR  Performance(1)		TSR  Modifier					0%					50%					100%					150%					200%										Payout Based on EPS Factor Alone (as Percentage of Target)
£ 25th Percentile				80	%				0	%				40	%				80	%				120	%				160	%							Final Payout after Applying TSR      Modifier
50th Percentile				100	%				0	%				50	%				100	%				150	%				200	%
³ 75th Percentile				120	%				0	%				60	%				120	%				180	%				200	%

The Compensation Committee considered a number of potential designs, as well as views of the Company’s shareholders, when it approved the PSU program design and performance measures. The PSU program rewards Adjusted EPS performance based on goals set by the Committee at the beginning of the performance period and relative TSR, which provides a clear incentive for executives to drive shareholder value. With the TSR Modifier in the program design, strong performance on the Adjusted EPS goal is fully rewarded only if it also results in above average shareholder returns. These performance measures were selected because: (i) Adjusted EPS is one of the primary measures the Company and investors use to assess the Company’s performance, (ii) relative TSR is an important measure for shareholders and (iii) PSU recipients have a clear line of sight into how superior performance affects Adjusted EPS.

Adjusted EPS and relative TSR of the Company either would not be meaningful or could not reliably be measured for periods following a change in control of the Company. As a result, the PSU program design provides for measuring the Company’s performance at the time of a change in control that occurs prior to the end of the three-year performance period for the PSUs (which the Company expects will be the case in connection with the merger for the PSUs granted in 2016, which have a performance period ending December 31, 2018). For the same reasons, the Compensation Committee determined not to grant any PSUs after the Company entered into the Merger Agreement.

At the closing of the merger, the vesting of any outstanding PSUs (which are only expected to be the PSUs granted in 2016 with a performance period ending December 31, 2018) will be accelerated and the number of shares earned with respect to each PSU award will be determined by the Compensation Committee based on (a) an EPS Factor determined based on the sum of the Adjusted EPS achieved for each completed year in the performance period and the budgeted Adjusted EPS for any year in the performance period not completed before the closing of the merger, compared to the cumulative goals set at the beginning of the performance period, and (b) a TSR Modifier based on the Company’s relative TSR for the period from the beginning of the performance period through the end of the last fiscal quarter completed on or before the closing of the merger.

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Based on the Company’s TSR (14.4%) being at the 36.3^rd percentile of the TSRs of companies in the S&P 500 for the 2015-2017 performance period, the Committee certified a TSR Modifier of 89%, which had the impact of reducing the final payout of the PSUs below the 200% EPS Factor. Based on the Committee’s approval, and the two performance ratings, 178% of the target number of PSUs granted in 2015 vested in February 2018.

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Section 4 – Strong Governance Practices Followed in Determining Executive Compensation

Role of the Compensation Committee

The Compensation Committee, which is composed of four independent directors, is responsible for determining the compensation of the NEOs. At the beginning of each fiscal year, the Committee reviews and approves target compensation and performance goals for the NEOs for that year. The Committee also determines the level of performance achieved for any completed short- and long-term incentive performance periods. This timing allows the Committee to consider financial results for the most recent year, along with feedback from shareholders through the Company’s engagement activities, as well as input from the Committee’s independent compensation consultant, as it makes compensation decisions and sets performance targets for the subsequent year. The Committee reviews and approves compensation to provide incentives that support the Company’s long-range plans and achievement of superior annual and long-term financial results, as well as continued progress on the Company’s long-term strategic objectives. The Committee also reviews and approves special incentive programs, such as the transaction-related program, in which the NEOs participate.

Role of the Board of Directors

The Board has delegated authority with respect to most executive compensation decisions to the Compensation Committee, but has retained the authority to approve certain new executive compensation plans, new equity plans and material amendments to existing executive compensation plans. The Board receives reports from the Committee on its actions and recommendations following Committee meetings, and the Board receives an update on the Company’s executive compensation and benefits programs each year.

Role of Management

At the Compensation Committee’s request, management provides the Committee information, analyses and recommendations regarding the Company’s executive compensation program and policies and assists the Committee in carrying out its responsibilities. The Committee also meets regularly in executive session without management present, including with its independent compensation consultant. While the Committee considers the recommendations of Mr. Bewkes regarding NEO compensation levels (other than with respect to his own compensation) and the input received from its independent compensation consultant, the Committee ultimately makes all decisions regarding NEO compensation.

Role of Independent Compensation Consultant

The Compensation Committee has retained Pay Governance LLC as its independent compensation consultant. The Committee assessed the consultant’s performance and independence in 2017 and determined that the consultant had no conflicts of interest that would prevent it from advising the Committee and confirmed the consultant’s independence. The consultant assists the Committee in the development and evaluation of the Company’s executive compensation program, policies and practices and in its decisions regarding executive compensation, and provides advice to the Committee on other matters related to its responsibilities. The compensation consultant reports directly to the Committee and the Committee has the sole authority to retain and terminate the consultant and to review and approve the consultant’s fees and other engagement terms. A representative of the compensation consultant attends meetings of the Committee, and communicates with the Committee chair between meetings as necessary or requested.

During 2017, at the Committee’s request, Pay Governance LLC performed the following services:

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Use of Peer Groups

As one of the largest video content-focused media and entertainment companies in the United States, Time Warner competes most directly for talent with five large United States-based media and entertainment companies. Therefore, the Compensation Committee primarily uses an entertainment industry peer group composed of these companies. The Committee does not target a specific percentile of compensation provided to executives at these companies in making compensation decisions. However, the Committee believes that an understanding of the compensation provided to executives in comparable positions at these companies is important given the skills and experience required of the Company’s top executives. Referring to the entertainment industry peer group helps the Committee understand the market for talent and set total target compensation at appropriately competitive levels that enable the Company to attract, retain and reward top performers over the long-term.

Although compensation levels at the companies in the entertainment industry peer group (some of which are effectively controlled by a single shareholder) are generally higher than in many other industries, the Committee believes those companies provide the most relevant comparisons because the Company competes most directly with these companies for the limited pool of executives with the creative and management skills and relevant industry experience needed to successfully operate the Company’s businesses.

The Committee also uses a secondary peer group, consisting of 20 companies, as a general reference point for compensation practices and related governance matters, such as the stock ownership requirements for executive officers and vesting provisions for equity awards. The secondary peer group includes a broad range of multi-national and multi-divisional companies with prominent brands and consumer-focused businesses. The Committee selected these companies based on revenue, market capitalization, and organizational complexity, also factoring in whether a company has a consumer focus and significant brand recognition. While the Committee regularly reviews this peer group based on these factors, it does not make annual changes because there can be significant fluctuations in some of these factors (e.g., market capitalization) over the short term. Instead, the Committee considers changes based on a longer-term perspective. The Committee most recently reviewed the Company’s peer groups in 2016 and, as a result of that review, made changes to the secondary peer group as described in the Company’s proxy statement for its 2017 annual meeting of shareholders. The Committee did not make any changes to the peer groups in 2017.

The following tables summarize the Company’s peer groups for 2017 and how the Committee used them:

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Total Target Direct Compensation Comparison

The following table shows how each NEO’s 2017 total target direct compensation (consisting of base salary, target cash bonus and the target value of annual long-term incentive awards) compared to the 2016 (and, where available, 2017) total target direct compensation of executives in comparable roles at the companies in the entertainment industry peer group, including the annualized value of any up-front equity awards granted to such executives. Information is not available for comparable positions at every company in the peer group, and the scope and nature of responsibilities for these positions may vary substantially among the entertainment industry peers. The Compensation Committee takes these factors into account when reviewing the competitive market data.

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Section 5 – Shareholder Engagement on Executive Compensation

The Company has had a long-standing practice of engaging with its shareholders on a range of topics, including executive compensation. The Compensation Committee generally has reviewed the shareholder engagement plan before its implementation, has been regularly updated on shareholder feedback and has considered the views expressed by shareholders in making its decisions. The Committee has viewed this continuing constructive dialogue as an integral part of the process of designing and refining the Company’s executive compensation program and maintaining strong corporate governance practices.

In connection with the special meeting of shareholders to approve the Merger Agreement held in February 2017, the Company contacted shareholders representing over 50% of the Company’s outstanding shares regarding the merger. Following the special meeting, in the period prior to the 2017 annual meeting of shareholders, the Company continued to engage with shareholders on a range of topics, including executive compensation and governance matters.

The Company’s engagement with shareholders has helped inform the Committee’s deliberations and decisions in recent years. The following chart summarizes key points the Company heard from shareholders about executive compensation over the last several years and the actions the Committee has taken with regard to the topics discussed.

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The Company’s executive compensation program received strong support from shareholders in 2017, with shareholders representing 92.5% of the votes cast at the annual meeting voting in favor of the compensation of the NEOs included in the proxy statement for the Company’s 2017 annual meeting of shareholders. In addition, the Company’s non-binding, advisory vote on compensation that may be paid or become payable to the NEOs in connection with the merger was approved by shareholders at the special meeting of shareholders held in February 2017.

In determining the NEOs’ compensation for 2018, the Compensation Committee considered the feedback from shareholders in recent years, the results of the 2017 advisory vote on NEO compensation, and the compensation decisions made by the Committee in connection with the merger. The Committee determined to keep the base salaries and target bonuses for the NEOs unchanged for 2018. In addition, the Company has no plan to grant the NEOs long-term incentive awards in 2018.

Section 6 – Compensation Policies and Practices

The Compensation Committee has adopted a number of policies and practices to support its compensation principles and help drive performance and align executive and shareholder interests. In addition, these policies and practices are designed to mitigate compensation-related risk without diminishing the incentive nature of the executive compensation program. For information regarding the Company’s annual risk assessment of the compensation programs and practices, see “Compensation Programs and Risk Management.”

Pay-for-Performance Policy

Under the Compensation Committee’s policy, prior to entering into the Merger Agreement, a majority of total target compensation for NEOs consisted of performance-based components, including a cash bonus, stock options and PSUs. This policy also incorporated the Company’s commitment that at least 50% of the estimated fair value of “full-value stock awards” (i.e., RSUs and PSUs) made to the Company’s executive officers would be performance-based, such that achievement of performance measures will determine the size and/or vesting of the awards. In connection with entering into the Merger Agreement, the Committee determined that granting PSUs with three-year performance periods and stock options would no longer align with the expected timing for closing the merger and the merger consideration. Consequently, beginning with the Transaction RSUs the Committee approved in October 2016, the Company granted only RSUs to employees and non-employee Directors prior to the expiration of the Company’s equity plan in August 2017.

Equity Dilution Policy

The Compensation Committee has an equity dilution policy of granting in a calendar year no more than 1.5% of the total outstanding Common Stock at December 31 of the preceding year. The equity dilution policy also addresses how the Company determines the appropriate level of equity dilution and establishes general guidelines for monitoring and managing equity dilution and annual share usage under its shareholder-approved equity plan. The equity awards granted by the Company in 2017 (including the Transaction RSUs granted to Mr. Bewkes in February 2017) represented less than 0.1% of the Common Stock outstanding on December 31, 2016. The Company’s equity plan, which had included the equity dilution cap in its terms, expired in August 2017.

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Stock Ownership and Retention Guidelines

The Compensation Committee has adopted stock ownership and retention guidelines to help promote a focus by NEOs on long-term goals and further align the interests of executives and shareholders. Each executive officer meets these guidelines. Following election to a position that is subject to the stock ownership guidelines, an executive has five years to meet the applicable stock ownership requirement, as set forth in the table below:

In determining whether the ownership requirement has been met and sustained, the following shares and interests are included: shares held directly by the individual, interests in the Time Warner Inc. Stock Fund in the Company’s qualified savings and nonqualified deferred compensation plans, restricted stock, unvested RSUs, and the expected net after-tax shares for PSU awards for which the performance period has been completed.

The Committee also has adopted stock retention requirements with respect to stock option awards. Executive officers must retain, for at least 12 months after exercise of stock options granted while an executive officer (or, if no longer employed by the Company, for at least 12 months after the date of exercise, but not beyond the first anniversary of the termination of employment), shares of Common Stock representing at least 75% of the after-tax gain that the executive realizes upon exercise (assuming a 50% tax rate for purposes of the calculation). This retention requirement will cease to apply following the closing of the merger.

Hedging and Pledging Common Stock

The Company’s executive officers and directors may not engage in short sales of Common Stock and may not purchase or sell puts, calls, straddles, collars or other similar risk reduction devices involving Common Stock. The Company’s executive officers and directors may not hold Common Stock in a margin account or pledge Common Stock as collateral for a loan, except in very limited circumstances in which the compliance officers for the Company’s supplemental trading policies are confident that sufficient other assets are available to satisfy the loan and that the likelihood of the pledged shares being sold is low.

Recovery of Previously Paid Executive Compensation (“Clawback Policy”)

By policy, if the Board determines that an executive officer intentionally caused a material financial misstatement that resulted in artificially inflated executive compensation, the Board will determine appropriate actions to remedy the misconduct and prevent its recurrence and any actions to be taken with respect to the executive, including recovery of compensation. The Board may consider a number of factors in determining whether to seek to recover compensation paid to an executive, including the nature of the underlying misconduct and the role of the executive; the amount of excess compensation paid as a result of the material financial misstatement; the risks, costs and benefits associated with pursuing the recovery of the compensation; and other actions the Company or third parties may have taken with respect to the executive who caused the misstatement.

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Employment Agreements

Employment agreements are standard in the entertainment industry for top executives, and the Compensation Committee believes it is in the Company’s best interest to secure the employment of each of the NEOs through an employment agreement. All of the NEOs are, and were during 2017, parties to employment agreements with the Company, the terms and provisions of which are described under “Employment Agreements” below. The Committee approves all employment agreements with the NEOs.

The employment agreements with the NEOs provide for payments and benefits upon termination of employment in various circumstances, as described under “Potential Payments Upon Termination of Employment, Disability, Death or Change in Control” below. The objective of these provisions is to recruit and retain talent in a competitive marketplace.

Tax Considerations

Section 162(m). Pursuant to Section 162(m) of the Internal Revenue Code of 1986 (the “Code”), as in effect for 2017, compensation in excess of $1 million per year paid to “covered employees,” which included the Company’s chief executive officer and three other highest paid executive officers (other than the chief financial officer) who were serving as of December 31, 2017, was not deductible unless it qualified as “performance-based” compensation. In connection with granting incentive compensation to the Company’s NEOs, the Compensation Committee’s historical practice was to consider the implications under Section 162(m) while retaining the flexibility to award compensation that might not qualify for a deduction if the Committee determined that such compensation was otherwise in the best interests of the Company and its shareholders.

The 2017 Tax Act eliminated the exception for “performance-based” compensation under Section 162(m) with respect to 2018 and future years and expanded the definition of “covered employees” so that it generally will include anyone who served as chief executive officer or chief financial officer or was otherwise a named executive officer for any year beginning with 2017. As a result, the Company expects that, except to the extent that compensation is eligible for limited transition relief applicable to certain written arrangements in place as of November 2, 2017, compensation over $1 million per year paid in 2018 or later to any person who was a named executive for any year beginning with 2017 will be nondeductible under Section 162(m). While the Committee expects to continue considering deductibility as one factor in determining executive compensation, it believes shareholder interests are best served by retaining the flexibility to approve compensation that is not deductible by the Company for tax purposes.

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Section 280G. No NEO is entitled to a gross-up or other make-whole payment in connection with any golden parachute excise taxes imposed due to Section 280G (the “280G Excise Tax”) of the Code on the payments and benefits that he may receive in connection with the merger. Instead, in the event that the 280G Excise Tax would be applicable to an NEO, the NEO will be subject to a “best net” approach, under which the NEO will receive either (i) the full amount of such payments and benefits or (ii) the greatest amount of such payments and benefits that will not subject the NEO to the 280G Excise Tax, whichever would result in the greatest after-tax amount. Based on analyses conducted in 2017, Mr. Averill was the only NEO who might, absent any mitigating actions, be subject to the 280G Excise Tax in connection with a closing of the merger in 2018. Therefore, to mitigate the potential impact of Section 280G of the Code, preserve the Company’s ability to claim tax deductions and reduce the expected impact of the 280G Excise Tax on Mr. Averill, in December 2017, the Compensation Committee approved the payment in December 2017 of a portion of Mr. Averill’s bonus for 2017 performance that would have otherwise been payable by March 15, 2018. The Committee was mindful that the amount accelerated and paid in 2017 was less than the bonus amount that Mr. Averill would have otherwise been substantially likely to receive in the first quarter of 2018, based on the Company’s and, where applicable, Mr. Averill’s performance. As a result, Mr. Averill received the remaining amount earned in respect of his bonus for 2017 in the ordinary course in the first quarter of 2018. Because Mr. Averill, as Chief Financial Officer, was not subject to Section 162(m) of the Code in 2017, the Company believes the actions to pay and settle a portion of his bonus in 2017 did not affect the Company’s ability to deduct the compensation paid to Mr. Averill.

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Annex A to the CD&A—Non-GAAP Financial Measures

The Company utilizes Adjusted Operating Income (Loss) and Adjusted EPS, among other measures, to evaluate the performance of its businesses. These measures are considered important indicators of the operational strength of the Company’s businesses. Some limitations of Adjusted Operating Income (Loss) and Adjusted EPS are that they do not reflect certain charges that affect the operating results of the Company’s businesses and they involve judgment as to whether items affect fundamental operating performance.

The Company uses Free Cash Flow to evaluate the performance and liquidity of its businesses and considers Free Cash Flow when making decisions regarding strategic investments, dividends and share repurchases. The Company believes Free Cash Flow provides useful information to investors because it is an important indicator of the Company’s liquidity, including its ability to reduce net debt, make strategic investments, pay dividends to common shareholders and repurchase stock.

A general limitation of these measures is that they are not prepared in accordance with GAAP and may not be comparable to similarly titled measures of other companies due to differences in methods of calculation and excluded items. Adjusted Operating Income (Loss) and Adjusted EPS and Free Cash Flow should be considered in addition to, not as a substitute for, Operating Income (Loss) and Diluted Income per Common Share from Continuing Operations, various cash flow measures (e.g., Cash Provided by Operations from Continuing Operations), as well as other measures of financial performance and liquidity reported in accordance with GAAP.

Definitions

“Adjusted Divisional Pre-Tax Income” is defined as Adjusted Operating Income plus Income (loss) from equity method investments.

“Adjusted Operating Income” is defined as Operating Income excluding the impact of noncash impairments of goodwill, intangible and fixed assets; gains and losses on operating assets (other than deferred gains on sale-leasebacks); gains and losses recognized in connection with pension and other postretirement benefit plan curtailments or settlements; costs related to the AT&T merger (including retention, restructuring and severance costs associated with the transaction); external costs related to mergers, acquisitions or dispositions (including restructuring and severance costs associated with dispositions), as well as contingent consideration related to such transactions, to the extent such costs are expensed; and amounts related to securities litigation and government investigations.

“Adjusted EPS” is defined as Diluted Income per Common Share from Continuing Operations attributable to Time Warner Inc. common shareholders with the following items excluded from Income from Continuing Operations attributable to Time Warner Inc. common shareholders: noncash impairments of goodwill, intangible and fixed assets and investments; gains and losses on operating assets (other than deferred gains on sale-leasebacks), liabilities (including extinguishments of debt) and investments, in each case including associated costs of the transaction; gains and losses recognized in connection with pension and other postretirement benefit plan curtailments or settlements; costs related to the AT&T merger (including retention, restructuring and severance costs associated with the transaction); external costs related to mergers, acquisitions, investments or dispositions (including restructuring and severance costs associated with dispositions), as well as contingent consideration related to such transactions, to the extent such costs are expensed; amounts related to securities litigation and government investigations; and amounts attributable to businesses classified as discontinued operations; as well as the impact of taxes and noncontrolling interests on the above items and the Company’s share of the above items with respect to equity method investments.

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“Free Cash Flow” is defined as Cash Provided by Operations from Continuing Operations plus payments related to securities litigation and government investigations (net of any insurance recoveries), external costs related to mergers, acquisitions, investments or dispositions (including restructuring and severance costs associated with dispositions), to the extent such costs are expensed and contingent consideration payments made in connection with acquisitions, less capital expenditures, principal payments on capital leases and partnership distributions, if any.

Reconciliations

Reconciliation of Adjusted Operating Income to Operating Income

(In millions; Unaudited)

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Reconciliation of Adjusted EPS to Diluted Income Per Common Share from Continuing Operations Attributable to Time Warner Inc. Common Shareholders

(Unaudited)

Reconciliation of Free Cash Flow to Cash Provided by Operations from Continuing Operations

(In millions; Unaudited)

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Compensation and Human Development Committee Report

The Compensation Committee of the Board of Directors has reviewed and discussed with management the foregoing CD&A. Based on such review and discussion, the Compensation Committee has recommended to the Board that the CD&A be included in this Amendment.

Members of the Compensation and Human Development Committee

William P. Barr (Chair)

Mathias Döpfner

Fred Hassan

Paul D. Wachter

Compensation Committee Interlocks and Insider Participation

None of the Compensation Committee members (i) has ever been an officer or employee of the Company or (ii) since the beginning of 2017, has been a participant in a “related person” transaction. None of the Company’s executive officers serves, or in 2017 served, as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of the Board or the Compensation Committee.

Compensation Programs and Risk Management

In early 2018, the Company completed its annual risk assessment of its compensation programs and policies for employees, including executive officers. In particular, the Company reviewed and analyzed the major components of compensation at the Company and its divisions, including:

In reviewing the major components of compensation, the Company evaluated the key characteristics of its compensation plans and programs, such as the performance measures used in the performance-based programs, the combination and number of such performance measures, eligibility for participation, any individual payout maximums, and the timing of payouts. The Company analyzed whether any of the major compensation components gave rise to different types of risk, such as strategic, financial, operational and reputational risk, which included but were not limited to the risk factors identified in the 2017 Form 10-K. The Company reviewed the distribution of pay versus revenue share for each of the Company’s divisions and considered the situations that may trigger disclosure specified in the SEC’s rules.

Based on its review of its compensation policies and practices, the Company has determined that any risks arising from its compensation programs and policies are not reasonably likely to have a material adverse effect on the Company. The Company’s compensation programs and policies mitigate risk through a combination of design elements and pay practices that are intended to support building long-term shareholder value. Throughout the Company, total compensation is heavily weighted toward fixed salary, while executive compensation has historically included a balanced mix of short-term and long-term compensation, cash-based and stock-based compensation, and fixed and performance-based compensation. The combination of performance measures for annual bonuses and the equity compensation programs, stock ownership and retention guidelines for executive officers, as well as the multiyear vesting schedules for equity awards, encourage employees to balance both a short- and a long-term view with respect to Company performance and thereby discourage behavior that leads to excessive risk taking. In addition, since entering into the Merger Agreement, the Company has only granted long-term incentive compensation in the form of RSUs, which carry the lowest potential risk among the various types of long-term incentive compensation the Company has historically utilized.

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Independent Compensation Consultant

The Compensation Committee retained Pay Governance LLC as its independent executive compensation consultant in 2017. Pay Governance LLC provides advice to the Committee on matters related to the fulfillment of the Committee’s responsibilities under its charter and on a wide range of executive compensation matters, including reviewing the overall design of the executive compensation program and identifying and collecting relevant competitive market data. All of the services provided by Pay Governance LLC during 2017 were to the Committee, and Pay Governance LLC did not provide any additional services to the Company. At least annually, the Committee conducts a review of its compensation consultant’s performance and independence. The Committee believes that there was no conflict of interest between Pay Governance LLC and the Committee during the year ended December 31, 2017. In reaching this conclusion, the Committee considered the factors set forth in the SEC and NYSE rules regarding compensation adviser independence. During 2017, at the Committee’s request, Pay Governance LLC provided the services described under “Compensation Discussion and Analysis—Section 4 – Strong Governance Practices Followed in Determining Executive Compensation—Role of Independent Compensation Consultant.”

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Summary Compensation Table

The following table presents information concerning compensation paid to the Company’s Chief Executive Officer, Chief Financial Officer and each of the three other most highly compensated executive officers who served in such capacities on December 31, 2017. For information regarding the components of the NEOs’ total compensation, see “Compensation Discussion and Analysis—Section 2 – Components of Executive Compensation.”

SUMMARY COMPENSATION TABLE FOR FISCAL YEAR 2017

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For each NEO, the amount includes a payment for 2017 and, for each NEO other than Mr. Bewkes, the amount also includes a payment for 2016 that was made in 2017. The NEOs are under no obligation to use the cash payments to purchase insurance. The amount for Mr. Bewkes also includes imputed income of $6,626 reflecting the amount allocated to the term portion of a split-dollar life insurance policy for him. The Company discontinued payment of the premiums for Mr. Bewkes’ split-dollar life insurance policy starting in 2003, and the annual premium is satisfied from the accreted value of the policy and/or a loan by the insurance company. For additional information regarding life insurance coverage for the NEOs provided pursuant to the terms of their employment agreements, see “Employment Agreements.”

Transportation-related benefits consist of the incremental cost to the Company of personal use of (a) aircraft owned (based on fuel, landing, repositioning and catering costs and crew travel expenses) or leased (based on hourly fees) by the Company, (b) private car service, and (c) a Company-provided car and a driver for Mr. Bewkes (based on the portion of the usage that was personal).

For security and efficiency reasons, Mr. Bewkes was provided a car and driver during 2017 and was encouraged to use Company aircraft for business and personal use. Other executive officers were eligible to use a private car service, Company aircraft for business use and, in limited circumstances and subject to the controls in the Company’s travel policies, to make personal use of Company aircraft. Personal use of Company aircraft by executives other than Mr. Bewkes was permitted when there was available space on a flight scheduled for a business purpose, in the event of a medical or family emergency, or with the approval of Mr. Bewkes.

Grants of Plan-Based Awards Table

GRANTS OF PLAN-BASED AWARDS DURING 2017

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Material Terms of Equity Awards Granted to the NEOs in 2017

Mr. Bewkes, who was awarded Transaction RSUs on February 15, 2017, was the only NEO who received equity awards during 2017. Each of the other NEOs was awarded Transaction RSUs on October 24, 2016 in connection with entering into the Merger Agreement. The Transaction RSUs granted to the NEOs (whether in 2016 or 2017) were approved by the Compensation Committee, were awarded under the 2013 Stock Incentive Plan and had a target value equal to two times the NEO’s 2017 target annual long-term incentive compensation. The material terms of the Transaction RSUs are described below. For additional information regarding the treatment of the Transaction RSUs and other equity awards held by the NEOs following a termination of employment (both before or after a change in control of the Company) or upon a change in control of the Company, see “Potential Payments Upon Termination of Employment, Disability, Death or Change in Control.”

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Outstanding Equity Awards Table

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2017