Time Warner Shareholders Denounce Chairman Ross

Time Warner Inc. Chairman and Co-Chief Executive Steven J. Ross stood his ground Wednesday as shareholder after shareholder at the debt-straitened media giant’s annual meeting denounced his 1990 compensation of $78.1 million as “abusive,” “immoral” and “obscene.”

Much of the barrage of criticism came from current and former members of the Newspaper Guild of New York, which represents 105 of the 605 magazine workers whose jobs are being eliminated in a cost-cutting move the company unveiled last Thursday.

“Your compensation has aroused enormous anger among the rank-and-file of your employees,” Guild Unit Chairperson Key Martin told Ross before the union official mounted the stage and handed Ross a petition asking that the job cuts be rescinded.

Martin said the layoffs would hurt the quality of the magazines. “There is a fear that there is no longer concern for ideas, that there is no longer concern for magazines, that there is no longer concern for words,” Martin said, adding that the cuts threatened “the very fabric” of the magazines.

“I welcome this chance to set the record straight,” said Ross, responding to an earlier question about his pay from shareholder activist John Gilbert.

The $78.1-million figure, said Ross, blurs “a crucially important distinction” between his salary and bonus, which totaled $3.3 million, and the remaining $74.8 million “which I became entitled to receive as an equity holder of Warner Communications” upon its acquisition by Time Inc. in January, 1990.

Ross, dubbed “The Prince of Pay” in the current issue of Forbes magazine, said the $74.8 million “was expensed by Warner years ago” and is not a drain on the combined Time Warner’s earnings.

Ross also noted that as head of Warner, he increased the company’s shareholder value from $13 million in 1962 to $14 billion when it was sold to Time in 1990.

Although Ross’s explanation was backed by William vanden Heuvel, chairman of Time Warner’s compensation committee, some shareholders were not satisfied. “How many beds can you sleep in, how many dinners can you have?” Gilbert asked.

Marylois Purdy Vega, Time magazine’s former chief of research, noting that Ross’s contract provides for his salary and bonus to continue to be paid to his family for three years should he die, said of the “golden coffin” arrangement: “Greed goes beyond the grave.”

Another shareholder, Richard Jacobs, asked Time Warner’s management to defend the decision of Time Inc. to spurn a $200-a-share offer for the company from Paramount Communications in 1989. Nicholas J. Nicholas, president and co-chief executive, insisted that the Paramount offer “was never real.”

“It couldn’t have happened,” Nicholas said. “They didn’t have the money.”

Time Inc., he said, was a “victim” of “the end of the ‘80s’ craziness.” The Paramount offer forced Time to acquire Warner for $14 billion in a debt-financed transaction instead of merging in a stock swap as originally contemplated.

Ross, in his prepared remarks, said that Time Warner’s equity offering this summer, which raised $2.7 billion, had allowed the company to reduce total debt by 23% to $8.9 billion from $11.5 billion.

Ross reiterated that Time Warner is having “serious and meaningful discussions” with prospective overseas partners for strategic alliances “but would not be rushed into an agreement merely for the sake of doing a deal.” He told a questioner that the company would likely have an alliance to announce by year-end.

Nicholas took a hard line against shareholder-employees who questioned whether the job cuts announced last week--including 44 at Time magazine and 36 at Sports Illustrated--would hurt vital coverage during next year’s presidential election and Olympics.

“We do not expect either the quality or vitality of our magazines will change one bit,” he said. And he told a questioner who asked that the company sweeten its severance-pay package: “We do not see any reason why collective bargaining should be brought before a shareholders meeting.”

Martin, the union representative, charged that the job cuts were cynically timed just before the annual meeting “to take a cost-cutting posture to please Wall Street.”

“Magazine management has begun to give itself the Hollywood star treatment, including chauffeur-driven limousines, company-paid helicopter service and the use of the fleet of corporate jets,” a union statement said. “All this has rubbed salt in the wounds of terminated staffers.”

Employees blame the job cuts on the need to reduce expenses because of high interest costs brought on by the Warner deal, but management insists the reductions stem from a sharp decline in advertising.