Turner Says He May Cut Pay He’d Get in Merger

Ted Turner, the chairman of Turner Broadcasting System Inc., said Wednesday that he may reduce the $125-million-plus five-year compensation package he negotiated as part of a merger with Time Warner Inc., to blunt criticism that his deal is too sweet.

That compensation would make him among the highest-paid executives in America, with greater earning power than Gerald Levin, who would be his new boss.

Turner, who would become vice chairman of Time Warner, made the remarks at a luncheon speech for entertainment executives at a private conference in New York held by Goldman Sachs.

A Time Warner source indicated that such an adjustment is being discussed.

Executive compensation has been a sensitive issue for the past five years, as institutional investors began to use their stock positions to unseat managers at under-performing companies and to reduce what they saw as exorbitant pay packages.

Since announcing the $7.4-billion merger last month, Time Warner and Turner have come under fire from some shareholders, cable competitors and Turner directors regarding some hidden costs of the deal.

Some Time Warner shareholders are upset that Turner agreed to pay a lucrative consulting fee of $50 million to Michael Milken, the former junk bond king who served a prison sentence for securities law violations and was barred from the securities industry for life.

Time Warner faces 14 lawsuits from shareholders worried about dilution and the high cost of the merger.

Two cable companies with people on the Turner board have claimed that John Malone, the head of Tele-Communications Inc., got preferential treatment to convert his shares into Time Warner stock.

Moreover, several Turner board members expressed astonishment that Turner had negotiated a rich compensation package for himself while leaving his top executives unprotected in the merger. According to people familiar with the compensation terms, Turner could earn $15 million a year plus stock options that could vastly increase his pay. Levin, the Time Warner chairman, earned $5.3 million in 1994.

Under the contract, Turner would earn an annual salary and bonus of $5 million, an additional sum based on performance that could be worth $10 million a year, and stock options for 2.2 million shares of Time Warner that compensation experts say could be worth $120 million if Time Warner does well.