For the past several months, Mr. Icahn has been advocating new leadership at the company to enact his proposals, including the breakup of the company.
Under the terms of the deal, Time Warner will increase its existing share repurchase program, recommend two new board members in consultation with Icahn partners, try to trim another $500 million in expenses and continue its dialogue with Mr. Icahn.
In a statement, Time Warner Chairman-CEO Richard D. Parsons pronounced the company “pleased” to have reached a resolution with Mr. Icahn. “We appreciate his role as a significant shareholder as well as his constructive suggestions,” Mr. Parsons said. “As we’ve said, our board and management are committed to building value for all our shareholders.”
The Icahn camp claimed victory in a statement of its own. “These actions are key to achieving the Icahn Group’s long-stated goal of creating value for all shareholders and have proved again that shareholder activism can be extremely effective,” it said.
Mr. Icahn said he, too, was pleased, with a caveat. “However, I remain committed to the tenets of the Lazard Report and hope to be able to convince Dick, in our future meetings, to accept a number of its recommendations,” he said.
The resolution brings a surprisingly quiet conclusion to a months-long rumble between Mr. Icahn, who argued that short-term thinking among Time Warner executives cost shareholders billions of dollars, and Mr. Parsons, who came under attack just as it seemed he had closed the company’s disastrous AOL Time Warner chapter.
Mr. Icahn teamed with Lazard Chairman-CEO Bruce Wasserstein to stage a takeover of Time Warner’s board. On Feb. 7, the two presented its plan in the form of a 342-page report outlining how much better off shareholders would be if the company divided into four divisions. However, since unveiling that plan to a packed room of analysts and reporters, they’ve managed to gain only spotty support among shareholders and Wall Street. Mr. Icahn had been expected to unveil his slate of candidates to replace the board this week, but instead he entered talks with Mr. Parsons and hammered out today’s agreement.
Former Viacom CEO Frank Biondi was being put forth as a replacement for Mr. Parsons. It is unclear if he will continue to have a role going forward.