Time Warner Cable 2015 Annual Report Download

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May 18, 2015
Dear Stockholder:
We cordially invite you to attend Time Warner Cable Inc.’s annual meeting of stockholders. The
meeting will be held on Wednesday, July 1, 2015, at 10:00 a.m. in the Auditorium at the New York Institute
of Technology, 1871 Broadway, New York, New York 10023. A map with directions to the meeting is
provided on the back cover of the proxy statement.
As a stockholder, you will be asked to vote on a number of important matters, which are listed in the
Notice of Annual Meeting of Stockholders:
to re-elect twelve members of the Company’s Board of Directors for another annual term;
to ratify the Board’s selection of independent auditors;
to consider a non-binding advisory vote on the compensation of our named executive officers as
described in the proxy statement; and
to consider two stockholder proposals described in more detail in the proxy statement.
The Board of Directors recommends a vote FOR the proposals listed as items 1, 2 and 3 in the Notice
and AGAINST the stockholder proposals.
This year, we are taking advantage of Securities and Exchange Commission rules that allow companies
to furnish proxy materials to their stockholders on the Internet. We believe that these rules allow us to
provide our stockholders with the information they need, while lowering the costs of delivery and reducing
the environmental impact of producing and distributing materials for our annual meeting. Under these rules,
you can vote in one of several ways. Instructions are provided in our communications to you. If you
received a Notice of Internet Availability of Proxy Materials in the mail, you can vote over the Internet, or,
if you request printed copies of the proxy materials by mail, you also can vote by mail or by telephone.
Your vote at the annual meeting is important. Whether or not you plan to attend the annual meeting in
person, it is important that your shares be represented. We urge you to submit your proxy as promptly as
possible.
If you are planning to attend the annual meeting in person, because of security procedures, you will need
to register in advance to gain admission to the meeting. You can register by calling 1-866-892-8925 or
sending an email with your name and address to: [email protected] by June 29, 2015. In addition to registering
in advance, you will be required to present government-issued identification (e.g., driver’s license or passport)
to enter the meeting. The meeting also will be audiocast live on the Internet at www.twc.com/investors.
I look forward to greeting those of you who are able to attend the annual meeting.
Sincerely,
Robert D. Marcus
Chairman and
Chief Executive Officer
PLEASE PROMPTLY SUBMIT YOUR PROXY

Table of contents

  • Page 1
    ... are listed in the Notice of Annual Meeting of Stockholders to re-elect twelve members of the Company's Board of Directors for another annual term; to ratify the Board's selection of independent auditors; to consider a non-binding advisory vote on the compensation of our named executive officers as...

  • Page 2

  • Page 3
    ... by telephone at 1-866-892-8925 or by email to: [email protected] by June 29, 2015. The Annual Meeting will start promptly at 10:00 a.m. To avoid disruption, admission may be limited once the meeting begins. TIME WARNER CABLE INC. MARC LAWRENCE-APFELBAUM Executive Vice President, General Counsel and...

  • Page 4

  • Page 5
    ... Page NOTICE OF ANNUAL MEETING OF STOCKHOLDERS ...PROXY STATEMENT ...Voting Shares in Your Brokerage Account ...Annual Report ...Recommendations of the Board of Directors ...CORPORATE GOVERNANCE ...General ...Board Size ...Criteria for Membership on the Board ...Director Nomination Process ...Board...

  • Page 6

  • Page 7
    ...Circle New York, New York 10023 PROXY STATEMENT This Proxy Statement is being furnished to stockholders in connection with the solicitation of proxies by the Board of Directors (the "Board") of Time Warner Cable Inc., a Delaware corporation ("TWC" or the "Company"), for use at the Annual Meeting of...

  • Page 8
    ... process by which stockholders may communicate with members of the Board of Directors. These documents are also available in print by writing to the Company's Corporate Secretary at the following address: Time Warner Cable Inc., 60 Columbus Circle, New York, New York 10023, Attn: General Counsel. 2

  • Page 9
    ... of the Proxy Statement summarizes the key features of the Company's corporate governance practices: Board Size The number of directors constituting the full Board is currently set at twelve. The Board of Directors has adopted a policy, consistent with the Company's Certificate of Incorporation...

  • Page 10
    ...- and daughters-in-law; and anyone who shares the director's home, other than household employees) must not have been an executive officer of the Company in the prior three years. Other Compensation. The director or immediate family member (as an executive officer) must not have received more than...

  • Page 11
    ... the organizations where a director or spouse is an executive officer or director is more than the greater of $1 million or 2% of all such organizations' annual gross revenues. ➢ Employment and Benefits. The employment by the Company of a member of a director's family will generally be deemed not...

  • Page 12
    ...for Board service. In identifying new director candidates, the Committee seeks advice and names of candidates from Committee members, other members of the Board, members of management, and other public and private sources. The Committee may also, but need not, retain a search firm in order to assist...

  • Page 13
    ... Director The Company's Corporate Governance Policy provides that the Nominating and Governance Committee may from time to time make recommendations to the Board regarding the leadership structure of the Board, including whether to combine or separate the positions of Chairman and Chief Executive...

  • Page 14
    ... to the Board and its committees, management highlights any significant related risks. In addition, annually a meeting of the Board is dedicated to reviewing the Company's short- and long-term strategies, including consideration of significant risks facing the Company. The Board has delegated...

  • Page 15
    ... and (ii) assisting the Board in overseeing the Company's (a) capital structure and financing strategies, including the related risks, (b) insurance program and (c) management of retirement plan assets, including the defined benefit pension plan trust. Marketing and Customer Care Committee. The...

  • Page 16
    ... in securities of the Company and disclosing material, non-public information regarding the Company, and the Company has procedures in place to assist directors in complying with these laws. Codes of Conduct In order to help assure the highest levels of business ethics at the Company, the Board of...

  • Page 17
    ...in government or academia. Mr. Shirley served as the President and Chief Executive Officer of Bacardi Limited, and also has a long service history with The Procter & Gamble Company and The Gillette Company and brings his marketing and managerial experience to the Board. Several of the directors also...

  • Page 18
    ... nominated for election at the Annual Meeting and was elected by the Company's stockholders at the annual meeting in 2014. Set forth below are the principal occupation and certain other information, as of April 15, 2015, for the twelve nominees, each of whom currently serves as a director. Name Age...

  • Page 19
    ... Maximum Educational Opportunities, Inc. ("G-MEO"), which provides study abroad programs in China for U.S. undergraduate students, in 2011 and became its Chairman and Chief Executive Officer in August 2013. He also became Professor Emeritus of Polytechnic Institute of New York University (formerly...

  • Page 20
    ...and executive compensation matters as well as in the cable, media and entertainment industry from his service as the chief legal officer at Time Warner and as a member of a premier law firm. Mr. Haje also has significant historical perspective and knowledge of the Company through his long service at...

  • Page 21
    ... director since March 2003. Mr. Logan has substantial business, finance and accounting experience as well as extensive knowledge of the media and entertainment industry. In addition, Mr. Logan oversaw Time Warner's investment in the Company as Chairman of Time Warner's Media and Communications Group...

  • Page 22
    ... during his nearly fifteen years with Time Warner and TBS and, prior to that, Price Waterhouse. Mr. Pace also brings an extensive knowledge of the Company's business and financial condition to the Board. Former President and Chief Executive Officer, Bacardi Limited. Mr. Shirley served as the...

  • Page 23
    ...and financial experience. The Company's business is subject to extensive regulation, and Senator Sununu provides legislative and regulatory insight. He also possesses corporate governance experience from his service on another public company board. Attendance During 2014, the Board of Directors met...

  • Page 24
    ...'s charter is available on the Company's website at www.twc.com/investors. SECURITY OWNERSHIP Security Ownership by the Board of Directors and Executive Officers The following table sets forth information as of the close of business on February 27, 2015 as to the number of shares of the Company...

  • Page 25
    ... Stock six months after termination of service as a member of the Board and (b) deferred stock units issued under the Directors' Deferred Compensation Program, which represent the right to receive shares of Common Stock on the distribution date selected by the director. Each non-employee director...

  • Page 26
    ...Committee has also appointed, subject to stockholder ratification, Ernst & Young LLP ("E&Y") as the Company's independent auditor for 2015, and the Board concurred in its appointment. The Audit Committee reviews and approves the annual internal audit plan and meets regularly with the representatives...

  • Page 27
    ... recommended to the Board of Directors, and the Board approved, that the audited financial statements of the Company be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the "2014 Form 10-K") for filing with the SEC. Members of the Audit Committee...

  • Page 28
    ... services, including (a) the annual audit (including required quarterly reviews) and other procedures required to be performed by the independent auditors to be able to form an opinion on the Company's consolidated financial statements; (b) the audit of the effectiveness of internal control over...

  • Page 29
    ... Charter was nominating a slate of thirteen independent candidates for election to TWC's Board of Directors at the Company's 2014 annual meeting of stockholders. Then, on February 12, 2014, the Company entered into a Merger Agreement with Comcast Corporation ("Comcast") pursuant to which the Company...

  • Page 30
    ... its executive officers, has created significant stockholder value over the past several years: Significant Operational Improvement and Solid Financial Performance In 2014, the Company: • • Engineered and executed a profound subscriber turnaround-adding 150,000 residential customer relationships...

  • Page 31
    ...the "TWC Maxx" all-digital conversions in New York City and Los Angeles, and the roll out of Internet speed increases in New York City, Los Angeles and Austin, ahead of schedule. Investing in the Company's network and new set-top boxes and modems. Improved customer service, including record "on-time...

  • Page 32
    ...stock options without express stockholder approval Executive officers with pledged TWC Common Stock Discussion in Proxy Statement Compensation Discussion & Analysis ("CD&A")-"Ownership and Retention Requirements; Hedging Policy" CD&A-"2014 Short-Term Incentive Program-Annual Cash Bonus" "Employment...

  • Page 33
    ...direct compensation. The 2014 annual LTI program consisted of Company RSUs that vest over a period of time and a portion of which are generally contingent on Company performance. In addition, each of the Company's senior officers, including the named executive officers, is subject to stock ownership...

  • Page 34
    ...; the Company's overall performance; and stockholder return. 2014 Base Salary and Target Incentive Compensation Determinations Each named executive officer's 2014 target total direct compensation ("TDC") is set out below. Target TDC is comprised of annual base salary, target annual cash bonus...

  • Page 35
    ... (as defined and listed below) and general survey data and decided to increase Mr. Marcus's annual base salary, target annual bonus and target LTI value commencing in 2014 upon his service as Chairman and Chief Executive Officer. In light of its review, the Compensation Committee established the...

  • Page 36
    ... Mr. Jain's employment by Insight, Mr. Jain was entitled to certain related severance benefits and, in 2014, received a total of $742,283 of salary continuation and bonus payments from the Company. These severance benefits were not taken into account in the Compensation Committee's TDC determination...

  • Page 37
    ... renegotiation of his employment agreement. For 2014, the Compensation Committee reviewed this compensation in light of the Company's key compensation principles, comparisons to comparable general counsel and other positions in the Primary Peer Group, Secondary Peer Group and general survey data and...

  • Page 38
    ... payments to the named executive officers for 2014 were based on three components: • the 2014 Time Warner Cable Annual Incentive Plan (the "2014 AIP"), based 50% on a Profit Participation Program ("Profit Participation Program") tied to Company financial performance and 50% on a new Operational...

  • Page 39
    ... to service debt, pay dividends, repurchase shares and prudently invest in new growth opportunities. The following threshold and maximum goals were established for the Profit Participation Program component of the 2014 AIP based upon a review of the prior year's Operating Income results, the Company...

  • Page 40
    ... are set out below. Operational Performance Incentive for Named Executive Officers (50% of 2014 AIP Opportunity) • Reduce Customer Care Calls • Reduce Trouble Call Rate Residential Customer Experience Plant Reliability & Expansion (25%) Deploy TWC Maxx in Key Cities (25%) Financial & Operating...

  • Page 41
    ... of senior management through the closing, or abandonment, of the Comcast merger. 2014 Annual Incentive Plan Performance Determination. In connection with its determination of annual bonus payments, the Compensation Committee reviewed the Company's results under the Profit Participation Program, the...

  • Page 42
    ... was based on management having successfully completed the migration to "all-digital" in Los Angeles and having deployed its TWC Maxx Internet speed increases in New York and Los Angeles as planned, and improving plant performance in these key locations, along with Austin, Texas, to a level above...

  • Page 43
    ... limitations on awards were imposed under the Time Warner Cable Inc. 2012 Annual Bonus Plan (the "162(m) Bonus Plan"), which was approved by the Company's stockholders in May 2012. Pursuant to the 162(m) Bonus Plan, a subcommittee of the Compensation Committee, whose members are "outside directors...

  • Page 44
    ... the Company's goals and retain the senior management team during the pendency of the Comcast merger and better aligned executives' interests with those of the Company's stockholders. In addition, the Compensation Committee was aware that stock options, which had historically been granted with...

  • Page 45
    ... announced, the senior management team is intact and has been successful in driving the business to achieve the Company's operating results while also working to advance the then anticipated closing and integration of the Comcast merger. In addition, both the employees and the Company are generally...

  • Page 46
    ...elements of the Company's executive compensation program, including salaries; short-term incentives; long-term incentives, including equity-based awards; employment agreements for the named executive officers, including any change-in-control or severance provisions or personal benefits set forth in...

  • Page 47
    ... for the named executive officers. These groups include other cable, telecommunications and media companies as well as other comparable public companies. The Compensation Committee used this data to assist it in evaluating general competitiveness and comparability of compensation design, mix and...

  • Page 48
    ... the cable/satellite, telecommunications and media industries. The Use of Pay Tallies The Compensation Committee periodically reviews "pay tallies" for the named executive officers (i.e., analyses of the executives' annual pay and long-term compensation with potential severance payments under...

  • Page 49
    ... Stock Ownership Requirement Multiple of Annual Base Salary Chief Executive Officer ...Chief Operating Officer ...Chief Financial Officer ...Other Executive Officers (and Executive Vice Presidents) ... 6.0X 3.5X 3.5X 2.0X Under the ownership requirements, the Company will review covered officers...

  • Page 50
    ...officers who make personal use of Company aircraft as and when required under applicable tax rules. The perquisites provided to the named executive officers are noted in the Summary Compensation Table, below. Benefits The Company maintains defined benefit and defined contribution retirement programs...

  • Page 51
    ...assumptions used in these calculations, see Note 13 to the Company's audited consolidated financial statements included in the 2014 Form 10-K. The amounts set forth in the Stock Awards column do not represent the actual value that may be realized by the named executive officers. See "-Grants of Plan...

  • Page 52
    ... New York City in connection with joining the Company as Chief Operating Officer and a tax equalization benefit of $51,929 related to the housing payments, each pursuant to the Company's standard executive relocation arrangements; and (z) severance payments related to his prior employment by Insight...

  • Page 53
    ... Plan and 2014 AIP and Supplemental Bonus Program. The target annual bonus payout amount for each named executive officer was established in accordance with the terms of the named executive officer's employment agreement, as may be increased by the Compensation Committee from time to time. For 2014...

  • Page 54
    ...885,445 (1) The dates of grant of each named executive officer's stock options outstanding as of December 31, 2014 are set forth in the table, and the vesting dates for each award can be determined based on the vesting schedules described in this footnote. The awards of stock options and PBOs, upon...

  • Page 55
    ... Peter C. Stern ... (3) Calculated using the NYSE closing price on December 31, 2014 of $152.06 per share of Common Stock. Option Exercises and Stock Vested The following table sets forth as to each of the named executive officers information on exercises of TWC stock options and the vesting of RSU...

  • Page 56
    ... by the TWC Pension Plans takes into account salary, bonus, some elective deferrals and other compensation paid, but excludes the payment of deferred or long-term incentive compensation and severance payments. The annual pension payment under the terms of the TWC Pension Plans, if the employee is...

  • Page 57
    .... Pension Benefits Table Set forth in the table below is each named executive officer's years of credited service and the present value of his accumulated benefit under the TWC Pension Plans computed as of December 31, 2014, the pension plan measurement date used for financial statement reporting...

  • Page 58
    ... benefit service from his rehire date. Nonqualified Deferred Compensation Prior to 2003, the Time Warner Entertainment Deferred Compensation Plan, an unfunded deferred compensation plan (the "TWE Deferral Plan"), permitted certain employees of the Company and its affiliates (including certain named...

  • Page 59
    ...named executive officers" of the Company. The employment agreement provides for participation in the Company's benefit plans and programs, including $50,000 of group life insurance and reimbursement of financial services. Mr. Marcus also receives an annual payment equal to two times the premium cost...

  • Page 60
    ... employment agreement provides for participation in the Company's benefit plans and programs, including group life insurance. Mr. Lawrence-Apfelbaum also receives an annual payment equal to the premium cost for life insurance with a death benefit equivalent to three times his annual base salary and...

  • Page 61
    ... the estimated cost of continued health, life and disability insurance, based on 2015 rates. (3) Reflects the value of unvested stock options and RSUs granted prior to 2015 that will vest as a result of the applicable termination of employment based on the excess of the closing sale price of Common...

  • Page 62
    ... Company-paid life insurance plan provided to all eligible TWC employees. Termination without Cause Termination of Employment during Employment Agreement Term. Each of the named executive officers is entitled to payments and benefits under the executive's employment agreement or other compensation...

  • Page 63
    ...the time periods set forth in the respective award agreements, generally one year thereafter (but not beyond the original expiration date); ➢ in the case of Mr. Lawrence-Apfelbaum, (a) unvested stock options granted before February 16, 2012 would continue to vest for 36 months during his severance...

  • Page 64
    ... in the Company's benefit plans and programs during such period. These amounts are reduced by disability payments from workers' compensation, Social Security and the Company's disability insurance policies. In the event Mr. Lawrence-Apfelbaum becomes disabled (as defined in his employment agreement...

  • Page 65
    ...Company's benefit plans and programs effective upon the commencement of such employment or such time as the executive becomes eligible for comparable coverage with the new employer. Potential Payments upon a Change in Control In the event of a change in control of the Company, if the named executive...

  • Page 66
    ... No additional compensation is paid for attendance at meetings of the Board of Directors or a Board committee. In general, for non-employee directors who join the Board after the date on which the annual equity award to directors has been made, the Company's policy is to make the stock unit grant on...

  • Page 67
    ... which was the closing sale price of the Common Stock on the date of grant (February 12, 2014). On December 31, 2014, each non-employee director held the following number of RSUs: 18,769 RSUs for each of Ms. Black and Messrs. Copeland, Haje, Logan and Nicholas; 16,555 RSUs for Dr. Chang; 17,850 RSUs...

  • Page 68
    ... as described above, a non-employee director or trustee, or unpaid volunteer at a non-profit organization; Executive Compensation. Any compensation paid to an executive officer of the Company if (a) the compensation is required to be reported in the Company's annual report on Form 10-K or proxy 62...

  • Page 69
    ... for the Company to wait until the next Committee meeting, to the Chair of the Nominating and Governance Committee. If the General Counsel or his designee potentially may be involved in a related person transaction, the applicable person is required to inform the Chief Executive Officer and the...

  • Page 70
    ... were filed against, among others, the Company and its directors. As described in the 2014 Form 10-K, the complaints in these actions alleged breaches of fiduciary duty to the Company's stockholders and disclosure failures in the Company's registration statement related to the Comcast merger, among...

  • Page 71
    ... of this Proxy Statement, the Compensation Committee has structured the Company's executive compensation program to achieve the following key objectives: • • pay for performance by rewarding executives for leadership excellence and sustained financial and operating performance in line with the...

  • Page 72
    ...corporate governance, the Company is asking stockholders to approve the following advisory resolution at the 2015 Annual Meeting of Stockholders: RESOLVED, that the stockholders of Time Warner Cable Inc. (the "Company") approve, on an advisory basis, the compensation of the Company's named executive...

  • Page 73
    ..., Time Warner Cable's website publicly affirms its commitment to "protecting the environment." The Board of Directors recommends a vote AGAINST this proposal for the following reasons: Political Advocacy is Critical to Stockholders. The Company operates in highly regulated industries. The Company...

  • Page 74
    ...the "Policy Statement"), is available on the Company's "Corporate Governance" page at www.twc.com/investors. The Policy Statement contains extensive disclosure on the Company's political and advocacy activities and annual review process for such activities, as well as links to the reports filed with...

  • Page 75
    ... the date of the 2015 annual meeting. SUPPORTING STATEMENT Time Warner Cable Inc. ("Company") allows senior executives to receive an accelerated award of unearned equity under certain conditions after a change of control of the Company. We do not question that some form of severance payments may...

  • Page 76
    ...and alignment with stockholder interests has been shown in connection with the Comcast merger and the continued focus of the Company's executive team. • • • ➣ TWC's Program is Well Within the Mainstream. TWC's vesting provisions in the event of a change in control-related termination have...

  • Page 77
    ... after a change-in-control-related termination, the term of the stock option is generally shortened to one year from the termination date. As a result, the executive may have a significantly shorter time to benefit from potential stock price appreciation and realize the compensation valuation...

  • Page 78
    ... if your shares of Common Stock are registered in your name with Computershare Shareowner Services, TWC's transfer agent), you may vote in person at the Annual Meeting. Stockholders of record also may be represented by another person at the Annual Meeting by executing a proper proxy designating that...

  • Page 79
    ... Time Warner Cable Inc. 2014 Annual Report to Stockholders may request a copy by contacting the bank, broker or other holder of record, or the Company by telephone at: 1-877-4-INFO-TWC, by email to: [email protected] or by mail to: Time Warner Cable Inc., 60 Columbus Circle, New York, New York...

  • Page 80
    ...provide the following information to The name and the address of the stockholder making the submission and the name, address, telephone number and social security number of the candidate to be considered. The class or series and number of shares of the Company's stock that are beneficially owned by...

  • Page 81
    ... directors. Pursuant to that process, stockholders, employees and others interested in communicating with the CEO, the Board's only employee director, should write to the address below: Robert D. Marcus Chairman and Chief Executive Officer Time Warner Cable Inc. 60 Columbus Circle New York, New York...

  • Page 82
    ...any individual non-employee director should write to the address below: [Name of Addressee] c/o Corporate Secretary Time Warner Cable Inc. 60 Columbus Circle New York, New York 10023 General The Board of Directors does not currently know of any other matters to be presented at the Annual Meeting. If...

  • Page 83

  • Page 84
    ... Expressway (I-495) west. Take the Long Island Expressway to the Queens Midtown Tunnel into Manhattan and follow signs uptown. From LaGuardia Airport (LGA), take the Grand Central Parkway west to the RFK Bridge into Manhattan. Take FDR Drive south to the 59th Street exit and travel west on 59th...