X0306 4 2017-02-15 0001105705 TIME WARNER INC. TWX 0001595087 Averill Howard M ONE TIME WARNER CENTER NEW YORK NY 10019 1 EVP & Chief Financial Officer Common Stock, Par Value $.01 2017-02-15 4 M 0 10072 0 A 67411 D Common Stock, Par Value $.01 2017-02-15 4 F 0 4267 96.32 D 63144 D Performance Stock Units 2017-02-15 4 M 0 10072 0 D 2017-02-15 2017-02-15 Common Stock, Par Value $.01 10072 0 D On February 15, 2014, the Reporting Person was awarded 19,295 target performance stock units (as adjusted for the spin-off of Time Inc.) with a three-year performance period ending December 31, 2016. As previously reported on a Form 4 (filed with the SEC on January 27, 2017), on January 26, 2017, the Compensation and Human Development Committee (the "Compensation Committee") approved a final payout of 199.2% of the target PSUs under the performance standards set in 2014, based on (i) the Issuer's cumulative Adjusted EPS achieved during the performance period, which resulted in an Adjusted EPS factor of 166% and (ii) its total stockholder return for the performance period compared to the other companies in the S&P 500, which resulted in a TSR modifier of 120%. The payout factor for the performance stock units is determined by multiplying the Adjusted EPS factor and the TSR modifier. On December 14, 2016, as part of actions taken by the Compensation Committee to mitigate the potential adverse tax consequences to the Company and the Reporting Person of Section 280G of the Internal Revenue Code in connection with the pending acquisition of the Company by AT&T Inc., the Compensation Committee approved the accelerated vesting of the Reporting Person's February 15, 2014 PSUs and the payout of 28,363 PSUs on December 15, 2016 (rather than February 15, 2017) at the level of 147% of the target number of PSUs, which was the amount accrued for financial reporting purposes through September 30, 2016, and which the Compensation Committee determined was lower than the level substantially likely to be achieved for the entire performance period. On February 15, 2017, the Reporting Person acquired additional 10,072 shares, which represented the difference between the number of shares that would have vested based on the final 199.2% payout factor and the 28,363 shares that vested on December 15, 2016. Each performance stock unit represents a contingent right to receive one share of common stock. The Reporting Person received one share of common stock for each performance stock unit that vested. Payment of tax liability by withholding shares of common stock incident to the vesting of performance stock units in accordance with Rule 16b-3. By: Brenda C. Karickhoff for Howard M. Averill 2017-02-17