Vendor Standards

WHEREAS:

Reports of human rights violations at suppliers of U.S.-based corporations have increased public awareness of the problems of denial of basic workplace rights, long working hours and poor health and safety conditions. Worker exploitation in factories where a company produces its goods can damage its reputation and lead to the loss of brand value or result in costly litigation.

Warner Bros. Consumer Products is one of the leading licensing and retail merchandising organizations in the world. It controls an array of popular licensed characters including Superman, Batman, Harry Potter, Bug Bunny, Scooby-Doo and many others. The company has licensed these characters for production of apparel, toys, jewelry, house wares, games and collectibles.

Our company has not provided shareholders and the public with information on its supply chain monitoring to be able to assess its performance in this important area. Time Warner apparently lags behind its peers by not having a code of vendor conduct. A prominent competitor, The Walt Disney Co., established a code of conduct in 1996. The code sets forth requirements for manufacturers of branded merchandise in regard to working conditions, compensation and benefits, working hours, nondiscrimination, health and safety, association, environmental protection, compliance with law, and monitoring of compliance. The Disney Co. has performed more than 40,000 audits at supplier facilities in 50 countries. http://corporate.disney.go.com/corporate/intl_labor_standards.html. There is no public evidence that Time Warner has performed such audits.

Companies such as Nike and Gap have suffered damage to their brands due to allegations of sweatshop labor in their supply chain. Our company purchases goods produced in countries like China where human rights abuses and unfair labor practices have been well documented. (U.S. State Department's "China Country Report on Human Rights Practices - 2004," http://www.state.gov/g/drl/rls/hrrpt/2004/41640.htm)

Time Warner needs to develop a code of vendor conduct and a program to enforce the code to protect its valuable brands. It should report to shareholders on how it implements the code, how it monitors suppliers and how it addresses issues of non-compliance that are found.

RESOLVED: Shareholders request the Board of Directors to:

• Develop a code vendor of conduct.
• Establish a code implementation plan for auditing supply chain facilities.
• Release periodic reports on adherence to the code.

Supporting Statement

We believe the code should be based on the United Nations' International Labor Organization (ILO) core labor standards and the United Nations Draft Norms on the Responsibilities of Transnational Corporations with Regards to Human Rights that define workplace human rights. Although most countries have laws that conform to ILO standards, in many instances these laws are not fully enforced. Time Warner should require that ILO standards apply to its vendor factories wherever they are located.