Dec. 11 (Bloomberg) -- Time Warner Inc. named Chief Executive Officer Jeffrey Bewkes to the additional role of chairman, in line with a succession plan outlined by current Chairman Richard Parsons earlier this year.

Parsons, 60, will step down on Dec. 31, New York-based Time Warner said in a statement today.

Bewkes, who succeeded Parsons as CEO in January, had a contract that allowed him to retire if he didn’t become chairman after one year. The terms include as much as $19 million in base salary and bonuses. The deadline gave the board until Jan. 1, 2009, to determine whether Bewkes, 56, would replace Parsons.

Since becoming CEO, Bewkes has explored possible deals for Time Warner’s AOL unit with Yahoo! Inc., Google Inc. and Microsoft Corp., talks which this week he called “ongoing.” The company also plans to split off Time Warner Cable Inc. early next year.

Parsons said at Time Warner’s annual shareholder meeting in May that he would probably step down after this year. He joined Time Warner’s board in 1991 and became CEO in 2002 after the company’s $124 billion merger with AOL led to record losses.

Parsons spent the first three years of his tenure selling assets and cutting costs to return Time Warner to profitability. He also helped settle a class-action lawsuit over AOL for more than $2.5 billion.

The statement didn’t disclose what Parsons plans to do after leaving the board. He is an economic adviser to U.S. President-elect Barack Obama. In October, Obama told about 120 supporters, including Parsons, that he may ask some of them to work in Washington if he was elected.

Citigroup Director

Parsons is also on the board of Citigroup Inc. and may be a leading candidate to replace Chairman Win Bischoff as some directors grow frustrated with the bank’s performance, the Wall Street Journal reported Nov. 13, citing unidentified people familiar with the situation.

Time Warner fell 10 cents to $10.06 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have declined 39 percent this year, roughly matching the Standard & Poor’s 500 Index. During Parsons’ tenure as CEO, the shares traded as low as $8.70 and as high as $23.15.

Before becoming chief executive, Bewkes had served as Time Warner’s president and operating chief since 2006. His current five-year contract ends Dec. 31, 2012. From 1995 until 2002, he led Time Warner’s HBO network, expanding the pay-television cable network with hits, including “The Sopranos” and the comedy “Sex and the City.”

To contact the reporters on this story: Jennifer Sondag in New York at jsondag@bloomberg.net; Sarah Rabil in New York at srabil@bloomberg.net

Last Updated: December 11, 2008 19:49 EST