NEW YORK (CNN/Money) - Annual meetings can be fairly routine affairs: a corporate video explaining how well business is going, a sappy tribute to a departing executive or board member, a perfunctory election for the board, maybe a few minutes of whining by a shareholder gadfly.

AOL Time Warner's brass would love to be so bored at their annual meeting Friday in Lansdowne, Va., near the offices of their embattled America Online unit.

Instead CEO Richard Parsons and outgoing Chairman Steve Case will face angry institutional shareholders -- some of whom are suing the company -- who don't like AOL Time Warner's proposed slate of directors or its proposed stock incentive plan.

Shareholders also will be looking for details about the status of federal probes into America Online's accounting practices and Parsons' efforts to sell assets to cut the company's debt load of more than $26 billion.

Company executives and shareholders will also be saying goodbye to Case, who is leaving under intense pressure from large shareholders, including CNN founder Ted Turner, who in turn is giving up his vice chairman post and selling a huge block of AOL stock in apparent disgust. Both Case and Turner will stay on the board, however.

AOL Time Warner (AOL: Research, Estimates), parent of CNN/Money, is coming off a year with a record $98.7 billion loss. Its stock price, despite recent gains, is still down 70.4 percent since the merger that formed the world's largest media company was completed in January 2001.

In this unhappy environment, the company needs shareholder approval of a new stock incentive plan, since the current one expires in November and is almost out of shares. The company argues it needs the new plan, which allows up to 200 million new shares and options to be issued to executives, directors and employees, in order to attract and retain employees at a time when more than two-thirds of its outstanding options are under water.

CNNfn's Greg Clarkin takes a closer look at the state of AOLTW ahead of its annual meeting of shareholders, who have a lot on their agenda, from federal investigations to reducing sky-high debt levels. Play video (QuickTime, Real or Windows Media)

Nevertheless, Institutional Shareholder Services, a leading provider of proxy voting and corporate governance services, is recommending to clients that they vote against the stock compensation plan because the additional shares that would be issued to executives, officers, and others would reduce the value of existing shares, an impact known as dilution.

"The total possible dilution (from all stock compensation plans) is 17.9 percent," said Rob Kellogg, director of proxy voter services for ISS. "Even if there's questions about how real those options are, this new issue by itself could represent 4 percent dilution. That's a pretty good chunk."

It's not clear that ISS will have significant support in its opposition to the stock plan, though. Since the stock price would need to climb 50 percent or more before most existing options could be exercised, the threat of dilution appears muted.

Some leading shareholders are planning to withhold their vote for several directors, including Case. Case acknowledges he has become a lightening rod for those angered about the drop in value of AOL's stock since the merger. Capital Research & Management, the company's largest shareholder, has said it will not vote for Case or his allies as a form of protest, according to a report in the Wall Street Journal. A spokesman for Capital Research, which owns about 7 percent of the company's stock, would not comment.

Some shareholder groups also question the independence of some of the company's outside directors. For example, Netscape co-founder James Barksdale, who sold his company to AOL, is listed as an independent director, as is former AOL executive Miles Gilburne. Such directors, who can serve as a key shareholder check on what executives are doing, should have fewer ties to the company, critics argue.

The California Public Employees' Retirement System, or Calpers, the nation's largest pension fund, will not vote for some directors, nor will it support Ernst & Young as the company's outside auditor.

Despite such protest votes, the directors are certain to be re-elected. The company's rules require only a majority of votes cast to elect a director. Shareholders can't vote against candidates, only withhold votes. But it will be a black eye for directors who have approval withheld by a significant number of shares.

Also scheduled is a vote on a long-shot shareholder resolution by an order of monks seeking more information about executive compensation and how it compares to that of lower-paid workers.

While the company is expected to prevail in all the votes, shareholders likely will levy criticism at the company's weak stock price, which has sparked the lawsuits and prompted selling by some company insiders, notably Ted Turner, who became the company's largest individual shareholder after he sold his Turner Broadcasting to Time Warner in 1996.

Turner sold 60 million shares for $13.07 each on May 5, or more than half his stake in the company, after he sold 14.2 million shares earlier in the year.

Turner is not the only insider selling shares. Vice Chairman Kenneth Novack sold 84,000 shares after exercising options for them in March and April. Barksdale sold 486,000 shares this year, or about 12 percent of his holdings.

Insider purchases have been more limited, although director Reuben Mark, the CEO of Colgate-Palmolive, bought 504,000 shares in the open market in May. And some top officers, including CEO Parsons, also bought a total of about 325,000 shares earlier this year, though much of that came from deferred compensation or company savings plans.