Warner Bros. Discovery CEO Compensation Faces Backlash from Shareholders

Warner Bros. Discovery CEO Compensation Faces Backlash from Shareholders

Warner Bros. Discovery CEO David Zaslav’s 2022 executive compensation has been met with disapproval from stockholders, according to a recent SEC filing. The company’s say-on-pay vote saw nearly half of the votes cast against last year’s compensation, which had just over 50% approval. Although the votes are non-binding, they carry weight when it comes to the company’s management. Companies usually receive over 90% approval, and anything below 70% is considered unfavorable. In instances like this, management often engages with shareholders to make changes for the following year.

The virtual annual meeting was held for WBD shareholders only, and the results reported 770.6 million votes against the 2022 pay, with 795.3 million voting to ratify. CEO pay is a topic of concern among media companies, and Zaslav’s compensation for 2022 totaled nearly $39.3 million. The previous year, the figure was $246 million, which included a large option grant. Equity awards vest over time, and only if the stock hits specific levels.

CEO compensation policies and pay numbers for the top five highest-paid executives are declared in proxy statements filed with the SEC early each year. Zaslav’s 2022 compensation included a base salary of $3 million, stock and option awards of $1.2 million and $1.4 million, respectively, and non-equity incentive plan compensation of $21 million.

Public companies have been required to hold say-on-pay votes since 2010, and most hold one every year. Legacy Discovery had held say-on-pay votes every three years but will now move to an annual vote as well.

Influential shareholder advisory service ISS recommended a vote against WBD’s compensation in a report last month. ISS stated that “A vote AGAINST this proposal is warranted,” citing Zaslav’s problematic severance arrangement, outsized annual bonus and target bonus opportunity, and insufficient disclosure of strategic goal targets and performance under both annual and long-term incentive programs. Although some positive changes were made in response to shareholder feedback, some appear to be merely incremental improvements.

Earlier this year, WBD announced that part of Zaslav’s compensation will now be linked to free cash flow. Despite this, the company will need to make significant changes to its compensation policies to satisfy shareholders.


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