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HomeEntertainmentWarner Bros. Discovery boosts David Zaslav pay incentives after company cuts costs

Warner Bros. Discovery boosts David Zaslav pay incentives after company cuts costs


After a brutal year marked by thousands of layoffs and stock struggles, Warner Bros. Discovery strengthened financial incentives for its Chief Executive David Zaslav and created a new pool of cash to pay bonuses for its top executives.

In a regulatory filing on Monday, the company said it had amended Zaslav’s contract to double the number of performance-related limited stock awards for which he is eligible. Under the new arrangement, Zaslav could be eligible to receive at least $12 million in stock awards in addition to his salary and other benefits during the years 2023, 2024 and 2025, according to the filing.

Zaslav has long been among the highest paid corporate executives in America, even when he ran the relatively small cable programming company Discovery. The 63-year-old executive’s pay packages have long been packed with rich equity incentives, which he traditionally took advantage of when his company’s stock price rocketed into the stratosphere.

Last year, Zaslav’s total compensation package was expected to be more than $250 million — nearly three-quarters, or $202 million, of which came from stock options he received as part of a new contract in anticipation of the merger of WarnerMedia and Discovery. However, he failed to realize that amount due to the lagging stock price of Warner Bros. Discovery.

In addition, a $27 million pool was set aside to pay bonuses to other employees. Nearly half of that amount is earmarked for corporate and finance executives with cash flow and debt management responsibilities, including Zaslav’s top lieutenants such as Chief Revenue Officer Bruce Campbell, Chief Financial Officer Gunnar Wiedenfels and CEO of Global Streaming JB Perrette.

Those three executives would be eligible for $2 million each.

The contract changes and bonus pool come ahead of the first anniversary of the rocky union between Discovery and WarnerMedia, the latter of which was previously owned by AT&T. The merger left the combined company with more than $50 billion in debt.

Since the merger, Warner Bros. Discovery faced a more challenging business environment and laid off several thousand employees at HBO, the Warner Bros. film and TV studio and Turner networks, including CNN. It canceled movies, including “Batgirl,” and TV shows in an effort to cut costs and qualify for tax write-offs. It reduced the number of “Sesame Street” episodes available for streaming on HBO Max.

The company also quickly pulled the plug on CNN+, a streaming service created by the previous government.

The motivation for Monday’s potential compensation increase, according to the regulatory filing, was to “promote and reward achievement of the company’s initiatives related to increasing free cash flow and reducing leverage.”

The stock options that are such a big part of Zaslav’s compensation package are under water because of Warner Bros.’s sluggish share price. Discovery.

The share of Warner Bros. Discovery plummeted last summer as part of an industry-wide shift as Wall Street began to worry media companies were spending too much money building robust streaming services to compete with Netflix in the streaming wars.

Also Warner Bros. Discovery was weighed down by a mountain of debt. It had to pay AT&T a $43 billion special dividend as part of the merger last April.

Shares of the company have gained ground in recent months, trading at nearly $16 a share on Monday. Still, it’s well below $24 per share as of when the new company was formed.

Zaslav’s stock options were tied to a stock price of $35 per share last year.

Instead of focusing primarily on boosting the stock, the company has now shifted its compensation focus to encouraging key employees to find ways to pay down debt and generate free cash flow. The new incentives are tied to those metrics.

“The changes to the Warner Bros. Discovery executive compensation programs are designed to further incentivize the company’s employees, including members of the leadership team and others whose efforts are critical to achieving key short-term financial goals of increased free cash flow and reduced leverage. said board chairman Samuel A. Di Piazza, Jr. in a statement.

“WBD’s Board of Directors is confident that these additional incentives provide a more competitive package against the backdrop of continued industry-wide transformation and economic headwinds, and better position the company to advance key drivers of shareholder value,” said Di piazza.

Last fall, Warner Bros. Discovery to investors that the cost of the downsizing would exceed $1 billion, including because of severance payments. The company’s goal was to find more than $3 billion in cost savings.

Discovery said on its most recent earnings call that cost cutting would enable it to improve its financial position faster than expected.

Separately, the company took out a new loan to repay part of its existing debt.

“The company remains highly indebted and therefore is weakly positioned for its current credit rating,” Moody’s said in a credit report, which kept the company’s credit rating at Baa3. “The stable outlook reflects Moody’s expectations that subscriber growth from domestic and international expansion of the (direct-to-consumer) streaming platforms will be able to offset secular pressures over time.”

Merry C. Vega is a highly respected and accomplished news author. She began her career as a journalist, covering local news for a small-town newspaper. She quickly gained a reputation for her thorough reporting and ability to uncover the truth.

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